(Dow Jones)The International Monetary Fund's executive board
Thursday approved a $1.27 billion loan to Jamaica, opening the
door for additional financing of more than $1 billion from other
international financial institutions.
Jamaica gets immediate access to about $640 million of the
27-month stand-by arrangement, with some of the money
expected to be used to create a financial stability support fund,
the IMF said in a statement.
The loan deal follows the successful completion of the government's
debt exchange totaling nearly $8 billion. The exchange, which was
accepted by almost 95% of bondholders, will generate interest savings
of at least 3% of gross domestic product, the fund said.
Takatoshi Kato, deputy managing director and acting chair of the
board, said the exchange "has contributed to a more equitable
sharing of the burden of the overall fiscal adjustment," while balancing
the need for cash-flow savings with ensuring financial stability.
The IMF-supported program aims at returning public finances to a
sustainable path, including by reducing the public sector fiscal
balance by 5% of GDP in fiscal 2010. Along with tax and financial
reforms, social spending will also be increased to protect the poor.
Jamaica's economy is expected to grow 0.5% in fiscal 2010-2011,
with a further increase of 2% after that, the fund said.