Business

Jamaica's annual World Bank subscription increased

BY DURRANT PAGE
Observer writer

Wednesday, July 17, 2019

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Jamaica like other member countries of the International Bank for Reconstruction and Development (IBRD), better known as the World Bank, has seen its annual contribution hiked based on the bank's 2018 General and Select Capital Increases in share allocation.

The increases have become necessary, in order to strengthen the bank's financial capacity, which would be done through an increase in its authorised capital stock.

As a member of the IBRD, Jamaica is now required to subscribe to 311 shares of the World Bank's General Capital Increase (GCI) and 163 shares of the Selective Capital Increase (SCI) based on the new capital stock allocation among member countries.

Based on this allocation, Jamaica's subscription would amount to just over US$8.6 million (US$8,683,307.30) over the next five years, as stated in 2019 Ministry Paper 40 tabled in Parliament on Tuesday (July 9) by Finance Minister, Dr Nigel Clarke.

This amount is much more than Jamaica's last payments for the period 2011-2017, which amounted to US$4.99 million. Based on the adjusted subscription, Jamaica is now obligated to contribute an amount of US$1.73 million annually over the next five years.

The first payment of US$1,736,661.46 under the new arrangement becomes due in October this year with subsequent annual payments due on or before October 1, each year with the final installments to be paid on September 30, 2023.

Jamaica's continued contribution to the IBRD is essential given the significant benefits received from the institution in both loans and grants over the years.

The Ministry Paper titled, '2018 General and Selective Capital Increases of the IBRD' detailed that Jamaica was in receipt of US$496.3 million in loans and grants from the IBRD over the 2011-2017 period.

Over the years the IBRD has provided funding to various institutions and projects in Jamaica with the most recent being a loan managed by the Development Bank of Jamaica to aid in the Access to Finance for Micro, Small and Medium Project and a grant to the Ministry of Industry, Commerce, Agriculture and Fisheries for promoting community-based climate resilience in the fisheries sector.

In the past, the IBRD provided assistance towards education transformation, climate change and agriculture including sustainable development of social capital. Support has also been provided by the IBRD for the Early Childhood Development Project, Inner City Basic Services for the Poor Project, Rural Economic Development Initiative Project and the Social Protection Project, which bolstered the Jamaica Programme for the Advancement through Health and Education (PATH) Conditional Transfer Programme.

JUSTIFICATION FOR THE INCREASES

The IBRD has increased its authorised capital stock to allow for a hike in paid-in capital of US$7.6 billion as well as a US$52.6 increase in “callable” capital by member countries.

This will provide the multilateral institution with adequate funding to fulfill its mandate of contributing to national development in the midst of fiscal challenges being experienced by the developing countries of the world.

The GCI and SCI are critical elements in the bank's aid machinery for the strategic provision of resources to the Caribbean and the other developing countries of the world.


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