BY INGRID BROWN Associate Editor — Special Assignment email@example.com
APPROXIMATELY US$850 million will be made available to financial institutions which participated in the recently concluded National Debt Exchange (NDX) programme and encounter any financial fallout as a result.
Information minister Senator Sandrea Falconer who made the announcement yesterday said the money is in preparation in the event the banks come under stress.
"Bearing in mind that the NDX is the second such programme, we have to anticipate just in case there is a fallout and we have to assist so it is preparation," Senator Falconer, told reporters at Wednesday's weekly Jamaica House Press Briefing at the Office of the Prime Minister in Kingston.
The money, provided by the International Monetary Fund (IMF), is being made available through the Financial Systems Support Fund.
Cabinet, Falconer said, had given approval for the fund to commence operations and for Government to inject a further US$10,000 as equity. The fund, she said, will support general financial systems stability in light of the NDX.
The Financial Systems Support Fund was established in 2010 following the initiation of the first Debt Exchange Programme (JDX), to provide funding to eligible financial institutions regulated by the Bank of Jamaica (BOJ) and the Financial Services Commission, which encountered temporary financial difficulties because of their participation in the JDX.
However, Falconer said the company was not put into operation as there was no call for its resources following the JDX.
"A loan capital of US$640 million was provided by the IMF in 2010 and was held in a specially designated account at the BOJ. A further $210 million is to be disbursed by the IMF to take the account to US$850 million," Falconer explained.
She said the Financial Systems Support Fund would be administered by the Bank of Jamaica.
In February, the Portia Simpson Miller administration announced the introduction of Jamaica's second debt exchange offer, as a prerequisite to the signing of a deal with the IMF.
The NDX is aimed at reducing the country's stock by $17 billion between now and 2020.