KINGSTON, Jamaica — The International Monetary Fund has approved a new US$1.64 billion Stand By Agreement programme for Jamaica.

The three-year Stand-By Arrangement (SBA) is to support the authorities’ continued economic reform agenda.

In a news release yesterday, the IMF said Jamaican authorities have indicated that they will treat the arrangement as precautionary, and do not intend to draw on the new SBA unless “exogenous shocks” generate an actual balance of payments need.

The IMF said the Executive Board approval will make about US$ 411.9 million available, and the remainder in six tranches upon completion of semi-annual programme reviews.

The new arrangement aims to sustain macroeconomic stability, while boosting employment, raising living standards.

According to the IMF, following the Executive Board discussion on Jamaica, Deputy Managing Director and Acting Chair Tao Zhang said: “Jamaica has established a commendable track record of programme ownership and implementation under the Extended Fund Facility (EFF).”

He said macroeconomic stability has been entrenched, evidenced by low inflation, the build-up of foreign currency reserves, and a decline in the current account deficit. Fiscal discipline and proactive debt management have helped place public debt on a downward trajectory. Still, growth is low, poverty and unemployment are high, and crime and security challenges impose a serious drag on growth, the release stated.

“The authorities’ request for a Stand-By Arrangement (SBA), which they intend to treat as precautionary, will provide insurance against unforeseen adverse external economic shocks, while focusing reform efforts to deliver better growth and job outcomes, as well as reduce poverty, while sustaining macroeconomic stability,” he said.

He added that fiscal discipline and public debt reduction will continue to anchor Jamaica’s reform programme. “Public sector transformation, another key pillar of the programme, will seek to re-orient public resource allocation toward infrastructure, social protection, and security-related spending, while delivering more efficient public services. The ongoing growth-friendly shift from direct to indirect taxes will continue to broaden the tax base and improve the efficiency of the tax system. The programme will continue to protect social spending, while also instituting reforms to strengthen the social safety net.”