THE Opposition Jamaica Labour Party (JLP) says the Inter-American Development Bank’s (IDB) freeze on new low-cost development loans to Jamaica over the next three years, was caused by the reckless management of the country, and described it as “an utter disgrace” on the path of the government.

Opposition Spokesman on Finance and the Public Service, Audley Shaw, said that the recent IDB Strategy Report, published yesterday, was a damning condemnation of the reckless path of debt financing of the budget on which the government has irretrievably embarked.

IDB report, said the JLP spokesman, implied that the government had virtually abandoned the IDB window for low-cost development funds in favour of the high-cost funds on the local and international capital markets, where money is obtained at two to three times higher than available at the IDB and other multilateral institutions.

The JLP spokesman added that the IDB’s concern that the government of Jamaica’s experience with the speed and flexibility of the international capital markets had given rise to dissatisfaction with the operational pace and rules and procedures of development banks, was an indictment on the finance minister, Omar Davies.

Said Shaw: “This freeze spells disaster for Jamaica’s ability to deal effectively with a debt reduction and containment strategy in the short to medium term, especially as it relates to obtaining policy-based debt reduction loans from the multilateral institutions.”

“Dr Davies has now borrowed himself and Jamaica into a corner and now has the country’s economy virtually trapped in a high interest-rate-borrowing spiral from which he has no clue of how to get out. On this spiral, there is no hope for lowering commercial bank lending rates to the goods and services-producing sectors of the economy”, Shaw said in a press statement..

He called on Minister Davies to issue a full report on the projects that are now compromised by delays or cancellation as a result of the government’s inability to provide adequate pre-financing or matching funds so that the projects can proceed.

The Opposition JLP, in the budget debate earlier this year, said a JLP government would:

. put constitutional limits on debt expansion;

. implement a debt-reduction strategy, using PetroCaribe funds, as well as low-cost, policy-based loans from multilateral agencies;

. put in place investment and growth-oriented policies that would aggressively substitute earnings for borrowing, which in turn would lead to job creation, economic development and reduced debt as a percentage of Gross Domestic Product.