Jamaica sought no new loans from China last year
A marked reduction in overseas development Assistance (ODA) to Jamaica in 2018 has been linked primarily to reduced levels of assistance sought from the People’s Republic of China.
The Economic and Social Survey of Jamaica (ESSJ) for 2018, published recently by the Planning Institute of Jamaica (PIOJ), says that assistance from international development partners (IDP) was guided by the strategic objectives in the Vision 2030 National Development Plan and the Medium Term Socio-Economic Policy Framework (MTF) 2015-2018.
In 2018, total ODA and Government counterpart resources in the form of loans, grants and technical assistance was US$2.5 billion (J$324.3 billion), an 8.7 per cent increase over the 2017 figure. Of the total ODA, US$220.7 million (J$28.6 billion) was approved for new ODA, compared with US$787.2 million (J$101 billion) in 2017.
“This reduction was attributed primarily to lower levels of assistance from bilateral partners, specifically from the People’s Republic of China, from which the Government of Jamaica sought no new loans and fewer grants during the period,” the ESSJ reported.
Jamaica’s total debt outstanding to China was US$626.27 million at the end of December 2018. This debt constitutes approximately 4.1 per cent of Jamaica’s national debt, with about 90 per cent of that being owed to the Chinese Government through the China Export-Import Bank, with an interest rate of 2-3 per cent to be repaid in the next decade.
Jamaica’s Government had a wake-up call when its debt overhang peaked at 147 per cent of GDP in 2013. But, with the support of the International Monetary Fund (IMF), the World Bank, and the Inter-American Development Bank (IDB), the country embarked on an ambitious reform programme which led to the successful reduction of its public debt last year to below 100 per cent of GDP.
That fiscal turnaround became possible through the country’s strong commitment, across succeeding political administrations. As a result, Jamaica also generated primary fiscal surpluses of at least 7 per cent of GDP for the past six years, and has remained committed to fiscal discipline which has made it a leading performer, globally.
Assistance from the Multilateral Financing Institutions (MFIs) accounted for 75.5 per cent of new resources. New ODA focused on the country’s social infrastructure sector to the tune of US$160.6 million (J$20.8 billion). The health sector received the largest share. Budget support was also provided for public financial management, fiscal consolidation, educational reform, as well as investment loans to support social protection, expand road infrastructure, and grants to assist with the development of irrigation networks.
Loan approvals amounted to US$130 million (J$16.9 billion), a decrease of 80.9 per cent compared with 2017, as the Government did not negotiate any new loans with China. New grants totaled US$90.7 million (J$11.8 billion), a decrease of 15.9 per cent.
Total loan disbursement from the Government’s main lending partners — the Caribbean Development Bank (CDB), China’s government, the IDB, and the World Bank — recorded an increase from US$189.7 million (J$24.6 billion) to US$286.5 million (J$37.2 billion).
This increase resulted from the disbursements of US$105 million (J$13.6 billion) under two IDB budget support programmes during the year. There was a marginal increase from US$301.9 (J$39.2 billion) to US$302.7 million (J$39.3 billion) for repayment of loan principals, interest, and other charges.
As a result, the Government of Jamaica maintained a negative new flow in the amount of US$16.2 million (J$2.1 billion) for 2018.
This year, the areas which are expected to benefit from ODA include security, social protection, rural water, agriculture, community tourism, disaster risk reduction, and climate change adaptation.
ODAs are concessionary loans, grants, and technical assistance to developing countries for the promotion of their economic welfare and development as its main objective.