The International Monetary Fund (IMF) has said that the funds approved last week under its rapid financing instrument (RFI) serves mainly as a contingency funding mechanism which is to be used by the country in cushioning the economic fallouts of the COVID-19 pandemic.

Last Friday the IMF’s executive board approved a request to give emergency financing assistance to the country totalling US$520 million or 100 per cent of quota.

Speaking in a press conference on Monday, Manuela Goretti, IMF’s mission chief for Jamaica, said that given that there are no immediate fiscal needs to be met, and with the supplementary budget already financed — the RFI really represents a contingency fund.

“The RFI represents a contingency that the authorities can rely on in case the pandemic proves greater than envisaged. The money will be deposited at the central bank but there is the possibility for the Ministry of Finance to use it for budget financing should the need arise. At the moment it will mainly help to strengthen the reserves at the central bank,” she said.

She said that with Jamaica among some 12 Caribbean countries approved for funding, the approval of funds comes at a most suitable time as the country seeks to sustain its track record of economic reform and support livelihoods and recovery.

Noting that the economy is expected to contract by 5.3 per cent this financial year with gradual recovery expected over the next two years [2022], the IMF mission chief said that the economic outlook at this time remains uncertain — especially given the fallout in tourism, mining, remittances and its associated foreign exchange for balance of payments support.

Goretti said that given the significant impact on key economic sectors it is crucial that the funds disbursed be properly allocated and used for the purposes intended.

“It is important that the money being spent is tracked and used in an appropriate and targeted way,” she reasoned.

Lauding the Government’s CARE Programme initiatives as adequately targeted, the IMF said that the measures will help to provide economic support to those in need.

“I think all these steps have reassured us and the executive board that this is money which is being rapidly disbursed because of the needs. What we have seen them do so far is commensurate to what the country is experiencing now. What is critical, is that any measure taken is temporary in nature, tied to the duration of the shock, and well targeted,” she stated.

POST-COVID-19 OUTLOOK

The IMF executive said that once the crisis abates, the authorities should continue the implementation of its ambitious reform agenda underpinned by strong commitment to sustainability. This, she says, is important to support economic recovery and more importantly, assure higher and more inclusive economic growth going forward— adding also that economic diversification should be considered as a useful undertaking in improving the resilience of the economy.

“Going forward economic diversification will be an important element for Jamaica — it’s very important to create the enabling conditions in terms of business environment, building institutions & governance, and allow private sector to generate new forms of investments and jobs in different sector,” Goretti said.