MANY observers have misunderstood the outcome of the recent International Monetary Fund (IMF) mission to Jamaica. There is no new programme. Basically, the IMF offered Jamaica new and valuable options due to our sound fiscal and monetary management.

The IMF is warning of a sovereign debt crisis in emerging markets. Persistent inflation has increased global interest rates and investors are moving their money out of developing economies. At the same time, global growth is expected to remain low.

Caribbean countries are extremely vulnerable to these kinds of shocks and many jurisdictions could face default or recession because they ran up their debt during the pandemic. Jamaica, however, has significantly reduced that vulnerability.

In 2020 the development institutions pressed Jamaica to increase fiscal spending to bail out private companies and consumers; however, the Jamaican Government chose instead to increase social safety nets and then quickly return to reducing the debt burden.

Additionally, Jamaica was one of the first countries to anticipate the inflationary threat and hiked interest rates to dampen domestic causes of inflation, and stabilised the exchange market to prevent capital flight. Other countries delayed increasing interest rates, and this has hurt the poor as inflation rates went higher.

Low-income groups have small savings and rely mostly on wages so inflation hits them hard and fast. Higher-income groups have more savings and enjoy several sources of income so they can normally continue their lifestyles despite spikes in inflation.

Jamaica is on a mission to breaking the ruinous cycle of responding to external shocks by increasing debt to keep on spending. We now have a track record of remaining steadfast across administrations, despite shocks like the pandemic and a destabilising war. We have passed legislation that enhances fiscal and monetary transparency and discipline. Our financial sector is stable, our international reserves are solid, and we have preferred access to international markets. Debt is lower than before the pandemic, and this is the fastest that Jamaica has ever recovered from a major shock. Employment levels are higher than prior to the pandemic.

The Government has restated its commitment to staying the course.

These are precisely the achievements that led the IMF to offer Jamaica the option of accessing facilities of more than US$1.7 billion at highly concessional terms. This is a frank recognition of Jamaica’s successful macroeconomic management. Unfortunately, no other Caribbean country has been offered access to these facilities.

Jamaica can choose when and whether to make use of this offer. There is about US$1 billion in external debt that will mature between 2023 and 2025. We now have the option of rolling it over with commercial creditors or we could opt to use the IMF facilities if alternative sources are more expensive.

Access to the IMF windows is based on our current achievements so there are no new policy conditions to be met. The cheaper financing terms would create fiscal savings that could then be used to further cushion the impact of the downturn on the poor or increase climate resilience.

Of course, rising inflation and the falling rate of the dollar remain a concern, but this insurance policy is clearly a no-brainer.