JAMAICA has secured access to US$1.2 billion ($193 billion) in rainy day funds from International Monetary Fund (IMF) following a successful review of its financial support programmes.

The IMF has made available US$258 million under the Resilience and Sustainability Facility (RSF) and about US$980 million under the Precautionary and Liquidity Line (PLL), reflecting confidence in Jamaica’s ongoing economic reforms and fiscal discipline.

“The response to recent shocks has strengthened the credibility of Jamaica’s fiscal and monetary policy frameworks,” the IMF said in a release regarding the approval of funds.

Although these funds are ready to be deployed if necessary, Jamaica continues to treat the PLL as a precautionary measure, meant for use only in the face of severe economic shocks or natural disasters. The PLL is intended for countries with strong fundamentals and can be drawn down in the event of liquidity challenges emerging from natural disasters or economic shocks.

The recent impact of Hurricane Beryl tested the country’s resilience but Finance and the Public Service Minister Dr Nigel Clarke emphasised that Jamaica has developed a robust disaster risk financing strategy that may negate the immediate need to draw on the IMF facilities. This strategy includes a multilayered set of financial instruments designed to ensure the availability of funds for emergency response and recovery from severe weather events.

Jamaica’s approach to disaster risk management was recently showcased when its tropical cyclone policy with Caribbean Catastrophe Risk Insurance Facility (CCRIF) triggered a payout of approximately US$16.3 million following Hurricane Beryl. This payout is part of Jamaica’s broader strategy to pre-finance emergency responses and recovery costs through various financial instruments.

In addition, the Government has initiated the process to access funds under a Contingent Credit Claim with Inter-American Development Bank (IDB) and maintains a $140-billion PLL with the IMF, offering a financial safety net for economic or natural shocks.

Last year the Government also launched public consultations on the National Natural Disaster Risk Financing Policy (NNDRFP), aimed at improving Jamaica’s preparedness for natural disasters. This policy focuses on both pre- and post-disaster measures, ensuring that the country is financially prepared to address the impacts of such events.

Meanwhile, Jamaica has made progress in enhancing its climate resilience, supported by the IMF’s RSF. Efforts include promoting renewable energy, integrating climate risks into financial planning, and creating opportunities for green financial instruments like green bonds.

The recent approval from IMF reaffirms that Jamaica’s economy has demonstrated resilience. The country reported estimated growth of about two per cent in the fiscal year 2023/24 driven by a booming tourism sector, which has surpassed pre-pandemic levels, and a steady recovery in the mining industry. Unemployment rates have declined, and inflation has returned to Bank of Jamaica’s target range, signalling a strong economic position.

The nation’s external position has also improved significantly, marked by a current account surplus, rising foreign direct investment (FDI), and international reserves reaching a historic high of US$5.2 billion at the end of March 2024.

Looking forward, Jamaica’s economy is expected to continue its positive trajectory, with GDP growth stabilising and inflation remaining under control. Public debt is projected to decrease to below 60 per cent of GDP by the fiscal year 2027/28, guided by the Government’s Medium-Term Fiscal Framework (MTFF). However, risks such as global economic fluctuations and natural disasters like Hurricane Beryl remain potential challenges.

GDP growth slowed to 1.4 per cent in the January to March 2024 quarter, and further slowing was seen in the June quarter. Bank of Jamaica is projecting lower economic growth for the July to September quarter.

“When the underlying direction of economic activity and the impact of the hurricane in July are taken into account, GDP for the September 2024 quarter is projected to contract when compared with the September 2023 quarter,” BOJ Governor Richard Byles said at a recent press conference.