The Government of Jamaica is seeking access to the IMF’s Rapid Financing Instrument in an effort to further cushion the potential fallout from the COVID-19 pandemic.
As the COVID19 outbreak continues to spike in the country, the government is seeking additional economic safeguards.
In a statement this afternoon, Finance Minister, Dr. Nigel Clarke, says despite access to several resources at this time the uncertainty surrounding the pandemic makes it prudent to seek further assistance.
The IMF Mission in Jamaica officially came to an end on November 10 last year.
Dr. Clarke says yesterday, on behalf of the government, and in his capacity of Minister of Finance Minister and the Public Service, he requested access to the IMF’s Rapid Financing Instrument.
The IMF’s RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need to have a full-fledged programme in place.
The support can be requested in the case of commodity price shocks, natural disasters, conflict and post-conflict situations, and emergencies resulting from fragility.
As part of his submission to the IMF, Dr. Clarke notes that Jamaica’s tourism sector is now operating at zero utilisation and the prospect and timing of reopening remains uncertain.
In addition, remittance inflows are expected to be subdued due to unemployment and deteriorating economic conditions in diaspora markets.
Furthermore, he says, the upcoming hurricane season poses additional risks.
Last week, on April 6, the IMF substantially increased the amount that member countries could access under the RFI window.
Dr. Clarke says while Jamaica enjoys a reasonable stock of foreign reserves and has contingency financing options providing the ability for Jamaica to absorb economic shocks, the duration of the global lockdown is highly uncertain.
He says the open-ended nature of the pandemic and its economic spillovers, therefore, pose intolerable balance of payment risks that threaten the economic gains of the country’s seven-year reform effort.
For these reasons, he believes it is prudent to access and have these resources available.
He says the RFI, as the name suggests, should result in a quick disbursement, in a matter of weeks.
The IMF has already approved hundreds of millions of US dollars under the RFI to nations such as Gabon in Central Africa and Albania in the Balkans.
Meanwhile, the opposition People’s National Party, PNP, has come out in support of the Government’s decision to apply to the IMF for support to tackle COVID-19.
Shadow Minister of Finance and Planning, Mark Golding, says the availability of additional resources from the IMF at this time will help to shore up the country’s foreign exchange position.
He says this is critical for the economy to continue to function through this sharp downturn.