Contacts In Washington: Alejandro Cedeño (202) 473-3477 acedeno@worldbank.org Patricia da Camara (202) 473-4019 pdacamara@worldbank.org WASHINGTON, January 15, 2009 – The World Bank Board of Directors today approved a US$100 million loan for Jamaica to assist the government in improving fiscal and debt sustainability. The Fiscal and Debt Sustainability Development Policy Loan will support a broad program of measures to control overall public sector balances and debt, increase the efficiency of financial management and budget processes, reduce distortions, and enhance the efficiency and fairness of the tax system. “This loan supports Jamaica’s efforts to reduce the country’s high level of debt and improve fiscal sustainability, which have constrained the country’s growth potential. These priorities have become even more relevant in the context of the current global financial market crisis and economic slowdown,” said Jamaican Finance Minister Audley Shaw. “We recognize that without reducing debt and controlling debt creation, public investment and social needs, such as improving health, education and addressing crime and violence, will not be met,” he added. “The program is closely aligned with the government’s efforts to improve fiscal balances and reduce costly public debt in a sustainable fashion,” said Yvonne Tsikata, World Bank Director for the Caribbean. “Given the potential for decreased fiscal revenues under the current global environment, these efforts are particularly important as a means to enhance fiscal efficiency and help foster growth in the medium term through a better allocation of scarce public resources,” she added. Specifically, the loan will support the government’s program through the following areas: - Containing expenditures through greater control of public sector balances and debt. Under this component, reforms include consolidating the budget (Central Government and Public Bodies), rationalizing the functions of Public Bodies, and divesting loss making commercial Public Bodies.
- Increasing the efficiency of public financial management and budgeting processes. This component aims to improve the prioritization of investment of the public sector, and enhance the monitoring, evaluation and performance of public spending. It also supports improving accounting and financial reporting, as well as mechanisms to control spending.
- Reducing distortions and enhancing the efficiency and fairness of the tax system. Policy actions under the third component target reforms to improve both tax policy and tax administration and are geared toward reducing tax distortions and enhancing equity.
The US$100 million commitment-linked loan with a variable spread over six-month LIBOR is payable in 30 years (including a five-year grace period) with level repayments of principal.
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