- The IMF executive board approved Jamaica’s request for emergency financial assistance of about US$415 million to help meet the urgent balance-of-payments needs stemming from the destruction caused by Hurricane Melissa.
- The Jamaican authorities continue to work on the recovery of essential services in the hardest-hit areas and on reconstruction efforts, with focus on supporting the most vulnerable segments of the population affected by the hurricane.
- Jamaica’s strong track record of economic reforms has created buffers that are proving invaluable in addressing the economic fallout and reconstruction needs.
WASHINGTON, USA – The executive board of the International Monetary Fund (IMF) approved a disbursement in the amount of SDR 306.32 million (about US$415 million, 80 percent of quota) for Jamaica under the Rapid Financing Instrument’s (RFI) large natural disaster window. These resources will help meet the urgent balance of payment needs stemming from the devastation caused by Hurricane Melissa, complementing the resources currently available under Jamaica’s disaster risk financing framework.
Jamaica’s established track record of economic reforms has created buffers that are helping to address the economic fallout and reconstruction needs after hurricane Melissa. Nevertheless, the widespread damage caused by the hurricane together with the resulting fiscal pressures and sharp decline in tourism receipts have generated a sizable balance-of-payments need in the short term. The government of Jamaica is committed to supporting the most vulnerable segments of the population in hurricane-hit areas and rebuilding of damaged infrastructure. While recognizing that the hurricane shock justifies a temporary easing of the fiscal stance, the authorities remain committed to fiscal responsibility and debt reduction once the hurricane shock has receded. The authorities also continue to prioritize achieving their inflation target and ensuring financial stability.
Following the executive board’s discussion Bo Li, deputy managing director and chair, issued the following statement:
“Hurricane Melissa has caused unprecedented destruction across Jamaica and is projected to have a significant negative impact on growth and create an urgent balance of payments need. Despite Jamaica’s multi-layered disaster risk financing strategy and sound macroeconomic policies over more than a decade, the financial resources available for disaster recovery are insufficient. Consequently, emergency assistance under the Rapid Financing Facility would help to support relief efforts, particularly for the most vulnerable, and accelerate the recovery. Strong collaboration with international partners remains important.
“The authorities’ policy response is helping to mitigate the economic and social impact of hurricane Melissa. Fiscal policy appropriately aims to provide relief and recovery in the hurricane-affected areas, with a focus on supporting the most vulnerable and rebuilding infrastructure. In this context, the temporary suspension of the fiscal rule is appropriate. The authorities’ commitment to prudent fiscal management and public debt reduction, once the hurricane shock has receded, is welcome. Increased public investment necessitates adherence to procurement best practices and strong coordination to support rebuilding efforts.
“With severe damage to agriculture, the hurricane has caused a significant negative supply shock, which is creating inflationary pressures. The Bank of Jamaica’s commitment to its inflation target remains essential to anchor inflation expectations and contain second-round effects. Limiting foreign exchange interventions to the prevention of disorderly market conditions is appropriate. Continuous supervisory vigilance to ensure financial stability is warranted.
“Building on their demonstrated commitment to credible policy frameworks and economic reforms, the authorities aim to continue prioritising measures to ensure medium-term macroeconomic stability.”
