WASHINGTON, CMC – The executive board of the International Monetary Fund (IMF) has approved a disbursement of US$415 million for Jamaica under the Rapid Financing Instrument’s (RFI) large natural disaster window.
The Washington-based financial institution said these resources will help meet the urgent balance-of-payments needs stemming from the devastation caused by Hurricane Melissa, complementing the resources currently available under Jamaica’s disaster risk financing framework.
The category five hurricane hit the island on October 28 last year, killing at least 45 people and causing damage estimated at more than nine billion US dollars.
The IMF executive board said Jamaica’s established track record of economic reforms has created buffers that are helping to address the financial 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, has generated a sizable balance-of-payments need in the short term.”
It said that the Jamaican government is committed to supporting the most vulnerable segments of the population in hurricane-hit areas and rebuilding 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.”
Deputy IMF Managing Director and Chair, Bo Li, said 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,” Li said.
He said the authorities’ policy response is helping to mitigate the economic and social impact of Hurricane Melissa.
The IMF official said that 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.”
Li said that limiting foreign exchange interventions to preventing 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 prioritizing measures to ensure medium-term macroeconomic stability,” Li added.
and then  has approved a disbursement of US$415 million for Jamaica under the Rapid Financing){kind=link}