Inter -American Development Bank (IDB) has just approved a US$75-million loan for Jamaica to strengthen its COVID-19 response.
The loan, which is the first of two policy-based loans that Jamaica will get from the IDB, is geared towards the efficiency and effectiveness of public policy and fiscal management in response to the health and economic crisis caused by COVID-19.
The primary focus of this loan is to promote the availability and timely execution of public resources to respond to the health crisis caused by COVID-19.
It will strengthen the counter-cyclical effect of fiscal policy through the introduction of temporary measures to protect the income of vulnerable households and increase liquidity for businesses during the crisis. In addition, the loan will promote economic and fiscal recovery in the post-pandemic period.
LOAN COMES AT A CRUCIAL MOMENT IN JAMAICA’S FIGHT AGAINST COVID-19
Commenting about the loan, IDB Country Representative and manager of the Caribbean Department, Therese Turner-Jones, remarked that, “this loan comes at a crucial moment in Jamaica’s fight against COVID-19 as the country begins the process of vaccinating its population to save lives, but also as it prepares to ramp up economic activity in the face of the economic fallout in 2020.”
She expressed the hope that these resources will help with both the health and recovery of the country.
Jamaica, like other Caribbean countries, has been hit hard by the pandemic as nearly a third of its output and employment are linked to the tourism sector. The IDB loan will help finance cash transfers to employees, grants to low-income informal workers, vulnerable groups and the unemployed, and provide student loan relief.
It will support small business grant programmes, especially in the tourism sector. The IDB loan will also support measures to strengthen fiscal institutions to improve efficiency and transparency of public investment as well as the formulation of strategies and public policy responses to limit the economic fallout of the crisis and bolster subsequent economic and fiscal recovery efforts.
The IDB loan has a 20-year maturity and 5.5-year grace period and its interest rate is LIBOR-based. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean.
The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.