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Madam Speaker, on various occasions I have reported to Parliament on the series of initiatives which have been taken and are planned for fiscal year 2000/2001, to bring about a final resolution of the problems in the financial sector. A critical component of this programme of activities, which I outlined in detail in my Budget presentation in April, was for Jamaica to access concessionary loan financing from multilateral institutions. These resources would be used to retire some of the FINSAC Bonds which have been used to address the solvency problems of intervened institutions – in particular Union Bank and NCB. I also indicated that the major multilateral banks, namely the World Bank and the IDB, in agreeing to assist Jamaica, had requested that this be done within the context of a Staff Monitored Programme (SMP) with the IMF. This SMP, which was essentially an elaboration of our own macro-economic programme, was approved by the IMF staff earlier this year, thus paving the way for the submission of loan applications to the multilateral bankers. Madam Speaker, to refresh our memories, the plan was to seek US$150 million each from the World Bank and the IDB. Subsequently, the CDB indicated its willingness to co-finance the IDB’s support to the tune of US$25 million. This brought the total amount to (US)$325 million, to be made available in two tranches. As regards the IDB loan, this was approved by its Board in mid September. I am pleased to announce that with the fulfilment of all conditionalities, the first tranche of this loan US$75 million has been disbursed by the IDB and received into the Government’s account. The first tranche of the CDB’s loan, a sum if US$12.5 million, will be disbursed during next week. I am also pleased to indicate to this Honourable House that the World Bank loan will be taken to its Board on Thursday, November 30 with the full expectation that it will be approved. In fact, I have been invited by the Vice President of the Bank with responsibility for Latin America and the Caribbean, Mr David de Ferranti, to be in Washington next week for signing of the loan agreement. Madam Speaker, I have given this report to the House as our success in obtaining these loans indicates that the programme of financing for the financial sector rehabilitation, which I articulated in the Budget presentation, is firmly on track. However, the receipt of US$75 million from the IDB and a further US$12.5 million from the CDB by next week also implies that our Central Bank’s ability to maintain stability in the foreign exchange market has been further enhanced. With the imminent approval of the
World Bank’s loan and the subsequent receipt of the first tranche of that loan –
another US$75 million, the country’s NIR and the Central Bank’s ability to
manage the foreign exchange market will be strengthened even further.
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