(Jamaica Gleaner) Finance Minister Audley Shaw says Jamaica is planning to return the bailout funds it got from the International Monetary Fund (IMF) as he moves to re-engineer the debt-servicing bill on padded foreign reserves.
He gave few specifics about the plan – telling Sunday Business that he would be guided by the central bank on how the give-back would be executed – or whether the targeted funds involved the untapped capital initially earmarked for rescuing financial companies and banks that were later added to the country’s reserves.
The finance minister, who initially raised the issue at a forum in Kingston, said Jamaica’s macro-economic indicators were looking favourable, but he also said that the give-back did not change the plan to seek an extension of the current IMF agreement.
“The economy is stable. The exchange rate is stable. Foreign exchange is not in short supply. Both the net international reserves and the gross reserve are at record high to the point that we are now contemplating that of the funds we have received from the International Monetary Fund,” he said Thursday at a small-business mingle.
“We are contemplating saying to the IMF we want to give back some of that money to you because we really don’t need that money, and keeping that money in the reserves is costing us. We are saying that we have kept the fiscal situation so tight and so disciplined that we are in a position to say to the IMF, take back some of the money.”
The net reserves stood at US$2.3 billion at the end of May. But Shaw also side-stepped answering how much would be returned.
“I would not know that now and would have to be advised by the Bank of Jamaica,” he told Sunday Business.
The announcement comes amid speculation that Jamaica might have failed the December-quarter test, whose results are still pending, but this has been denied by Shaw, while IMF representatives in Jamaica have said they would offer no specific comments ahead of the IMF’s board review.
In February 2010, the IMF approved a 27-month standby arrangement with Jamaica, which included borrowings of US$1.3 billion and the Financial Sector Support Fund (FSSF) of US$950 million.
The FSSF was seeded by the IMF’s US$450 million, IDB US$300 million, and World Bank US$200 million, and the resources were distributed upfront.