Above: Kingston (CJ Photo)

By the Caribbean Journal staff

Jamaica has reached its long-awaited agreement with the International Monetary Fund, the organization announced in a statement Friday.

The staff-level agreement is on the key elements of an economic programme that can be supported by a 48-month arrangement under the fund’s Extended Fund Facility.

The agreement is in the amount of about $750 million, or 175 percent of quota.

It comes four days after Jamaica announced it would be making a debt exchange offer; that offer led to credit downgrades by both Standard & Poor’s and Fitch.

Jamaica and the IMF have agreed on understandings reflected in the government’s economic programme, the fund said.

That was stated in a letter of intent that will be reviewed by IMF management and finalized before the agreement is approved, the IMF’s Jan Kees Martijn said.

The staff said the Executive Board would consider the proposal by the end of March, “subject to the timely completion of prior actions to be taken by the Jamaican government and obtaining necessary financing assurances.”

“The authorities have announced a debt exchange that, along with the fiscal adjustment and structural reform measures in the economic program, will help reduce Jamaica’s medium-term financing needs and contribute to debt sustainability,” he said. “In addition to continued support from international financial institutions and other official creditors, the success of the authorities’ program will depend critically on a high rate of participation of private creditors in the debt exchange. All these elements will help secure financing assurances for a Fund-supported program.”

Jamaica currently has an IMF quota of about $434 million. It became an IMF member in 1963.

The main objective of the reform programme is to contain Jamaica’s “rising economic and external vulnerabilities,” following what the fund called three decades of “very low economic growth.”

“The programme also aims to promote macroeconomic and financial stability, including through achieving and sustaining higher primary fiscal surpluses that can help underpin debt sustainability, pave the way for private-sector led growth through the implementation of a comprehensive set of structural reforms, and promote social stability through enhanced social protection for the most vulnerable,” Martijn said.

The reforms will cover several areas, including strengthening public finances through tax reform and improved public management, enhancing financial sector resilience and protecting the “most vulnerable” and promoting economic self-reliance, among other components.