IMF Comes Through for Jamaica

The IMF has approved a 27-month $1.27bn stand-by agreement (SBA) for Jamaica, of which $640m will be made available immediately to establish a financial stability support fund. The funds aim to support Jamaica’s reform program to address deep-seated structural weaknesses in the economy, increase its growth potential, and make it less vulnerable to external shocks, says the IMF. The SBA is expected to generate about $1.10bn in finding from other international financial institutions. In addition, Jamaica closed Wednesday a JAD700bn ($7.86bn) exchange offer to holders of 350 different classes of domestic securities, with final results due out next week that are expected to show an acceptance rate of over 95%, according to an official familiar with the process. Burdened with costly interest rates, the government offered holders a par exchange for bonds with lower interest rates and longer maturities. The maturity extension should be an average 2.5 years, with interest rates lowered from an average of 18%-19% to 12%, according to ratings agency and sell-side analysis. The government claims the operation will save JMD40bn annually in interest payments. Citi managed the process.