Several business leaders have endorsed the government’s decision to seek access to the International Monetary Fund’s (IMF) Rapid Financing Instrument (RFI) as part of measures to cushion Jamaica against the projected fallout as a result of the coronavirus (COVID-19) pandemic.
The RFI provides rapid financial assistance to IMF member countries facing urgent balance of payment requirements, consequent on extenuating circumstances such as natural disasters, commodity price shocks, and emergencies resulting from fragility, without the need for a full-fledged programme.
The IMF has earmarked US$50 billion to help member countries, particularly low-income and emerging market states, to tackle challenges associated with COVID-19. The World Bank, which has a similar facility, has also pledged funding support to affected countries.
Minister of Finance Dr Nigel Clarke indicated on Thursday that he has written to IMF Managing Director, Kristalina Georgieva, on behalf of the government, requesting access to the RFI.
Jamaica Employers’ Federation (JEF) President, David Wan, says the decision of the Government is “prudent”, in light of the fact that “we don’t know how long the outbreak is going to last”.
He notes that while the Bank of Jamaica (BOJ) has substantial net internal reserves (NIR) totalling some US$3.2 billion, supporting revenue inflows may fall short of projections consequent on the slowdown in economic activity due to COVID-19.
“I think the IMF knows that COVID-19 will affect a lot of countries… so they have [made the RFI available] as a method of providing assistance, without the need of entering into a programme arrangement. Given all that is happening locally and globally, it’s good to have the RFI as an intervention option,” Wan tells JIS News.
Jamaica Chamber of Commerce (JCC) President, Lloyd Distant Jr, also agrees that the government’s move to access the RFI “is the right thing to do”. “I think the view that many of us have is that the writing was on the wall that Jamaica would have needed [funding] support through this pandemic,” he said. “In this regard, with provisions [like the RFI], you want to join the line from very early. That said, it is the right and appropriate move for us to seek this level of support… and we do endorse the government’s decision,” he adds.
Distant says the JCC is hopeful that the administration will similarly apply for access to the World Bank’s RFI.
Small Business Association of Jamaica (SBAJ) President, Hugh Johnson, says the organisation lauds the Government on its move. “We believe that the decision to access the RFI facility should have been made earlier. But we, nonetheless, we welcome the move… a prudent move… at this stage,” he adds.
Meanwhile, the Jamaica Manufacturers and Exporters’ Association (JMEA) in a statement describes the decision as “forward-thinking and the right move”, given the economic impact of COVID-19 on the country’s finances.
Noting that “no industry has been spared”, the association argues that the anticipated fallout in revenues coupled with fiscal interventions to cushion the nation’s most vulnerable citizens, along with other measures implemented in response to the crises, “will undoubtedly place immense strain on the government’s coffers”.