REPORT TO CONGRESS ON

THE INTERNATIONAL MONETARY FUND’S

LOAN TO JAMAICA AND BARBADOS

A Report to Congress

consistent with

Section 1501 of the

Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010

United States Department of the Treasury

July 2, 2019
Introduction 

This report provides an assessment of the likelihood that the International Monetary Fund (IMF) 

loans to Jamaica (approved in 2016 but has not disbursed as the program is precautionary) and 

Barbados, made in 2018, will be repaid in full. This report is required by section 1501 of the 

Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010.

1

 Both countries had debtto-GDP ratios greater than 100% at the time of the loan and are not eligible for assistance from 

the International Development Association. 

JAMAICA

At the time of the initial program approval in May 2013, Jamaica’s public debt was 145% of its 

GDP, a number which IMF staff estimates will fall to 99.6%2of GDP in FY 2018/193. Its 

performance under successive IMF programs has been remarkably strong. 

As directed by section 1501, and consistent with its longstanding practice with respect to all 

loans, the Office of the United States Executive Director (OUSED) at the IMF, in close 

coordination with the Treasury Department, conducted a careful and thorough evaluation of the 

proposed program for Jamaica when it was submitted to the IMF Executive Board. The OUSED 

and Treasury continue to monitor the progress under the program. 

Overview

On November 11, 2016, the IMF Executive Board approved a three-year Stand-By Arrangement 

(SBA) in the amount of SDR 1.195 billion (about $1.6 billion at the time of approval) for 

Jamaica. The Jamaican authorities continue to view the SBA as precautionary; they have not 

drawn, and do not intend to draw, financing from the IMF unless external shocks—e.g., a sharp 

increase in oil prices, global market volatility, or natural disasters—generate an actual balance of 

payments need. This SBA replaced the country’s Extended Fund Facility (EFF), approved in 

May 2013 for the amount of SDR 615.38 million (about $932 million at the time of approval). 

The main pillars of the SBA include: (i) reorienting fiscal policy to better support growth and 

reduce poverty; (ii) reducing public debt to 60% of GDP by FY 2025/26 (the year ending March 

2026) by maintaining a primary surplus of 7% of GDP for the duration of the program; (iii) 

building the foundation for monetary policy to move to inflation targeting; and (iv) augmenting 

financial sector resilience and inclusion. 

Jamaica has by now established an exemplary multi-year track record of program ownership and 

implementation, under both of Jamaica’s leading political parties. Looking back to Jamaica’s 

previous EFF, the authorities successfully completed 13 program reviews, including maintaining 

 

1

P.L. 111-203; codified at 22 U.S.C. 286tt(b), section 68(b) of the Bretton Woods Agreements Act: “Within 30 days 

after the Board of Executive Directors of the Fund approves a proposal [to make a loan to a country whose public 

debt exceeds gross domestic product and is not eligible for assistance from the International Development 

Association], and annually thereafter by June 30, for the duration of any program approved under such proposals, 

the Secretary of the Treasury shall report in writing . . . assessing the likelihood that loans made pursuant to such 

proposals will be repaid in full. . . .”

2 FY2018/19 figures are still estimates due to the time lag in preparation of official statistics by Jamaican authorities.

3

Jamaican fiscal year runs from April 1 to March 31.
a primary fiscal surplus of at least 7% of GDP over the lifetime of the EFF so as to markedly 

improve debt sustainability and be in a position to reduce debt-to-GDP down to 60% by FY 

2025/26. Jamaica also made important progress under the EFF to restore macroeconomic 

stability: the exchange rate substantially adjusted toward its equilibrium level under a more 

flexible regime, inflation fell, and the central bank began to rebuild foreign exchange reserve 

buffers.

Under the current SBA, Jamaica has continued this positive trajectory. On March 28, 2019, 

Jamaica successfully concluded its fifth review on schedule. Treasury shares the IMF staff view 

that program implementation remains robust five years into economic reforms. Jamaica met all 

quantitative criteria for end-December 2018; the authorities have also passed amendments to the 

Bank of Jamaica’s (BOJ) governance framework to improve governance and independence as 

part of the program’s structural reforms. Importantly, program performance remained strong 

even following a change in government in early 2016, signaling a strong political consensus for 

reforms embodied in the IMF SBA. Fiscal consolidation has underpinned an increasingly stable 

macroeconomic picture. The latest IMF program review estimated that the public debt-to-GDP 

ratio fell to 99.6% in March 2019 from a peak of 145% in May 2013. Markets rewarded Jamaica 

for its strong policy track-record by upgrading the country’s credit rating and lowering sovereign 

bond yields to historic lows. The IMF scheduled the sixth and final review for the fall of 2019. 

Debt Status

Jamaica has reduced its public debt-to-GDP ratio by almost 45 percentage points since the start 

of its prior EFF in 2013, faster than the IMF originally anticipated, as the authorities 

supplemented aggressive fiscal consolidation with successful debt management operations. The 

IMF estimates debt-to-GDP to be 99.6% as of the end-March 2019, a reduction of 14% from the 

November program approval. As Jamaica proceeds with implementation of structural reforms,

improvements in public revenue and stronger GDP growth should help further reduce the debt 

burden. Jamaica’s Fiscal Responsibility Law, which places a floor on the overall fiscal balance, 

serves as a concrete policy measure to achieve the debt-to GDP ratio of 60%4by 2026. 

Debt Management Strategy

The government’s primary objective is to keep Jamaica’s public debt on a downward trajectory

to make space for essential public services and maintain access to debt markets. In order to meet 

this objective, the government remains committed to running primary surpluses that allow for a 

reduction in the level of outstanding debt-to-GDP. Jamaica adjusted the primary surplus 

downward from 7% to 6.5%, but this lowering of the primary surplus target will not materially 

impact Jamaica’s ability to meet the 60% debt-to-GDP target by FY 2025/26. The government 

has also implemented a number of structural reforms, including enhancements to the central 

bank’s governance framework to improve central bank governance and independence. The 

government has pledged to reduce the public sector wage bill by rethinking the compensation 

structure and composition of the workforce over a 4-year wage settlement period, via an 

agreement negotiated with public sector unions. Planned investments in farming infrastructure 

such as rural roads and irrigation should boost Jamaica’s key agriculture sector while building 

 

4 This figure is calculated according to the debt methodology of Jamaica’s Fiscal Responsibility Law, which differs 

from the IMF program’s methodology primarily by excluding debt to the IMF held by the BOJ.
resilience against frequent tropical storms. The IMF projects that public debt-to-GDP will 

continue to decline after the program expires in late 2019. 

Vulnerabilities 

Growth and job creation dividends from the reforms have been slow to materialize, posing risks 

to Jamaica’s strategy to further reduce debt and free up fiscal space for productive investments. 

Persistent below-potential real GDP growth rates, averaging only 0.9% since reforms began in 

2013, could lead to decreased public support (although official commitment to the program has 

remained strong to date). Further, if the authorities are unable to effectively address high crime 

rates, expand private sector access to finance, and raise necessary infrastructure investment, 

these factors could impede private sector activity, keeping growth rates sluggish. 

Notwithstanding sluggish growth, success by the central bank in taming inflation, together with 

historically low unemployment, appear to have bolstered political support to continue on the 

reform path.

At the macro level, external shocks such as a sharp rise in risk premia due to volatility in 

international markets and an economic slowdown in key trading partners are downside risks to 

growth. Another vulnerability is volatility in international oil prices, as higher oil prices would 

tend to increase the current account deficit and create depreciation pressures on the currency. 

Finally, Jamaica remains highly exposed to the risk of significant weather-related natural 

disasters.

Public debt in foreign currency now accounts for about 61% of total public debt. However, the 

government’s successful reopening of domestic debt markets in February 2016 and strong 

demand for domestic currency government securities in 2018 should help rebalance the 

composition of external versus domestic debt and ameliorate foreign currency risk over time. 

Domestic debt market development requires a series of well-sequenced reforms over the short 

and medium term that will reduce key inefficiencies in the market. 

Overall Assessment

Jamaica remains heavily indebted and vulnerable. However, the EFF was highly successful in 

helping to address these issues, and the current precautionary SBA is providing a solid 

framework for the country to continue on a sustainable debt path and mitigate its vulnerabilities. 

The Jamaican authorities continue to demonstrate their extraordinary commitment to meeting 

IMF program objectives, and they are on track to maintain a strong level of performance and 

country ownership. Based on these factors and the IMF’s preferred creditor status, the Treasury 

Department assesses that the IMF’s loan to Jamaica is likely to be repaid in full.

BARBADOS

Barbados has struggled to break free from a vicious cycle of low or negative growth since the 

2008-09 financial crisis. Public debt reached 126% of GDP (as of end-2018) after peaking in FY 
2017/185

at around 160%. Barbados has embarked on a comprehensive Economic Recovery and 

Transformation (BERT) plan aimed at restoring fiscal and debt sustainability. 

As directed by section 1501, and consistent with its longstanding practice with respect to all loans, 

the Office of the United States Executive Director (OUSED) at the IMF, in close coordination with 

the Treasury Department, conducted a careful and thorough evaluation of the proposed program

for Barbados when it was submitted to the IMF Executive Board. The OUSED and Treasury 

continue to monitor the progress under the program. 

Overview

On October 1, 2018, the IMF Executive Board approved a four-year Extended Fund Facility 

(EFF) in the amount of SDR 208 million (about $290 million at the time of approval) for 

Barbados. Barbados’ international reserves rebounded sharply to $531 million as of end of 

March 2019 from $220 million at the beginning of the program. An additional $175 million in 

policy based loans from multilateral development banks and suspension of debt service on 

external commercial debt has aided the accumulation of foreign currency reserves.

The main pillars of the EFF include: (i) fiscal adjustment that adopts a primary surplus of 6% of 

GDP in the medium term; (ii) State Owned Enterprise (SOE) reforms to reduce transfers that 

have become a significant burden on the budget; (iii) external debt restructuring with foreign 

commercial creditors; (iv) maintaining the stability of the financial system following the impact 

of domestic debt restructuring; (v) growth-oriented reforms aimed at supporting both the 

traditional and non-traditional private sector. 

Under the current EFF, the country authorities have shown strong ownership of the reform effort 

and program implementation. The rapid completion of a domestic debt restructuring has been 

helpful in reducing economic uncertainty and resulted in an immediate reduction in the debt-toGDP ratio of about 30 percentage points in nominal terms. Barbados met all performance 

criteria for end-March, and has made progress on structural reforms, with six structural 

benchmarks implemented either on time or with minor delays. The government intends to 

increase its 3.5% primary surplus in FY 2018/19 to 6% in FY 2019/20. 

This program involves significant risks due to the extensive nature of the structural reforms and 

adjustments needed with limited implementation capacity. However, Barbados has shown strong 

ownership of the reform effort by demonstrating important policy measures undertaken since the 

start of the program. With strong implementation of the program, we expect Barbados to repay 

the IMF in full. The IMF scheduled the second review for the fall of 2019.

Debt Status

At the time of program approval, Barbados’ public debt reached an unsustainable 157% of GDP. 

Barbados completed a comprehensive domestic debt restructuring in October 2018 that 

significantly reduced its debt to commercial banks, insurers, central bank, and national insurance 

scheme. Public domestic debt has decreased by 36% of GDP from 129% in April 2018 to 93% 

of GDP in March of 2019. During the same time frame, external debt increased by 6% from 

 

5 Barbadian fiscal year runs from April 1 to March 31
28% to 34% of GDP due to a $100 million loan from the InterAmerican Development Bank and 

an additional $75 million loan from the Caribbean Development Bank used to increase foreign 

reserves. These loans and a moratorium on payments to external commercial creditors were 

crucial in replenishing foreign reserves. 

The overarching objective and long-term anchor of the IMF program is to reduce public debt to a 

sustainable level of GDP by March 2024 (the IMF program suggests that an anchor of 60% 

debt/GDP by 2024 should guide macroeconomic policies, which is consistent with the debt/GDP 

target used by Jamaica, and the IMF’s advice given to other small islands in the Caribbean). 

Implementation of structural reforms, improvements in public revenues, and the eventual 

recovery in GDP growth should help Barbados meet this target.

Debt Management Strategy

The external commercial debt moratorium is still ongoing. The moratorium on payments in May 

2018 to stabilize foreign reserves has led to arrears to foreign commercial creditors. 

Negotiations are proceeding with the external commercial creditors to restructure outstanding 

debt to sustainable levels. Barbados has taken steps towards reaching agreement with external 

creditors by maintaining transparency through the negotiation process, although the parties have 

not yet concluded negotiations. Barbados has also agreed to repay small loans from external 

sovereign creditors (China and Canada). 

The government’s primary objective is to implement a reform program that supports higher 

private-sector led investment and growth and restores confidence in the economy. Growth 

oriented policies and fiscal discipline will allow the government to achieve a debt-to-GDP ratio 

of 80% by FY 2027/28 and 60% by FY 2033/34. In order to reach this objective, the 

government has undertaken a comprehensive restructuring of its domestic debt and committed to 

reach a 6% primary fiscal surplus over the medium term. 

Implementation of SOE reforms will be critical to achieving a more sustainable fiscal position. 

Under the Financial Management and Audit law passed in January 2019, the government must 

approve all SOE borrowing and SOEs submit standardized quarterly reports on SOE 

performance. This reform will provide oversight of government debts and reduce transfers. 

The Corporate Income Tax (CIT) reform to unify the treatment of domestic and international 

companies to comply with EU and OECD guidelines should foster a business-friendly 

environment in Barbados, further stimulating the economy and decreasing the debt-to-GDP ratio. 

The IMF projects a 5-7% decline per year in gross public sector debt from 2019-2024 debt 

reduction and GDP growth strategies.

Vulnerabilities 

Key risks to the debt reduction strategy include limited implementation capacity of the 

government, untested ability to maintain fiscal discipline/high surpluses over a sustained period 

of time, and risks related to the external debt restructuring. Reforms to SOE reform will also 

include increases in tariffs and fees charged by SOEs (e.g. bus fares, water rates, and travel 
development fee) which may foster public discontent and lead to weakened political willpower 

to persevere with necessary reforms. 

At the macro level, external shocks such as a sharp rise in risk premia due to volatility in 

international markets, and economic slowdown in trade partners are vulnerabilities to growth. A 

key vulnerability is a disorderly Brexit or a U.S. slowdown, both of which would reduce the 

number of tourists visiting from key source markets (U.K. tourists are 33% of tourist market 

share and U.S. tourists are 30%). The authorities have initiatives to diversify the economy into 

new areas over time such as renewable energy, high-tech, and software development to 

complement the traditional services sector, but these nascent industries will take time to develop. 

Finally, Barbados remains highly exposed to the risk of significant weather-related natural 

disasters. 

Overall Assessment

Barbados remains heavily indebted and vulnerable. However, its comprehensive domestic debt 

restructuring was highly successful in reducing the overall debt burden and putting the country 

on a path towards sustainability. The EFF also provides a strong framework to help enable 

significant fiscal consolidation and an increase in foreign reserves. The Barbadian authorities 

continue to demonstrate their commitment to meeting IMF program objectives, including 

through strong public communications to maintain public support for the reform effort. Based 

on these factors and the IMF’s preferred creditor status, the Treasury Department assesses that 

the IMF’s loan to Barbados is likely to be repaid in full.