IMF agrees on $750 mn loan to Jamaica

The International Monetary Fund announced Friday it had reached an agreement with Jamaica for a fresh $750 million loan, after the Caribbean country launched a crucial debt swap earlier this week.

"The mission has reached a staff-level agreement with the Jamaican authorities on the key elements of an economic program that can be supported by a 48-month arrangement under the Extended Fund Facility," the IMF said in a statement.

The Fund said the loan could be approved by the IMF executive board 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 agreement came after Prime Minister Portia Simpson Miller and Finance Minister Peter Phillips announced on Monday an ambitious domestic program to swap high-yield government debt for lower-yield paper.

The swap, the country's second debt restructuring in three years, was crucial to lowering the government's debt service burden, which currently sucks up 55 percent of government spending.

The swap was a condition set by the IMF for a new financing program, said Phillips.

The debt swap and other fiscal and structural reforms in Kingston's economic program "will help reduce Jamaica's medium-term financing needs and contribute to debt sustainability," the IMF's Jamaica mission chief Jan Kees Martijn said in a statement.

"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," Martijn said.