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Jamaica pledged $2 billion for restructuring

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(Globalpost/GlobalPost)

Three key international lenders announced preliminary approval Monday for nearly $2 billion in loans to support a sweeping restructuring program for impoverished Jamaica.

The International Monetary Fund, the World Bank and the Inter-American Development Bank said they were ready to provide new support after Kingston showed its commitment to reforms.

The World Bank and IDB were putting up $510 million each to supplement a $958 million four-year loan from the IMF.

The loans all still need final approval from the respective boards of each institution.

The World Bank and IDB said in a statement that the loans constituted confidence in Jamaica's macroeconomic stabilization program.

"Jamaica has taken the bold decision to tackle the structural impediments to growth that have hindered its development for decades," they said.

The IMF's portion of the program -- increased by some $200 million from the figure earlier envisaged -- was set after the government successfully pulled off a huge domestic debt swap.

The bond swap, completed on February 28, was aimed at replacing high-cost debt with bonds issued at lower rates, in order to reduce the government's debt service burden.

It effectively cut the interest cost, but not principal, on nearly half of the country's 860 billion Jamaican dollars ($9.0 billion) in domestic debt.

The IMF stressed the need for Kingston to follow through with restructuring.

The program "crucially depends on full and timely policy implementation by Jamaica of a coordinated set of reforms, to strengthen the public finances, restore debt sustainability, enhance growth, and bolster the resilience of the financial sector," the Fund said in a statement.

"Recognizing the sacrifice involved for the Jamaican people, the strategy also aims to minimize the impact on the poorest and most vulnerable."

The World Bank said it will craft a new partnership strategy with the Jamaican government designed to enhance economic growth, generate jobs and fight poverty.

"The IDB and the World Bank share the high priority assigned by the Government to restoring macroeconomic stability and recognize the significant steps already taken to achieve this," they said.

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http://www.globalpost.com/dispatch/news/afp/130408/jamaica-pledged-2-billion-restructuring