Policy reform in support of private investment (ESF cash transfer)

Program funds will be used to import U.S. goods for the private sector. The initial tranche of $5 million will be conditioned on the Government of Jamaica"s (GOJ) progress in carrying out the macroeconomic reform program mandated by the InterAmerican Development Bank and other multilateral lenders, with emphasis on liberalizing the foreign exchange regime, reforming monetary and fiscal policies, and agreeing to study the need for institutional changes in the role and capabilities of the Ministry of Finance. Subsequent tranches will depend on continued progress in these areas. The GOJ will set aside the local currency equivalent of program funds for: USAID/J operating expenses; counterpart contributions to USAID and other donor projects; GOJ projects; and related audit services. Amendment of 9/24/92 authorizes additional balance of payments assistance and defines a policy conditionality matrix for FY"s 1992 and 1993. The matrix includes four non-negotiable, core conditions: liberalization of the foreign exchange regime; monetary and fiscal policy reform; strengthening the fiscal policy process; and meeting privatization targets. The GOJ must also demonstrate progress on at least three of the following six secondary conditions: (1) transferring Bank of Jamaica losses to central GOJ accounts; (2) enforcing collection of the General Consumption Tax of 10/91; and (3-6) passing legislation to encourage employee stock option plans, improve the business climate, modernize securities markets. and allow credit unions to charge and pay market rates of interest. A final secondary condition, but one which the GOJ must fulfill, is monthly publication of monetary and reserve data. (PD-ABF-488)