FEARS THAT the Bruce Golding-led administration could be faced with a crisis in servicing its debt obligations have been removed, at least for now, with the signing yesterday of a US$329-million loan from the Inter-American Development Bank (IDB).

Prime Minister Bruce Golding said the administration would be able to pay a €200-million bond due in February.

With the pending maturity of government loans and the country's high indebtedness, there were concerns that the Government might be faced with a crisis.

Clearing february debt

"So we will be drawing that cheque and we will be paying out that €200 million that becomes due on February 9," Golding said yesterday at Jamaica House during the signing with IDB President Luis Alberto Moreno.

The Jamaica Labour Party (JLP) had signalled its intention, during the run-up to the 2007 general election, that it would be engaging the multilaterals to access loans.

Golding argued that the move to approach the multilaterals was now paying off because access to the capital markets for development needs were almost closed.

Grateful for aid

"Were it not for the support that we got from the multilaterals, principally, the IDB, I shudder to think what Jamaica's alternatives would have been," he said.

The prime minister said the country was now positioned to meet its obligations and to ensure adequate supply of foreign exchange in the market.

Since late last year, the Jamaican dollar has increasingly come under pressure with the US currency now selling for more than J$80.

The IDB loan to Jamaica will support government policies and specific projects.

According to Golding, the loans were provided on the basis that those policies would be implemented "faithfully and steadfastly".

Call for unity

Despite painting a grim picture of a country facing enormous challenges, Golding said the administration would provide the bases for the economy to rebound at the end of the current global crisis.

IDB president Luis Alberto Moreno encouraged Jamaicans to unite as they face the effects of the global crisis.

Of the US$329 million, $300 million has been earmarked for liquidity support for the private sector. The Programme for Advance-ment Through Health and Education will receive US$15 million while US$14 million will be set aside for the Primary Education Support Project.

Don Wehby, minister without portfolio in the ministry of finance and the public service, said the IDB loan would be disbursed through the Development Bank of Jamaica.

Commercial banks will onlend to the productive sector at an estimated interest rate of between 10 per cent and 12 per cent.

Economic difficulties outlined by the PM: