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No debt default in Jamaica: IMF

By John Myers, Zhu Qingxiang (Xinhua)

15:45, May 22, 2013

KINGSTON, May 22 (Xinhua) -- The International Monetary Fund (IMF) on Tuesday dismissed speculations on the likelihood of debt default in Jamaica, hailing the country's progress made in economic reform.

"We are encouraged by the steady progress that is being made. We have found a strong resolve to implement the program and that is indeed critical because we all realize the serious challenges to be overcome," Jan Kees Martijn, the IMF's mission chief to Jamaica told a press briefing in Kingston on the conclusion of a week-long routine visit to the island.

"We strongly support Jamaica in implementing the program and we stand ready to help them in further strengthening it and refining it over time," he added.

Jamaican Finance Minister Peter Phillips joined the IMF representative in denying the possibility of a default relapse for the island, whose debt to GDP ratio is some 140 percent.

"It is a strenuous program as I have said, but we have been performing on this program and we intend to do that," Phillips insisted.

"To reduce the debt burden, fiscal discipline is a critical element," Martijn said, adding it is "not easy but is realistic."

These comments came a day after the rating agency Moody's Investor Service forecast a default relapse for Jamaica.

"At the moment, we see a high probability that Belize and Jamaica will relapse into default," Moody's said in a report on Monday, warning that many Caribbean countries will be forced to restructure their national debts.

Moody's cited Jamaica's high debt to GDP ratio as one of the main reasons for a default relapse.

"We see the defaults of Belize, Jamaica and Grenada over the past year as being part of a broader debt crisis in the Caribbean," the rating agency said in the report.

Earlier this month, the IMF approved a 932.3 million U.S. dollar loan as part of a four-year program to support a comprehensive economic reform agenda in Jamaica, followed by disbursements of 510 million dollars each from the World Bank and the Inter-American Development Bank in support of the reform program.

The IMF mission chief said it was just the start of a four-year program that provides a guide "for addressing the longstanding problems of high debt and low growth in Jamaica."

"The program is doable. I have no doubt that the board of the Fund would not have approved it did they not consider it doable," Phillips assured.

The first mission review for Jamaica's program by the IMF is due in August.

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