Report No. PIN91
Jamaica CAS: Public Information Notice
World Bank Board Discusses
Jamaica Country Assistance Strategy Progress Report
On October 24, 2002, the World Bank's Board of Executive Directors discussed the
Bank Group's Country Assistance Strategy (CAS) Progress Report for Jamaica
covering the next twelve months.
Country Context: Since the last CAS for Jamaica was discussed at the Board in
November 2000, Jamaica has made considerable progress in the reform of the
financial and social sectors. The financial sector clean-up, in particular, has
been one of the fastest and most comprehensive, with the privatization of the
major financial institutions completed, the legal framework for regulation of
the financial sector overhauled, and supervision capacity strengthened, with
Jamaica largely in compliance with the Basle Core principles. As a result, the
financial sector is now in better shape than at any time in the past, even as
strengthening of insurance, pensions and non-deposit taking institutions
continues. In the social sectors, the social safety net program has been
completely restructured, with the rationalization of three existing schemes, and
the conditioning of social benefits on the children's school attendance and
health clinic visits. The Government is also putting in place a program for
HIV/AIDS prevention and control and this is now being readied for implementation
at a national level. At the same time, the Bank-supported ongoing Public Sector
Modernization Program and the Country Procurement Assessment have supported
substantive improvement in the transparency and efficiency of public management,
with the ongoing implementation of new procurement policy and procedures, and
the transfer of many responsibilities from ministries to executive agencies with
demonstrable improvement in service delivery and customer responsiveness.
Since July 2001, Jamaica has also experienced several major domestic and
external shocks: July 2001 violence in Kingston, the September 11 events, a
strike in a leading alumina producer over October-December 2001, and November
floods associated with Hurricane Michele, leading to significant loss of
infrastructure, production as well as tourism revenues. In spite of these
shocks, the Jamaican economy has shown considerable resilience, with positive
growth in 2000/01 and 2001/02 after four years of negative growth. This
resilience is displayed in the continued commitment to strong fiscal management,
a significant accumulation of external reserves, maintenance of a relatively low
poverty headcount ratio, and continued structural reforms. However, despite the
impressive policy effort, the Jamaican economy continues to be vulnerable, with
a large debt overhang , which has decreased only marginally since the last CAS.
Bank Strategy: Over the last two years, the Bank and Jamaica have developed a
productive relationship based on trust and commitment. The Bank's assistance
strategy has been closely aligned with the Government's own development
priorities and reform agenda, evidenced by the authorities' impressive track-
record in implementing the reforms agreed to, despite the intervening economic
shocks. The Bank has also tried to respond with flexibility and speed to the
multiple shocks of 2001, with an Emergency Rehabilitation Loan in December 2001,
addressing the fiscal impact of the shocks, and the preparation of a new
National Community Development Project, addressing issues of social dislocation.
At the same time, the Bank has continued to complement its focused lending



program with major analytical work relating to constraints to growth, improved
procurement and financial management, social issues such as youth at risk and
gender equality, and managing the impact of natural disasters. The
International Finance Corporation (IFC) and the Multilateral Investment
Guarantee Agency (MIGA) have also had active programs in Jamaica, with IFC
supporting investments in telecommunications and the airports and MIGA
supporting 13 active contracts in the power and financial sectors.
Bank Assistance: The Bank's assistance strategy for the next 12 months is
largely unchanged. The total package amounts to US$129.8 million. New lending
is limited to the two projects already identified in the previous CAS-the Bank
Restructuring and Debt Management Program Loan II (US$75 million) and Reform of
Secondary Education II (US$39.8 million)-as well as the National Community
Development Project (US$15 million) identified in the aftermath of September 11.
The Bank's ongoing and planned analytical work program-study on Growth and
Competitiveness, a Public Expenditure and Institutional Review and a Rural
Development Strategy-is designed to identify key interventions to support the
resumption of broad-based growth in Jamaica, and to provide an analytical basis
for its interventions in the next CAS. The Bank will begin preparation of a new
CAS in early 2003 and expects to present it to the Board before end-2003.
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