FOR OFFICIAL USE ONLY Report No: ICR00005951 IMPLEMENTATION COMPLETION AND RESULTS REPORT IBRD-92160 ON A LOAN IN THE AMOUNT OF US$150 MILLION TO Jamaica FOR THE Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) March 01, 2023 Macroeconomics, Trade And Investment Global Practice Finance, Competitiveness and Innovation Global Practice Latin America And Caribbean Region The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) CURRENCY EQUIVALENTS (Exchange Rate Effective {February 28, 2023}) Currency Unit = Jamaican Dollar (J$) J$ 154.62 = US$1 US$ 0.58 = SDR 1 GOVERNMENT FISCAL YEAR April 1 – March 31 Regional Vice President: Carlos Felipe Jaramillo Country Director: Lilia Burunciuc Regional Director: Robert R. Taliercio Practice Manager: Doerte Doemeland, Yira Mascaro Task Team Leader(s): Rohan Longmore, Fadwa Bennani ICR Main Contributor: Philip English The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) ABBREVIATIONS AND ACRONYMS BOJ Bank of Jamaica BEST Business Employee Support and Transfer of Cash CARE COVID-19 Allocation of Resources for Employees CCT Conditional Cash Transfer COVAX COVID-19 Vaccines Global Access COVID-19 Coronavirus disease 2019 CPF Country Partnership Framework CPI Consumer Price Index CRRDPF COVID-19 Response and Recovery Development Policy Financing DPF Development Policy Financing DPL Development Policy Loan DTI Deposit Taking Institution ERDPL Economic Resilience Development Policy Loan FY Fiscal Year GDP Gross Domestic Product GOJ Government of Jamaica IBRD International Bank for Reconstruction and Development ICR Implementation Completion and Results IDB Inter-American Development Bank IFC International Finance Corporation IMF International Monetary Fund LAC Latin America and the Caribbean MFIs Microfinance Institutions MLSS Ministry of Labour and Social Security MOFPS Ministry of Finance and the Public Service MOHW Ministry of Health & Wellness MSMEs Micro, Small and Medium Enterprises NIS National Insurance Scheme NDC Nationally Determined Contribution PA Prior Action PATH Programme of Advancement Through Health and Education PDO Program Development Objective PER Public Expenditure Review RI Results Indicator SET Cash Supporting Employees with Transfer of Cash SMEs Small and Medium Enterprises SP Social Protection WBG World Bank Group The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) TABLE OF CONTENTS DATA SHEET ......................................................................................................................... 1 I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES ............................................... 5 II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES .......................................... 9 III. OTHER OUTCOMES AND IMPACTS ............................................................................ 20 IV. BANK PERFORMANCE ............................................................................................... 20 V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES .......................................... 21 VI. LESSONS AND NEXT PHASE ....................................................................................... 21 ANNEX 1. RESULTS FRAMEWORK ........................................................................................ 23 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES ...... 29 ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS ........................................................................... 32 ANNEX 4. SUPPORTING DOCUMENTS ................................................................................. 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) . . DATA SHEET BASIC INFORMATION Product Information Project ID Program Name P174531 Jamaica COVID-19 Response and Recovery Development Policy Financing Country Financing Instrument Jamaica Development Policy Lending DPF Options Programmatic Regular Deferred Drawdown Option Catastrophic Deferred Drawdown Option No No No Crisis or Post Conflict Sub-National Lending Special Development Policy Lending Yes No No Organizations Borrower Implementing Agency Jamaica Ministry of Finance Program Development Objective (PDO) Program Development Objective (PDO) The development objective of this operation is to assist in Jamaica's response to the COVID-19 crisis by: (i) protecting poor and vulnerable people; (ii) supporting sustainable business growth and job creation; and (iii) strengthening policies and institutions for resilient and sustainable recovery. PROGRAM FINANCING DATA (USD) FINANCE_TBL Approved Amount Actual Disbursed World Bank Administered Financing Page 1 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) 150,000,000 150,000,000 IBRD-92160 Total 150,000,000 150,000,000 KEY DATES Concept Review Decision Review Approval Effectiveness Original Closing Actual Closing 16-Dec-2020 14-Jan-2021 18-Mar-2021 29-Mar-2021 31-Mar-2022 31-Mar-2022 RATINGS SUMMARY Program Performance Overall Outcome Relevance of Prior Actions Achievement of Objectives (Efficacy) Moderately Satisfactory Satisfactory Moderately Satisfactory Bank Performance Satisfactory RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) SECTORS AND THEMES Sectors Mitigation Co- Adaptation Co- Major Sector/Sector (%) benefits (%) benefits (%) SECTOR0_TBL Public Administration 20 5.00 5.00 Central Government (Central Agencies) 10 0 0 Other Public Administration 10 50 50 SECTOR0_TBL Financial Sector 30 0.00 0.00 Banking Institutions 30 0 0 SECTOR0_TBL Health 10 0.00 0.00 Health 10 0 0 Page 2 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) SECTOR0_TBL Social Protection 20 0.00 0.60 Social Protection 20 0 3 SECTOR0_TBL Industry, Trade and Services 20 0.00 1.00 Tourism 10 0 10 Trade 10 0 0 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 10 Fiscal Policy 10 Fiscal sustainability 10 Trade 10 Trade Facilitation 10 Trade Logistics 10 Finance 30 Financial Stability 20 Financial Sector oversight and policy/banking 20 regulation & restructuring Financial Infrastructure and Access 30 Payment & markets infrastructure 10 MSME Finance 20 Financial inclusion 10 Social Development and Protection 30 Social Protection 30 Social Safety Nets 30 Social Insurance and Pensions 20 Human Development and Gender 100 Gender 30 Disease Control 100 Pandemic Response 100 Page 3 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Environment and Natural Resource Management 12 Climate change 12 Mitigation 5 Adaptation 7 ACCOUNTABILITY AND DECISION MAKING Role At Approval At ICR Regional Vice President: Country Director: Director: Practice Manager: Rohan Longmore, Fadwa Task Team Leader(s): Rohan Longmore, Fadwa Bennani Bennani . Page 4 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES A. Context at Appraisal Context 1. This Implementation Completion and Results (ICR) report assesses the achievements of the Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531). This project was designed to support the Government of Jamaica’s (GOJ’s) response to and recovery from the health, social, and economic fallout caused by the COVID-19 pandemic. The development objectives of the operation were closely aligned with the priorities outlined in the GOJ’s pandemic response and stimulus package, and its commitment to structural reforms to support a resilient recovery and growth. The pillars of the operation were also aligned with the thematic areas of the World Bank’s COVID-19 Crisis Response Approach paper. The operation leveraged several operations including the Economic Resilience Development Policy Loan (ERDPL)1 (P170223) series and the Foundations for Competitiveness and Growth (P147665) project. The loan was approved by the Board on March 18, 2021, in an amount equivalent to US$150 million. 2. It was more appropriate to provide immediate support via a standalone DPF, rather than through the ongoing ERDPL series, for three reasons: (i) it enabled focused and fast-track support to target urgent COVID-19 response and recovery needs; (ii) the GOJ had expressed a strong preference for maintaining the structure of the ERDPL series and its reform program intact; and (iii) GOJ staff capacity was stretched due to the crisis and could focus better on preparing a standalone DPF. Nonetheless, the two operations were highly complementary. Both operations supported actions to strengthen social protection, customs management, and the fiscal responsibility framework. 3. Prior to the pandemic, Jamaica had pursued a strong program of fiscal consolidation to stabilize the economy and reduce debt. Jamaica institutionalized hard-won fiscal discipline through a Fiscal Responsibility Law, moving to inflation targeting, allowing for greater exchange rate flexibility, and strengthening oversight of the financial system. Consistent annual primary surpluses above 7.0 percent of GDP enabled the GOJ to bring down the public debt ratio by 50 percentage points to 94 percent of GDP. Low and stable inflation in the target range of 4-6 percent became the norm. Unemployment fell to its lowest levels and reserves were comfortably above 5 months of imports. The favorable turnaround in the country’s macroeconomic prospects was also reflected in the local stock exchange, which was rated as the world’s best-performing stock index in 2018. However, GDP growth remained sluggish, averaging around 1.5 percent in the four years prior to the pandemic. 4. The early stages of the pandemic had a moderate health impact for Jamaica, but the economic shock was severe. At the time of project appraisal, Jamaica’s GDP was expected to contract by 11.6 percent in FY2020/21; the eventual decline was in fact 11.0 percent. The socio-economic impact of the pandemic was particularly severe on tourism-dependent countries such as Jamaica, where the sector contributes approximately 30 percent of GDP and supplies a third of all jobs. The GOJ took early and aggressive measures, starting in March 2020, to prevent the spread of infection, including cancelling all major public and private gatherings, closing the border and schools, and quarantining entire communities. The GOJ also instituted its COVID-19 Allocation of Resources for Employees (CARE) program to protect the poor and vulnerable who lost jobs and livelihoods, as well as several initiatives to support businesses to ensure a rapid and sustainable recovery. Specifically, the Government support was broken 1The second operation in the ERDPL series was cancelled at the request of the Government. With the change in priorities occasioned by the pandemic, several key reforms were delayed and unlikely to have been completed even with an approved extension of one year. Page 5 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) into the Supporting Employees with Transfer of Cash (SET) and the Business Employee Support and Transfer of Cash (BEST) programs. 5. Owing to the swift and comprehensive response of the Government to the COVID-19 crisis, the rebound in economic activities was stronger than anticipated. With the gradual easing of mobility restrictions and the introduction of the resilient corridor within the tourism sector, beginning in June 2020, economic activity quickly picked up in the ensuing quarters. Real GDP rose by 8.3 percent in FY2021/22, driven by private and government consumption and external demand, while there was some slowdown in investments. Government consumption remained robust amidst a continuation of efforts to stem the impact of the pandemic on livelihoods. The rebound was heterogeneous across sectors, with tourism and construction among the best performing sectors despite high vaccine hesitancy. In this context, the unemployment rate fell to a historic low of 6 percent in April 2022. 6. After years of low and stable inflation, there has been a sustained increase since June 2021. Strong domestic demand, adverse weather conditions for agricultural produce, and price pressures from the conflict in Ukraine pushed inflation to 10.2 percent in August 2022 (year-on-year). Price increases have eroded households’ purchasing power and undermined poverty reduction. As inflation expectations moved above the inflation targeting band (4-6 percent), the central bank adjusted its benchmark policy rate by a total of 600 basis points to 6.5 percent between October 2021 and September 2022. 7. The fiscal account recorded a surplus of 0.9 percent of GDP in fiscal year 2021/22. Higher tax and non-tax collections boosted revenues to 31.0 percent of GDP. Spending fell by 2.4 percentage points to 30.1 percent of GDP, reflecting lower program, compensation, and capital expenditures. In this context, the public debt to GDP ratio fell by 15.7 percentage points to 94.8 percent of GDP. The fiscal accounts should remain in surplus over the medium term with spending averaging lower that in FY2020/21 as the COVID-19 social assistance and business support programs are phased out. As such, financing needs will decline pulling debt below 90 percent of GDP and closer to the target of 60 percent of GDP. Nevertheless, the trajectory for public debt remains vulnerable to uncertainties related to COVID-19, tightening global financial market conditions, fiscal risks posed by state-owned enterprises and natural disaster shocks. 8. Jamaica's current account deficit narrowed to 1 percent of GDP in FY 2021/22, owing to a 324 percent increase in visitor arrivals and a 10.9 percent increase in remittances. However, tourist numbers are still down 49 percent from pre-pandemic levels. Jamaica ended FY 2021/22 with US$4,325 million in official reserve assets (equivalent to 6.4 months of total imports), up 1.9 percent from the year prior. Most of the increase was driven by Special Drawing Rights and the International Monetary Fund (IMF) Reserve Position. The current account is expected to record an average annual deficit of 2.6 percent of GDP over the medium term as rising fuel prices increase spending on imports and remittance growth slows. Private flows are expected to improve, reducing the need for public sector borrowing to finance the deficit. Gross reserves are expected to remain at healthy levels, averaging more than 5 months of imports. 9. Financial sector soundness indicators remained broadly positive, and profitability has improved to pre- crisis levels. Credit to the private sector has slowed down since the onset of the COVID-19 crisis but has picked up slightly in FY2021/22. Annual growth in deposit-taking institutions (DTIs) loan portfolio decelerated from 15.8 percent in FY 2019/20 to 9.4 percent in FY2021/22. Although banks’ profitability was adversely impacted by the crisis, banks remained profitable and have recovered to pre-crisis profitability levels. System-wide liquidity and capital adequacy indicators have remained comfortably above the statutory requirements, with a capital adequacy ratio of 14.2 percent and all DTIs reporting a liquidity coverage ratio (LCR) in excess of 100 percent. Meanwhile, the non-performing loans ratio has improved by 0.2 percentage points (to 2.7 percent) in the first six Page 6 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) months of 2022 despite the decline in the stock of loans under moratoria and has remained relatively stable following a 0.6 percentage point increase in 2020. 10. The national poverty rate is estimated to have declined to 12.6 percent in 2022, from 23 percent in 2020, though still above the pre-pandemic levels. Over 150,000 workers either lost their jobs or dropped out of the labor market between January and July 2020. Although the employment rate slightly surpassed pre-pandemic levels in October 2021, nearly 50,000 workers still had not returned to the labor force, foregoing earned income. Lower-income households, in particular, are feeling strained as prices continue to rise. Inflation will need to be kept in check to protect purchasing power. 11. The economy is projected to grow over the medium-term although significant risks remain. Real GDP growth is expected to average 1.4 percent over the medium term. Agriculture and tourism will remain key drivers of growth and will be supported by mining and quarrying given the planned reopening of a major alumina plant in 2023. It is expected that monetary authorities will continue their tightening cycle to stymie inflation. The external sector will remain in deficit, affected by the conflict in Ukraine. Tourism is expected to reach pre- pandemic levels by FY2023/24, closing the output gap in the same period. Table 1. Jamaica: Key Macroeconomic Indicators (FY2019/20 - 2024/25) Post-COVID 2019/20 2020/21 2021/22e 2022/23f 2023/24f 2024/25f Annual percentage change Real Economy Real GDP growth (percent) -0.1 -11.0 8.3 2.2 1.5 0.4 CPI (period average) 4.7 5.3 7.4 9.4 8.2 7.5 CPI (eop) 5.9 4.5 11.3 7.6 7.9 7.3 Monetary and financial BOJ policy rate (eop/latest) 0.5 0.5 4.5 … … … Credit to private sector (Percent change of M3) 12.3 6.9 7.0 … … … Non-performing loans/total loans (eop/latest) 2.2 2.7 2.6 … … … Percent of GDP Fiscal Budgetary revenue 30.6 29.5 31.0 30.3 30.6 31.0 Budgetary expenditure 29.7 32.6 30.1 30.0 30.3 30.8 Primary balance 7.1 3.5 6.8 5.9 5.3 4.8 Overall fiscal balance 0.9 -3.1 0.9 0.3 0.3 0.3 Public Debt 94.7 110.5 96.9 89.8 83.6 78.3 External Debt 58.8 69.7 61.2 58.3 54.3 50.8 Domestic Debt 35.9 40.8 35.7 31.5 29.4 27.5 External Current account balance -1.7 -1.1 -1.0 -3.3 -3.1 -1.3 Exports of goods, f.o.b 9.8 9.3 9.4 9.3 9.3 9.1 Export of services 27.2 11.0 22.8 21.4 21.4 21.4 Imports of goods, f.o.b. 34.7 29.7 31.3 36.6 36.0 35.5 Imports of services 16.4 12.4 22.1 17.2 17.5 17.8 Foreign direct investment 0.8 1.3 1.9 2.2 2.4 2.4 Gross reserves (US$ millions) 3,689 4,244 4,325 4,382 4,592 4,801 Page 7 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) In months of imports 5.5 9.0 6.4 6.0 6.3 6.6 Memorandum items Nominal GDP (J$ billions) 2121.1 1948.8 2321.5 2415.8 2522.8 2629.6 Net international reserves (US$ millions) 3237.7 3319.3 3675.8 3811.5 3915.4 4019.4 Exchange rate (avg., J$/US$) 135.2 145.6 153.5 … … … Source: Jamaican authorities, IMF, and WBG staff estimates and projections. Note: Numbers reported in fiscal years (April 1 - March 31). Original Program Development Objectives (as approved) 12. The development objective of this operation was to assist in Jamaica's response to the COVID-19 crisis by: (i) protecting poor and vulnerable people; (ii) supporting sustainable business growth and job creation; and (iii) strengthening policies and institutions for resilient and sustainable recovery. Original Policy Areas/Pillars Supported by the Program (as approved) 13. This operation supported the Government’s response to the COVID-19 crisis to mitigate the impact on poor and vulnerable households and businesses while also advancing reforms to support a swift and sustainable recovery. The mitigation measures supported by this Development Policy Financing (DPF) operation were estimated to keep over 400,000 persons out of poverty. In addition, the program advanced medium-term institutional and policy reforms in some key areas that were deemed critical to support a resilient and sustainable recovery especially under the latter two pillars. In many cases, the measures were based on prior and ongoing World Bank technical assistance, highlighting the value added of the World Bank’s engagement in recent years. The operation supported prior actions (PAs) under three (3) interrelated pillars. 14. Pillar 1: Protecting poor and vulnerable people. Pillar 1 supported the emergency response to the pandemic. The program included: (i) emergency financial support to affected individuals and households impacted by the COVID-19 pandemic; (ii) the introduction of a new social pension for the elderly, aged 75 years and older, and augmenting cash transfers to eligible households; and (iii) approval of an interim national deployment and vaccination plan for the COVID-19 vaccine to ensure the safe re-opening of the economy. 15. Pillar 2: Supporting sustainable business growth and job creation. Pillar 2 support reforms to counter the impact of the pandemic on businesses while also addressing structural constraints to business development, trade, and growth. The key reforms included: (i) emergency financial support to small businesses, in particular in the tourism sector, to cope with the economic impacts of COVID-19; (ii) approval of the Microcredit Act, 2021 to promote the growth of microcredit institutions and support responsible lending to MSMEs by the sector; (iii) approval of the regulatory sandbox to foster Fintech and digital payment products and promote financial inclusion; and (iv) modernization of the trade infrastructure to promote export competitiveness and improve the efficiency of border clearance processes. 16. Pillar 3: Strengthening policies and institutions for resilient and sustainable recovery. Pillar 3 builds on the other two pillars by advancing reforms to protect macroeconomic gains leading up to the pandemic while also strengthening the policy and institutional base of the country to ensure sustainable development outcomes. Policy actions focused on: (i) legislation for the establishment of an Independent Fiscal Commission to inform the public on the soundness and sustainability of Jamaica’s fiscal position; (ii) approved amendments to the Bank of Jamaica Act to reinforce the independence of the central bank and its inflation targeting regime; and (iii) approval of the Nationally Determined Contributions (NDC), including target greenhouse gas emissions, to strengthen climate resilience and the sustainability of growth. Page 8 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) 17. Through these three pillars and ten PAs, the operation delivered meaningful, tangible results in support of the Government’s response to the crisis and, in select areas, strengthening the policies and institutions for a resilient and sustainable recovery. As explained in detail in Section II, the operation was successful in achieving its objectives in the midst of an unprecedented global crisis and uncertainty. B. Significant Changes During Implementation There were no changes during implementation. II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES A. Relevance of prior actions Rating: Satisfactory 18. Summary of the justification of the rating: The DPF operation was part of a broader adjustment of the Bank’s program in Jamaica. It drew on the Bank’s analytical and operational engagements in Jamaica in supporting the Government’s efforts to mitigate the impact of the pandemic and ensuring a swift and sustainable recovery. All PAs of the operation were carefully designed, drawing on the rich analytical work of the Bank to ensure that they achieved the PDO despite the many challenges and uncertainties occasioned by the pandemic. Further, the PAs closely aligned with the Government’s program and the World Bank’s strategic engagement in Jamaica as guided by the WBG Country Partnership Framework (CPF), which was approved by the Board of Executive Directors on April 2, 2014 (Report No. 85158-JM). The Performance and Learning Review, discussed by the Board on May 25, 2017 (Report No. 112663-JM), reaffirmed the CPF priority areas and extended it to end-FY19. 19. The operation is in line with the WBG’s strategic priorities to respond and help countries recover from the pandemic. The operation aligns closely with all four pillars of the WBG COVID-19 Crisis Response Approach Paper, which include: (i) saving lives; (ii) protecting poor and vulnerable people; (iii) ensuring sustainable business growth and job creation; and (iv) strengthening policies, institutions and investments for rebuilding better. Furthermore, the operation incorporated reforms geared towards closing the gender gap and advancing the Government’s commitment to climate change. 20. The PAs broadly supported the achievement of the three pillars of the PDO, which were specified as: (i) protecting poor and vulnerable people, (ii) supporting sustainable business growth and job creation, and (iii) strengthening policies and institutions for resilient and sustainable recovery. As shown in Table 2 and elaborated below, the interventions of the operation led to the successful implementation of most of the PAs and the achievement of the development objectives of the operation. It is important to note that the first four prior actions were well-aligned with the Government’s COVID-19 response plan and directly addressed the social and economic impact of the pandemic. The seventh prior action to streamline import and export procedures was relevant for the goal of assisting short-term economic recovery. The remaining prior actions represented important medium- term reforms necessary to support a resilient and sustainable recovery. Table 2. Prior Actions and Results Indicators Prior Actions Results Indicators (original and revised) Pillar 1: Protecting poor and vulnerable people Prior Action 1: To provide emergency support to Number of beneficiaries (male/female) receiving affected individuals impacted by the COVID-19 the CARE cash transfers: pandemic, the Borrower, through the Cabinet, has Baseline (March 2020): 0 Page 9 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) approved emergency measures including the Target (March 2022): At least 170,000 males; At least provision of: (i) temporary cash transfers through the 260,000 females SET to individuals who lost employment between Status (May 2022): 183,326 males, 274,969 females March 10, 2020 and December 31, 2020 and who had an annual taxable income less than or equal to J$1.5 Target met and exceeded. million; (ii) COVID-19 General Grants to selected occupational groups who are registered with a state Number of PATH beneficiaries receiving the CARE or municipal authority; and (iii) Compassionate Grants program’s COVID-19 PATH grant: to individuals with a valid tax payer registration Baseline (March 2020): 0 number, not formally employed and not recipients or Target (March 2022): At least 125,700 males; At least not intending to be recipients of any other benefit 140,400 females. under the CARE Programme. Status (May 2022): 125,700 males and 140,400 Prior Action 2: To mitigate the impact of the COVID- females. 19 pandemic on the poor, the Borrower, through the Cabinet, has approved: (i) one additional payment to Target met. PATH beneficiary households through a PATH CARE grant and top-ups to PATH beneficiary households Number of beneficiaries accessing the social with school-enrolled children; and (ii) a Social Pension pension for the elderly: for elderly individuals aged 75 years or more, who are Baseline (March 2020): 0 not in receipt of other pensions, including National Target (March 2022): At least 50,000 Insurance Scheme pension, PATH or Poor Relief Status (May 2022): 10,000 payments. Target 20 percent met. Prior Action 3: To ensure the safe re-opening of the Percentage of priority groups vaccinated against economy, the Borrower, through the Cabinet, has Covid-19 under phase 1: approved an interim National Deployment and Baseline (March 2020): 0 Vaccination Plan for the COVID-19 Vaccine including Target (March 2022): At least 40 percent priority groups, such as health workers and non- Status (May 2022): 70 percent health frontline workers, recommended for vaccination during the first phase of vaccine Target met. deployment. Pillar 2: Supporting sustainable business growth and job creation Prior Action 4: To help small businesses, in particular Number of businesses accessing the BEST cash in the tourism sector, to cope with the economic transfers and grants: impacts of COVID-19, the Borrower, through the Baseline (March 2020): 0 Cabinet, has approved emergency liquidity support to Target (March 2022): At least 1,800 small businesses including: (i) the BEST Cash Program, Status (May 2022): 1,885 to provide temporary cash transfers to businesses in the tourism sector based on the number of workers Target met. they have kept employed and with an annual income of J$1.5 million or less; (ii) one-time COVID-19 Small Number of tourism sector employees retained under Business Grants to small businesses with annual sales the BEST Cash program: of J$50 million or less; and (iii) one-time COVID-19 Baseline (March 2020): 0 Tourism Grants to operators in the tourism sector. Target (March 2022): At least 13 percent Status (May 2022): Only 167 tourism enterprises received transfers. Even if they average 40 employees, that is only 6,700. As such, fewer than 7 percent of tourism workers benefitted. Page 10 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Target roughly 44 percent achieved. Prior Action 5: To promote the growth of microcredit Number of microcredit institutions having submitted institutions and support responsible lending to a complete application for a license under the new MSMEs by the sector, the Borrower has tabled a Bill legal framework: shortly entitled “the Microcredit Act, 2021” which Baseline (March 2020): 0 licenses and regulates microcredit institutions and Target (March 2022): At least 3 strengthens borrower protection. Status (May 2022): 7 complete applications received. 1 institution has been licensed and 6 applications are pending review. Target met and exceeded. Prior Action 6: To foster Fintech and digital payment Number of Fintech products admitted for testing in products and promote financial inclusion, the the regulatory sandbox: Borrower, through the Bank of Jamaica, has issued Baseline (March 2020): 0 guidelines for the operation of a Fintech Regulatory Target (March 2022): At least 4 Sandbox including application requirements, Status (May 2022): 5 eligibility criteria and Fit and Proper requirements. Target met and exceeded. Prior Action 7: To modernize the trade Number of days taken by the Trade Board Limited to infrastructure, promote export competitiveness and process trade licenses for imports and exports: improve the efficiency of border clearance processes, Baseline (March 2020) :5 the Borrower, through the Jamaica Customs Agency, Target (March 2022): 3 has: (i) allowed electronic processing of export Status (May 2022): 96 percent of imports and manifests by shipping agents through the online Port exports are processed in less than 3 days; most Community System and ceased the processing of the exports processed in 24 hours. dock receipt for export shipments; and (ii) launched the Trade Board Limited on the Jamaica Electronic Target met. Single Window for Trade platform for imports and exports. Pillar 3: Strengthening policies and institutions for resilient and sustainable recovery Prior Action 8: To strengthen the fiscal responsibility Number of fiscal assessment reports (that include framework, the Borrower has tabled the legal debt sustainability analysis) issued by the Fiscal framework to establish the Independent Fiscal Commission: Commission. Baseline (March 2020): 0 Target (March 2022): At least 1 Status (May 2022): 0 Target not met. Prior Action 9: To reinforce the independence of the Number of statements published on the Bank of Jamaica and its inflation targeting regime, the performance of BOJ with respect to its monetary Borrower has approved amendments to the Bank of policy and achievements in relation to its inflation Jamaica Act which include provisions to enhance Bank target of Jamaica’s governance, clarify its mandate and Baseline (March 2020): 0 improve its operational independence. Target (March 2022): At least 1 Status (May 2022): 9 Page 11 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Target met and exceeded Prior Action 10: To strengthen climate resilience and NDC implementation plan approved by GOJ: sustainability of growth, the Borrower, through the Baseline (March 2020): No Cabinet, has adopted the revised Nationally Target (March 2022): Yes Determined Contributions including target Status (May 2022): Yes greenhouse gas emissions lower than planned in the previous Nationally Determined Contributions and Target met. climate resilience considerations. Prior Action 1: To provide emergency support to affected individuals impacted by the COVID-19 pandemic, the Borrower, through the Cabinet, has approved emergency measures, including the provision of: (i) temporary cash transfers through the SET to individuals who lost employment between March 10, 2020 and December 31, 2020 and who had an annual taxable income less than or equal to J$1.5 million; (ii) COVID-19 General Grants to selected occupational groups who are registered with a state or municipal authority; and (iii) Compassionate Grants to individuals with a valid tax payer registration number, not formally employed and not recipients or not intending to be recipients of any other benefit under the CARE Programme. 21. Jamaica has a well-established social protection system, but gaps remain necessitating emergency support programs during the pandemic. This system includes the National Insurance Scheme (NIS); a flagship conditional cash transfer (CCT) programme to poor households (PATH); a School Feeding Programme providing free or subsidized meals to students; and other benefits and services to smooth consumption and protect households from shocks. To address gaps and respond to the pandemic, the GOJ created the COVID-19 Allocation of Resources for Employees (CARE) programme, building on PATH and other existing programs, to provide a range of benefits to different individuals and groups affected by the crisis. The CARE program included the Supporting Employees with the Transfer of Cash (SET Cash) grant, General Grants to the self-employed, and Compassionate Grants to others not covered elsewhere. Discussions with and data supplied by the Ministries of Finance and Labour and Social Security confirmed that the targeted programs, which were short-term in design, directly addressed immediate needs arising from the pandemic and were highly relevant for the achievement of the PDO. Notably, there were more than 450,000 beneficiaries for the CARE programme, approximately 6.6 percent higher than the programme’s target with females benefiting more than males (Table 2). Prior Action 2: To mitigate the impact of the COVID-19 pandemic on the poor, the Borrower, through the Cabinet, has approved: (i) one additional payment to PATH beneficiary households through a PATH CARE grant and top-ups to PATH beneficiary households with school-enrolled children; and (ii) a Social Pension for elderly individuals aged 75 years or more, who are not in receipt of other pensions, including NIS l pension, PATH or Poor Relief payments. 22. PATH is well-targeted, but the benefits are relatively low which triggered the activation of additional measures to mitigate the impact of the pandemic on the poor and vulnerable. A recent assessment of PATH’s beneficiary incidence has shown its progressivity, with a much higher concentration of beneficiaries in the poorest quintiles. However, its benefits are lower than CCTs in the Latin America and the Caribbean (LAC) region, with an average annual benefit of approximately 15.3 percent of the national per capita food poverty line, compared to 21 percent in LAC CCT programs. It was therefore highly appropriate to top-up these benefits on a temporary basis to help poor households cope with the pandemic. The Ministry of Labour and Social Security confirmed that a Page 12 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) determination of qualified beneficiaries was made in mid-2020 while the project was under preparation. The targets of at least 125,700 male and 140,400 females were successfully achieved, and the support was delivered to households within the first year of the pandemic when the dislocation in the economy was the greatest. 23. Advancing reforms to support the elderly poor and vulnerable were prioritized during the pandemic. Jamaica does not have a social pension scheme for the elderly poor with no other source of income (including NIS). Further, while PATH is provided to poor households, both its design as a CCT and its targeting mechanism are not optimal for reaching the elderly poor. As such, progress on the establishment of a social pension program will help to close an important gap. The approval of the social pension, the design of which was supported by technical assistance from the Bank, now allows elderly PATH beneficiaries to transition to the pension at 75 years of age. The social pension benefit of J$3,400 per month is half of the NIS minimum pension and is 30 percent higher than the PATH benefit paid to eligible beneficiaries. This prior action is complementary to actions that reinforce the flexibility of the social protection system to respond to crises and addresses a key gap in existing social protection coverage. Prior Action 3: To ensure the safe re-opening of the economy, the Borrower, through the Cabinet, has approved an interim National Deployment and Vaccination Plan for the COVID-19 Vaccine including priority groups, such as health workers and non-health frontline workers, recommended for vaccination during the first phase of vaccine deployment. 24. At the time of appraisal, the GOJ was anticipating the forthcoming arrival of vaccines from the COVAX facility. The Interim National Deployment and Vaccination Plan detailed the actions that the GOJ was taking to prepare for the procurement of 935,676 doses of the vaccine under the COVID-19 Vaccines Global Access (COVAX) facility and the introduction of the vaccine into Jamaica. The procured doses would allow for the vaccination of roughly 16 percent of the population which had been prioritized. The priority groups included, among others, healthcare workers, non-health frontline workers (e.g., police or army), the elderly over 60 years, and institutionalized persons. The plan also provided guidance for key national stakeholders on how to administer the vaccines. The approved document was an Interim Plan, since the GOJ was waiting for further information from the COVAX facility, and issues with respect to liability and potential indemnity agreements with the vaccine manufacturers were still being defined. Clearly, this action was highly relevant to the objectives of this operation. Prior Action 4: To help small businesses, in particular in the tourism sector, to cope with the economic impacts of COVID-19, the Borrower, through the Cabinet, has approved emergency liquidity support to small businesses including: (i) the BEST Cash Program, to provide temporary cash transfers to businesses in the tourism sector based on the number of workers they have kept employed and with an annual income of J$1.5 million or less; (ii) one-time COVID-19 Small Business Grants to small businesses with annual sales of J$50 million or less; and (iii) one-time COVID-19 Tourism Grants to operators in the tourism sector. 25. The tourism sector is a central pillar of the Jamaican economy but is particularly vulnerable to impact of the pandemic. The sector is estimated to contribute nearly one-third of the GDP and one-third of all jobs. However, tourism was the sector worst affected by the pandemic as the Government took proactive measures to contain the spread of the virus by closing international borders and imposing a domestic curfew in March 2020. While borders were reopened for non-citizens on June 15, 2020, Jamaica witnessed a near 90 percent contraction in activity in hotels and restaurants during April-June 2020, compared to the previous year. Cruise ship arrivals were halted for a while and declined by 65 percent from January to September 2020, compared to the same period in 2019. This sharp contraction posed large risks for the preservation of jobs and livelihoods, especially among micro, small and medium enterprises (MSMEs) operating in the sector. Other small and medium-sized businesses were also likely to be severely affected by the slump in tourism or the overall decline in the economy. Page 13 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) 26. The grants were targeted, temporary, and complementary to other measures. The funds were to be used to implement the necessary COVID-19 safety and recovery measures and protocols prior to reopening, ensure business continuity and retain workers. For the tourism sector, applicants were expected to be licensed by the Jamaica Tourist Board (or registered with the Ministry of Tourism). The requirements also include registration with the Tax Administration of Jamaica. The benefit amount was determined on the basis of previous income records and the proposed recovery plans. This was complemented by preemptive measures by the Bank of Jamaica (BOJ) to boost liquidity and avoid an undue tightening of credit conditions. Banks were requested to consider on a case-by-case basis loan moratoria and changes in loan covenants for firms most impacted by COVID- 19. The Development Bank of Jamaica rescheduled SME loans for up to three months, offered loan moratoria to hard-hit sectors, and reviewed the criteria for the national partial credit guarantee scheme to incentivize lenders to provide working capital and investment financing to MSMEs. Around the world, governments were providing such temporary support to small and medium enterprises (SMEs), and it was particularly appropriate to target the tourism sector given its importance in the case of Jamaica. Prior Action 5: To promote the growth of microcredit institutions and support responsible lending to MSMEs by the sector, the Borrower has tabled a Bill shortly entitled “the Microcredit Act, 2021” which licenses and regulates microcredit institutions and strengthens borrower protection. 27. There was a need to promote micro-lending while addressing concerns over the sustainability of certain institutions, predatory lending, and other unfair practices. A recent survey found that almost half of the MSME respondents cited access to finance as a constraint. This would have been further exacerbated by the COVID-19 crisis. While the microfinance sector has the potential to reach micro and small businesses and fill the gaps that commercial banks are unable to meet, the sector remains underdeveloped in Jamaica. The microfinance sector is mostly made up of numerous small entities, including non-government organizations, with less optimal products such as pay-day loans rather than small business financing. Many of these organizations are also financially unsustainable and dependent on external donor funds. The absence of a dedicated regulatory framework over the activities of microfinance institutions (MFIs) hindered the emergence of strong players and the growth of lending by the sector. The Microcredit Act, 2021 would license and regulate any non-deposit taking institution aiming to provide microcredit services. 28. This action represented a sensible medium-term reform to support the post-COVID recovery. Normally, proposing a new law would take some time to have an impact, given the need for Parliamentary review and approval, followed by the formulation of implementing regulations. However, in this case, given the prevailing context and with the support of the DPF, the Bill was approved in 2021. Furthermore, the regulations were issued by July 2021. Institutions that intended to continue offering loans to micro, small, and medium-sized businesses or to individuals defined under the Microcredit Act, 2021 were required to apply to the Bank of Jamaica for a license within one year. During this time, institutions were expected to gather the needed requirements under the new Act and fill-out the relevant documentation published on the BOJ‘s website. The medium-term impact on the sector and on MSME financing should be positive and thereby contribute to recovery from the pandemic. Prior Action 6: To foster Fintech and digital payment products and promote financial inclusion, the Borrower, through the Bank of Jamaica, has issued guidelines for the operation of a Fintech Regulatory Sandbox including application requirements, eligibility criteria and Fit and Proper requirements. 29. The demand for innovation in financial technology (Fintech) and the ability to transact digitally has increased significantly around the world. The advent of COVID-19 has accelerated this demand, with the need for solutions to maintain social distancing, ensure business continuity, and prevent service disruptions. Fintech also plays a key role in supporting financial inclusion by leveraging technology to bring digital financial services to Page 14 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) previously underserved households and businesses. A regulatory sandbox is a regulator-driven environment for testing financial innovation in a live market environment which lowers regulatory costs, encourages partnerships, and manages risks related to consumer protection, among others. The sandbox model has been successful in many countries around the world and could be beneficial in stimulating the recovery and sustaining growth in Jamaica. It is less clear whether it had the potential to assist in coping with COVID-19 short term response, as implied in the program document, since widespread application of any innovations is unlikely to happen before the pandemic has run its course. The sandbox had the objective to promote the BOJ’s understanding of Fintech products and business models and to inform the framing of new regulations to enable the growth of Fintech. Such development of fintech could promote greater financial inclusion of households and MSMEs. In addition, by reducing the dependence on physical financial interactions and the need for cash, these Fintech innovations could facilitate secure ways for Governments and providers to reach vulnerable groups quickly and efficiently. Prior Action 7: To modernize the trade infrastructure, promote export competitiveness and improve the efficiency of border clearance processes, the Borrower, through the Jamaica Customs Agency, has: (i) allowed electronic processing of export manifests by shipping agents through the online Port Community System and ceased the processing of the dock receipt for export shipments; and (ii) launched the Trade Board Limited on the Jamaica Electronic Single Window for Trade platform for imports and exports. 30. Efficient logistics are increasingly recognized as critical to enjoying the benefits of international trade . With the global reduction in import tariffs, logistics costs are often the most important barrier to access to cheap imports. Logistical delays can also impede export competitiveness. Jamaica is committed to facilitating trade both for its own economy and with a view to serving as a regional hub. However, as of 2020, the country performed less favorably than regional comparators or middle-income countries more broadly. The action in question included reforms within non-Customs border regulatory agencies as well as institutional stakeholders who have clearance roles, through the implementation of an electronic single window, providing traders with a single interface to submit all documents and requirements. The action also covered two reforms specific to export logistics. 31. These reforms are highly relevant to the objective of recovery from the pandemic . Renewed export growth and access to imports close to world prices are both important potential sources of higher economic growth. Furthermore, the reforms supported should have an immediate effect on the costs facing importers and exporters. Prior Action 8: To strengthen the fiscal responsibility framework, the Borrower has tabled the legal framework to establish the Independent Fiscal Commission. 32. A Fiscal Commission can be an important institution to ensure compliance with fiscal rules . There is empirical evidence that the existence of a Fiscal Commission is positively correlated with success in achieving the objectives of fiscal rules. A respected and credible Fiscal Commission can strengthen the Government’s commitment to fiscal rules by reporting to the public on the soundness and sustainability of Jamaica’s fiscal position, thereby raising the reputational and political costs of violating the rules. However, a Fiscal Commission should: (i) be operationally independent; (ii) have the technical capacity necessary; and (iii) be adequately resourced. 33. This is a medium-term reform with potential for sustaining confidence in Jamaica’s fiscal and debt management efforts as part of a broader program to entrench macroeconomic stability. The reform involves establishing a new institution to monitor, report and incentivize sustained improvement in the fiscal discipline, which in turn reassures private investors and gradually increases fiscal space for development priorities in public spending. While the fiscal rules have been quite successful without such a Commission - with public debt being Page 15 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) reduced by 50 percentage points since 2013 - most of the decline was achieved within the context of successive IMF programs which ended in 2019. As such, the Fiscal Commission is intended to serve as an oversight body, akin to the IMF, which could provide continued transparency in fiscal management in Jamaica. Furthermore, the reform was timely as the next phase of debt reduction could prove more difficult, and the recent slippage due to COVID-19, while justified, may call for an enhanced framework for fiscal responsibility. Prior Action 9: To reinforce the independence of the Bank of Jamaica and its inflation targeting regime, the Borrower has approved amendments to the Bank of Jamaica Act which include provisions to enhance Bank of Jamaica’s governance, clarify its mandate and improve its operational independence. 34. Amendments to the BOJ Act were considered as a central pillar of the Government’s thrust to maintain macroeconomic stability. The amendments, which aimed to establish an inflation-targeting regime and to enhance the BOJ’s governance structures, were approved by Parliament in 2020. This reform cemented price stability as the BOJ’s primary objective, provided a legal basis for its operational independence, and strengthened the governance structure and accountability framework. It established reporting and accountability arrangements for the Monetary Policy Committee, and the formation of a Financial Policy Committee to strengthen oversight of the financial system. On central bank financing to the Government, the amendments placed a ceiling on the size and tenure of such financing in relation to the Government’s revenue collections. 35. These reforms were broadly consistent with international good practice. Central bank independence is a basic tenet of sound macroeconomic management, while strong accountability is essential. Regular reporting on monetary policy decisions is important to manage inflation expectations and enhance policy credibility. Previous reforms in the financial sector needed to have the force of law. The extraordinary measures taken to cope with the pandemic did call for some reassurance that the BOJ would be returning to more orthodox practices in the near future. While the urgency of this reform as an instrument to aid in economic recovery could be questioned, given that inflation was not as important an issue as economic growth leading up to the pandemic, the reform was important to anchor expectations. In this regard, the relevance of this prior action was significant. Prior Action 10: To strengthen climate resilience and sustainability of growth, the Borrower, through the Cabinet, has adopted the revised Nationally Determined Contributions including target greenhouse gas emissions lower than planned in the previous Nationally Determined Contributions and climate resilience considerations. 36. Jamaica submitted its updated NDC to the United Nations Framework Convention on Climate Change (UNFCCC) in June 2020 to meet requirements under the Paris Agreement. This committed the country to more stringent targets and obligations to translate these commitments into a low-emissions and climate-resilient development plan. The commitment envisages increasing coverage and unconditional climate ambition, in absolute terms, by 60 percent, with a focus on renewable energy and forest conservation. Dealing with climate change is a high priority for all countries and Jamaica’s decision to advance reforms in this area during the pandemic highlights its commitment to progress on climate change as a necessary part of sustainable recovery from the pandemic. Nevertheless, the link between this action and the COVID-19 response is especially weak. B. Achievement of Objectives (Efficacy) Rating: Moderately Satisfactory 37. Summary of the justification of the rating: The efficacy of PAs is rated moderately satisfactory given that the operation was successful in achieving its PDO in record time to mitigate the impact of the pandemic. Specifically, the operation successfully promoted initiatives to support vulnerable households and businesses while also supporting the development and approval of health protocols to prepare the conditions for a safe Page 16 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) reopening of economic activities. In addition, it supported measures and reforms to protect jobs and ensure sustainable business growth. The program advanced key reforms to expand the use of Fintech to improve access to financing for MSMEs and financial inclusion; and to ensure that microcredit sector resources are leveraged to provide financing to MSMEs while also protecting borrowers. Measures to improve the efficiency of cross-border trade to boost growth were also included. Finally, the operation helped strengthen the institutional mechanisms that underpin fiscal responsibility and solidify central bank independence while committing to ambitious climate targets. The objectives of all three pillars of the PDO are achieved through the 10 PAs of the operation, with only a few minor caveats. This reflected the fact that Jamaica has strong systems and good institutional capacity to implement some prior actions, and there are good controls in place to support well targeted spending. Additionally, the authorities used the emergency as an opportunity to achieve consensus on necessary reforms for medium-term growth. Out of the 12 targets, 9 were fully achieved and some were exceeded. Two were only about 20 percent achieved and one showed limited progress. The three incomplete outcomes discussed below (PA#2, PA#4 and PA#8) do not undermine the overall objectives of the operation. PA#3, which focused on the health sector, also warrants some discussion. 38. For PA#2, the payment of social pensions to people 75 years and older rolled out on time as projected, but only achieved partial success. This was due to lower-than-expected take-up by potential beneficiaries and documentation issues, as several applicants did not have identification and/or birth certificates, which affected the verification process. The Government has been working around these constraints through additional public outreach including social workers visiting the communities, advertisements (television, radio, newspaper), and even through community and faith organizations, as well as establishing a drive to assist persons who would otherwise meet the criteria, with obtaining birth certificates. As a result, the number of beneficiaries is gradually increasing. 39. The support to businesses and the resultant number of jobs saved in the tourism sector under PA#4 underperformed relative to the target. Discussions with the Ministry of Finance and the Public Service confirmed that while the overall target of number of SME beneficiaries was achieved, the proportion of tourism companies was much smaller than expected. This was because many of these firms operate in the informal sector and were not officially registered, which was a requirement of the BEST program. As a result, the intervention saved only about 44 percent of the jobs targeted. While many SMEs would have suffered from the recession which resulted from the COVID-19 pandemic, it is probable that tourism enterprises were indeed the most severely affected. Therefore, with only 167 of the 1,885 beneficiary enterprises coming from the tourism sector, it would appear that the BEST program did not achieve its original objectives. 40. There was no progress on the preparation of a report by the Fiscal Commission. Creating a Fiscal Commission is not straightforward, beginning with the recruitment of a highly qualified and impartial macroeconomist to serve as Commissioner. There are not likely to be many potential candidates who meet the requirements. Once in place, the Commissioner is then responsible for staffing the office by hiring qualified personnel. Only afterward can data be collected, and analysis conducted for the first report. It might have been overoptimistic to expect this to be completed within one year. In fact, the government made slow progress and was only able to appoint an appropriate Commissioner in March 2023. The COVID-19 pandemic appears to have been one reason for the delay, as it diverted attention to more urgent matters. 41. Discussions with the Ministry of Health and Wellness confirmed that in spite of implementation challenges (PA#3), the government was able to surpass its target of having at least 40 percent of the priority groups vaccinated by March 2022. The implementation challenges included significant delays in vaccinating priority groups stemming from two factors beyond the control of the government. One was the delay in receiving vaccines from COVAX. The other was hesitancy among Jamaicans, exacerbated by misconceptions concerning the Page 17 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) relative merits of different brands. When the first shipments of COVAX did not include brands considered to be the best, people chose to wait. These delays then gave more time for anti-vaccination information to circulate, thereby reinforcing hesitancy among some groups. But with a concerted effort by the authorities, vaccination levels for most priority groups were well above 70 percent by the end of the project. Further, over 23 percent of the population were fully vaccinated against COVID-19 by March 2022. Relevance of Results Indicators 42. Most indicators were clearly defined, highly relevant to the PAs and PDO, feasible, and easily measurable. Targets of result indicators (RIs) were determined in close collaboration with the Government based on the assessment of the impact of the pandemic on areas covered by the operation and the feasibility of the targets to be achieved by the end of the operation. The indicator related to the Fiscal Commission might have been too ambitious, given the one-year time frame of the project. The fourth indicator, measuring the level of vaccination of priority groups, was certainly relevant but depended on factors beyond the control of the authorities – the availability of vaccines through COVAX and the willingness of Jamaicans to get vaccinated. The indicator related to the cash grants could have been more outcome-based reflecting the movement in poverty numbers. Measurability of Results Indicators 43. All the indicators, apart from one, were easily measurable. The one problematic indicator concerned the number of tourism employees benefiting from the BEST Cash program. The Government only collected data on the number of enterprises. Further, the target was a percentage of all tourism employees, a number which was not readily available. Although not a problem in terms of the attainment of targets, the definition of the fourth indicator related to the vaccination of priority groups was problematic as it is not clear if the intention was to measure progress in vaccinating priority groups at the end of phase 1 or at the end of the project. Appropriateness of Targets 44. The target for two indicators proved too ambitious. The target of 50,000 persons over 75 years old receiving pension was too ambitious due to the longer-than-anticipated verification process of the eligibility of beneficiaries, in the absence of birth certificates in several cases. In parallel, the target related to the issuance of a report by the Fiscal Commission, was also too ambitious. The target for the indicator linked to the cash support to households was achieved before the DPF was approved. The other indicators were broadly appropriate, including those that exceeded targets on account of faster than planned implementation. Notably, the indicators for the central bank, Fintech and microcredit all exceeded their targets but were deemed appropriate given uncertainties regarding the operationalization of the BOJ Act, as well as the readiness of potential applicants for the sandbox and licensing under the Microcredit Act, 2021, at the time of appraisal. For the COVID-19 vaccination plan, the target was informed by the country’s experience with other vaccination campaigns which included high vaccine hesitancy. 45. The status of the outcome indicators in the Policy Matrix are presented in Table 3 below: Table 3. Status of Outcome Indicators Results Indicator Performance relative to targets Indicator #1: Number of beneficiaries (male/female) Fully Achieved receiving the CARE cash transfers 183,326 males and 274,969 females received the transfers, slightly exceeding the target. Indicator #2: Number of PATH beneficiaries Fully achieved Page 18 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) receiving the CARE program’s COVID- 125,700 males and 140,400 females received the 19 PATH grant. grant. This target was met even before the DPF was approved. Indicator #3: Number of beneficiaries accessing the Partially achieved social pension for the elderly Only 10,000 elderly people received the pension by May 2022, compared to a target of 50,000, due to a lack of birth certificates or other documentation. Indicator #4: Percentage of priority groups Achieved vaccinated against Covid-19 under phase 1 Target of 40 percent well exceeded for most priority groups, and on average for all of them, by May 2022. Indicator #5: Number of businesses accessing the Fully Achieved BEST cash transfers and grants Target of 1,800 slightly exceeded. Indicator #6: Number of tourism sector employees Partially Achieved retained under the BEST Cash program Based on the number of tourism enterprises, the number of employees retained was well below the target, in the order of 44 percent. Indicator #7: Number of microcredit institutions Fully Achieved and Exceeded having submitted a complete application for a license Seven applications have been received compared to a under the new legal framework target of 3. One microcredit institution received a license. Indicator #8: Number of Fintech products admitted Fully Achieved and Exceeded for testing in the regulatory sandbox Five products have been admitted compared to a target of 4. Indicator #9: Number of days taken by the Trade Fully Achieved Board Limited to process trade licenses for imports Most imports and exports are processed in less than and exports the 3 days targeted. The average for exports is 1 day or less. Indicator #10: Number of fiscal assessment reports Not Achieved (that include debt sustainability analysis) issued by The Fiscal Commission has not yet been established. the Fiscal Commission Indicator #11: Number of statements published on Fully Achieved and Exceeded the performance of BOJ with respect to its monetary Nine statements have been published, greatly policy and achievements in relation to its inflation exceeding the target of 1. target Indicator #12: NDC implementation plan approved by Fully Achieved GOJ The implementation plan has been approved. C. Overall Outcome Rating and Justification Rating: Moderately Satisfactory 46. The relevance of prior actions is rated as satisfactory, and the achievement of objectives is rated as moderately satisfactory. Some prior actions were highly relevant to responding to the pandemic, some were appropriate for assisting in the recovery, while a few were more long-term and better suited to a regular DPF Page 19 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) series. Data from the government show that the majority of the results were achieved, and some were exceeded. However, little or no progress was recorded in three result areas. III. OTHER OUTCOMES AND IMPACTS A. Poverty, Gender and Social Impacts 47. The measures supported under Pillar 1 aimed to protect the health and welfare of poor and vulnerable populations, as well as safeguard their incomes and livelihoods, in response to the COVID 19 pandemic. A simulation of the SET Cash intervention suggests that it would reduce the poverty rate by 0.5 percentage points.2 PATH’s targeting has been assessed to be progressive, with a higher concentration of beneficiaries in poor deciles. The 2019 WB Social Protection Public Expenditure Review (PER) estimated that a 25 percent increase in the average annual PATH benefit would result in a 2.2 percent reduction in poverty.3 This is similar to the CARE PATH benefit of J$4,080 covered under PA#2, which represented a 21 percent increase. The measures under PA# 4 supported businesses, the preservation of jobs, and the avoidance of firm closures, particularly within MSMEs. They likely reduced the number of individuals who would have otherwise fallen into poverty during the pandemic, particularly those in the tourism sector where there is a higher proportion of female workers. The other measures in Pillars 2 and 3 would have had a neutral or positive indirect impact on poverty reduction. B. Environmental, Forests, and Natural Resource Aspects 48. The prior actions are unlikely to have had significant negative impacts on the country’s environment, forests, fisheries, or other natural resources. They did not include policy reforms directly involving production, infrastructure development, or land use changes. PA# 10, updating Jamaica’s NDC, should have positive environmental impacts, including those related to climate mitigation, adaptation, and resilience, as well as sustainable land and energy use. C. Institutional Change/Strengthening 49. While many of the prior actions were designed to provide immediate support in the context of the pandemic, a few will have contributed to institution building. The Microcredit Act, 2021 will strengthen microfinance institutions. Prior action 9 is explicitly designed to strengthen the BOJ by enhancing its independence, expanding its mandate, and increasing its transparency and accountability. Prior Action 8 creates a new institution, the Fiscal Commission, which could eventually play a critical role in improving the performance of fiscal institutions. D. Other Unintended Outcomes and Impacts 50. No other unintended outcomes and impacts. IV. BANK PERFORMANCE 2 Program Document for Jamaica COVID-19 Response and Recovery DPF, page 38. 3 Public Expenditure Review of Social Protection in Jamaica: Principal Programs, Services, and Instruments. World Bank, 2019. Page 20 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Rating: Satisfactory 51. Summary of the justification of the rating. Bank performance is rated Satisfactory. Despite limited time for preparation and numerous pandemic-induced constraints, the Bank’s country knowledge, technical depth, and ongoing policy dialogue and collaboration with the GOJ enabled the Bank team to produce a program which supported important reforms in social protection, health, trade, climate and fiscal and financial areas. These reforms enabled a gradual recovery from the deepest economic contraction in the country in recent decades. The design of the program was closely aligned with the Government’s response to the crisis, which targeted financial support to the most vulnerable while also advancing reforms geared toward facilitating the recovery and maintaining macroeconomic stability. The Bank worked closely with the Government and other stakeholders to capitalize on synergies for greatest development impact. The Bank provided technical assistance throughout the implementation on PAs #1, #3, #7 and #10. 52. The project design was informed by a variety of country-specific and regional studies by the World Bank and other agencies, as documented in Annex 5 of the Program Document. The measures supported under Pillar 1 drew on the Social Protection PER for Jamaica as well as reforms initiated in 2019 as part of the First Economic Resilience DPL. Microcredit reforms (PA#5) were informed by the Jamaica Financial Sector Assessment of 2015 and subsequent technical assistance. The Jamaica Financial System Stability Assessment by the IMF and World Bank in 2018 contributed to the reforms of the Bank of Jamaica (PA#9). Technical assistance by IFC was instrumental in supporting the trade facilitation measures (PA#7). 53. The design of the operation could have been better aligned with the emergency nature of the situation. Having ten prior actions, many with multiple components, seems unduly heavy for an operation intended to respond quickly to the social and economic impact induced by a health crisis. Other countries with stronger capacity benefited from lighter operations. Furthermore, some of the reforms were more long-term in nature and better suited to a normal DPF series. For example, the establishment of a Fiscal Commission requires several steps, and it should not be surprising that it did not achieve the expected results in one year. It was probably more appropriate to leave it in the parallel DPF series where it was originally included. The action on climate change also seems to fit in this category. V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES 54. The risk to the sustainability of the development outcomes is low. Many of the outcomes were only intended to be short-term, as an emergency response to the pandemic. The underlying social protection system is well-established and gradually expanding. The reforms to the BOJ are designed to reinforce the sustainability of its performance. The new microcredit Act, 2021 brings the previously unsupervised microcredit sector under the oversight of the BOJ, and as such, it would enable more sustainable operation and growth of microcredit institutions in Jamaica. The reforms in trade facilitation are part of a medium-term program to which the authorities remain fully committed. The Fiscal Commission is enshrined in law and there is no reason to doubt the authorities’ intentions to implement it once the urgency of the pandemic has subsided. VI. LESSONS AND NEXT PHASE A. Lessons Learned 55. The success of the operation was driven by a strong and ongoing policy dialogue, including the provision of necessary technical assistance throughout the preparation of the operation. This was achieved despite significant operational changes that were necessary due to the “stay at home” and “physical distancing” protocols. Page 21 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) The Government and the task team had to be more selective with the reforms to ensure impact, and they were able to capitalize on the existence of several knowledge products and Bank operations in most areas. This provided a good base for pushing policy issues that were at various stages of readiness and could support a sustainable recovery. Additionally, the pandemic allowed the government to expedite certain reforms aimed at protecting citizens, stimulating growth, and achieving results. 56. The Bank’s flexibility in adapting its program to respond to the client’s needs, especially in crisis conditions, helped to solidify stakeholder support for the operation. Providing immediate support via a standalone DPF, rather than through the parallel ERDPL (P170223) enabled focused and fast-track support to target urgent COVID-19 response and recovery needs. This allowed the Government to maintain the structure of the ERDPL series while redeploying its limited human resources to new priorities linked to stemming the fallout from the crisis. 57. The DPF supported a comprehensive reform agenda which called for a multidisciplinary approach, given the nature of the crisis. The operation benefited from various Global Practices, as well as IFC working to support the Government to advance reforms on multiple fronts to mitigate the adverse impact of the pandemic on lives, livelihoods and on the economy. 58. Although the design and the execution of the operation achieved good results, there was a need for greater realism in targets given the highly uncertain environments. With the onset of the pandemic there was a shift in government priorities, which stretched the capacity within the government and adversely impacted achievement of a few targets. This was the case with PA#8, wherein there was no movement on the establishment of the Fiscal Commission. In parallel, it is important for targets to be defined with consideration for potential factors beyond the control of the borrower. The plan to vaccinate priority groups was affected by the performance of COVAX and household behavior. Similarly, the search for a Commissioner, and the subsequent recruitment of staff for the commission, was delayed on account that the pandemic would have limited the availability and willingness of potential candidates to move to Jamaica. B. Next Phase 59. Several upcoming/ongoing operations and analytical assessments by the World Bank Group are closely linked to the DPF and will build on some of the programs initiated by this operation. A Social Protection project (P178582) is under preparation and strengthen the resilience and opportunity functions of Jamaica’s social protection system. This will address issues of unemployment insurance, increasing the system’s ability to respond to shocks. A new DPF (P180868) is also under preparation and is expected to advance reforms in the areas of fiscal sustainability, trade facilitation and resilience to climate change which build on progress made in the COVID-19 Response and Recovery DPF. Page 22 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) ANNEX 1. RESULTS FRAMEWORK . RESULTS INDICATORS Pillar: Pillar 1: Protecting poor and vulnerable people Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#1: Number of beneficiaries Number 0.00 430,000.00 458,295.00 (male/female) receiving the CARE cash transfers 31-Mar-2022 31-Mar-2022 31-May-2022 Comments (achievements against targets): The targets were fully achieved. Of the target of 430,300 at least 170,000 males and 260,000 females were expected. The total number of beneficiaries approximated 458,295 of which there were 183,326 males and 274,969 females. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#2: Number of PATH Number 0.00 266,100.00 266,100.00 beneficiaries receiving the CARE program’s COVID-19 31-Mar-2020 31-Mar-2022 31-Mar-2022 PATH grant Page 23 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Comments (achievements against targets): The target was fully met. 125,700 males and 140,400 females received the grant. This target was met before the DPF was approved. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#3: Number of beneficiaries Number 0.00 50,000.00 10,000.00 accessing the social pension for the elderly 31-Mar-2020 31-Mar-2022 31-May-2022 Comments (achievements against targets): The target was only partially (20 percent) achieved. Only 10,000 elders received the pension by May 2022, compared to a target of 50,000, due to lack of birth certificates or other documentation. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#4:Percentage of priority Percentage 0.00 40.00 70.00 groups vaccinated against Covid-19 under phase 1: 31-Mar-2020 31-Mar-2022 31-May-2022 Comments (achievements against targets): The target was met in spite of significant setbacks due to the unavailability of vaccines for most of 2021. Well over 70 percent of priority groups were inoculated. Page 24 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Pillar: Pillar 2: Supporting sustainable business growth and job creation Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#5: Number of businesses Number 0.00 1,800.00 1,885.00 accessing the BEST cash transfers and grants: 31-Mar-2020 31-Mar-2022 31-May-2022 Comments (achievements against targets): The target was met and served as a useful mechanism to preserve jobs and business continuity. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#6: Number of tourism sector Percentage 0.00 13.00 6.00 employees retained under the BEST Cash program 31-Mar-2020 31-Mar-2022 31-Mar-2022 Comments (achievements against targets): Target was only partially achieved. Only 167 tourism enterprises received transfers. Even if they average 40 employees, that is only 6,700 compared to a target of about 15,000 (13 percent). As such, fewer than 7 percent of tourism workers benefitted. The low take up was on account of the high informality of SMEs operating in the sector. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Number 0.00 3.00 7.00 Page 25 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) RI#7: Number of microcredit 31-Mar-2020 31-Mar-2022 31-May-2022 institutions having submitted a complete application for a license under the new legal framework Comments (achievements against targets): Target exceeded as institutions sought to accelerate plans to become compliant. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#8: Number of Fintech Number 0.00 4.00 5.00 products admitted for testing in the regulatory sandbox 31-Mar-2020 31-Mar-2022 31-May-2022 Comments (achievements against targets): The advent of COVID-19 has accelerated this demand, with the need for solutions to maintain social distancing, ensure business continuity, and prevent service disruptions. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#9: Number of days taken by Days 5.00 3.00 3.00 the Trade Board Limited to process trade licenses for 31-Mar-2020 31-Mar-2022 31-May-2022 imports and exports: Page 26 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Comments (achievements against targets): 96 percent of imports and exports are processed in less than 3 days; most exports processed in 24 hours. Pillar: Pillar 3: Strengthening policies and institutions for resilient and sustainable recovery Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#10: Number of fiscal Number 0.00 1.00 0.00 assessment reports (that include debt sustainability 31-Mar-2020 31-Mar-2022 31-May-2022 analysis) issued by the Fiscal Commission Comments (achievements against targets): The target was not met as progress to operationalize the commission slowed in the context of the pandemic. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion R#11: Number of statements Number 0.00 1.00 9.00 published on the performance of BOJ with respect to its 31-Mar-2022 31-Mar-2022 31-May-2022 monetary policy and achievements in relation to its inflation target Page 27 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Comments (achievements against targets): The target was exceeded as the central bank was able to accelerate the implementation of the legislation which mandated the creation and operationalization of the monetary policy committee. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion RI#12:NDC implementation Yes/No No Yes Yes plan approved by GOJ 31-Mar-2020 31-Mar-2022 31-May-2022 Comments (achievements against targets): The action was fully achieved with the technical support of the Bank. . Page 28 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES A. TASK TEAM MEMBERS Name Role Preparation Rohan Longmore, Fadwa Bennani Task Team Leader(s) Vinicius Lima Moura Procurement Specialist(s) Arun Manuja Financial Management Specialist Deborah Grace Watson Financial Management Specialist Woori Lee Team Member Karlene Collette Francis Team Member Matias Jose Arnal Team Member Marvin Ploetz Team Member Smriti Seth Team Member Nelissa Kay Moreen Hines Team Member Asha Monifa Williams Team Member Raquel Alejandra Letelier Team Member Maja Murisic Team Member Sharmista Appaya Team Member Pierre-Laurent Chatain Team Member Ezio Caruso Team Member Veronica Trujillo Team Member Suchada Ngeayvijit Team Member Abha Prasad Team Member Page 29 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Jacqueline Beatriz Veloz Lockward Counsel Junko Onishi Team Member Supervision/ICR Rohan Longmore, David Cal MacWilliam, Fadwa Bennani Task Team Leader(s) Vinicius Lima Moura Procurement Specialist(s) Arun Manuja Financial Management Specialist Deborah Grace Watson Financial Management Specialist Woori Lee Team Member Karlene Collette Francis Team Member Matias Jose Arnal Team Member Nelissa Kay Moreen Hines Team Member Maja Murisic Team Member Jacqueline Beatriz Veloz Lockward Counsel Clemente Avila Parra Team Member . B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY21 30.745 190,609.82 FY22 0 0.00 Total 30.75 190,609.82 Supervision/ICR FY22 7.946 47,304.35 FY23 2.634 17,052.66 Page 30 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) Total 10.58 64,357.01 . Page 31 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) ANNEX 3. BORROWER, CO-FINANCIERS, AND OTHER DEVELOPMENT PARTNERS’/STAKEHOLDERS’ COMMENTS The government broadly agrees with the ICR. Page 32 of 33 The World Bank Jamaica COVID-19 Response and Recovery Development Policy Financing (P174531) ANNEX 4. SUPPORTING DOCUMENTS Page 33 of 33