Bondholders Encouraged to Accept NDX Offer

With just three days to go before the National Debt Exchange (NDX) offer closes, Government bondholders are again being encouraged to participate in the programme.

Senior Director in Debt Management at the Ministry of Finance and Planning, Pamella McLaren, says the Government is “seeking to get a 100 per cent participation rate,” as this is a critical component for securing an agreement with the International Monetary Fund (IMF).

“No high participation in the NDX (means) we will not have a signed IMF agreement in place. So, it’s very important that all bondholders participate in the NDX,” she emphasized, while addressing a JIS ‘Think Tank’ at the agency’s headquarters on Tuesday, February 19.

Mrs. McLaren explained that the NDX is one of the prior actions that the Government must take before the IMF Board will approve the agreement. The Government is seeking to enter a four-year arrangement under the IMF’s Extended Fund Facility (EFF).

“As part of the IMF programme, as a prior action, the Government of Jamaica is required to do a transaction regarding the debt, which is one of the highest globally. The programme is designed to put the debt on a sustainable path,” she said.

Mrs. McLaren explained that bondholders are being asked to participate in the NDX in order to “free up fiscal space”, as the Government has been issuing debt to repay principal and interest, causing the country’s debt to increase.

Under the NDX, bondholders are being asked to exchange their existing bonds for instruments with longer maturities and lower interest rates. The principal will not be affected.

“With this reduction in interest, the debt stock will not grow as it is growing now. The end game is to see the debt stock reducing and allowing the Government more fiscal space. So, rather than having to borrow to service debt, the resources can be used for social amenities for the people of Jamaica,” she said.

The bond offer, which was launched on Tuesday, February 12, closes on Thursday, February 21.