Diaspora Bond Still Being Considered

Minister of State in the Ministry of Foreign Affairs and Foreign Trade, Hon. Arnaldo Brown, says the plan by the Government to tap into the resources of overseas nationals, through the issuing of a Diaspora Bond, is still being considered.

He noted, however, that “timing” is going to be important in terms of its implementation.

The State Minister was speaking at a JIS Think Tank held on Wednesday, October 8, at the agency’s Half-Way-Tree Road headquarters.

A Diaspora Bond is a debt investment instrument issued by the Jamaican Government in which Jamaicans living overseas would loan money to the Government for a defined period of time at a fixed interest rate through the Jamaica Stock Exchange (JSE).

The recommendation for the floating of the bond came out of the first Biennial Diaspora Conference held in Kingston in 2004. It was seen as an attractive option for the Jamaican Government in sourcing capital to fund development initiatives.

Selling bonds directly to the Jamaican Diaspora is intended to attract a share of the approximately US$5 billion saved annually by nationals and persons of Jamaican descent living abroad.  It is estimated that overseas nationals remit over US$2 billion into the island annually.

Mr. Brown said while there was positive support from the Diaspora after stakeholder meetings with Government officials, a decision was made not to issue the bond because of the impact it would have on the country’s debt burden.

“The hope was that the bond would be priced and be sufficiently large that it may replace high yielding debt with low yielding debt, therefore creating some space for the Government to operate, and to probably use those savings from the lower yields to invest in education, infrastructure, health and so on,” Mr. Brown explained.

“So, when our debt profile improves, maybe at that point, the Government of Jamaica may think about an instrument in the form of a Diaspora Bond,” he informed.

“So, the question of a Diaspora Bond is still a matter under consideration, but I think timing is going to be important in terms of its implementation,” he noted.

In the meantime, Mr. Brown said the commitment of Jamaicans in the Diaspora to the development of the country continues to be strong, not just in remittance flow, but investments in education, health and contribution to the tourism sector.

“They account for 15 per cent of our visitor arrivals based on tourist numbers, so they represent a significant constituency,” he noted.

The State Minister said there are opportunities for other means of investment by overseas nationals outside of the Diaspora bond.

“The fact is established that these Jamaicans, many of them have significant disposable income… (and) have expressed the desire to support micro and small enterprises, but are really looking for an avenue through which they can do that in a fairly structured way,” he said.

He said the JSE, including the junior market, are vehicles that can be used to support this level of interest from the Jamaican Diaspora.