Finance Minister Assures Pensioners

Finance and Planning Minister, Dr. the Hon. Peter Phillips, has assured pensioners, who are holders of local and United States currency bonds, that interest payments due to them on these instruments, will not be affected by the implementation of the National Debt Exchange (NDX) initiative.

This assurance comes against the background of what he says are “a lot of enquiries” which have been received from pensioners in relation to the NDX and the administration’s debt reduction programme.

The NDX, which was launched on February 12, is a key pre-requisite for implementation by the administration, in order to successfully conclude negotiations with the International Monetary Fund (IMF) for a new financing agreement.

The facility exchanges higher interest debt for lower cost debt and will entail significant sacrifices from financial institutions and the holders of domestic bonds. It is aimed at assisting the administration to significantly reduce the country’s debt stock, which currently stands at over 140 per cent of Gross Domestic Product (GDP).

Speaking at a media briefing at Jamaica House on February 14, where he provided an update on Jamaica’s economic programme, Dr. Phillips advised that pensioners who are holders of maturing bonds will receive full payment of the interest accumulated.

The Minister pointed out that special terms are included in the NDX offer, which would see the pensioners and other retail bond holders also being afforded the opportunity to opt for a special one-year bond, with an interest rate ranging between five and seven per cent.

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“So, if you had a Jamaican dollar bond maturing, or a US dollar bond maturing, you could elect to receive a new bond at seven per cent for the domestic and five per cent for the US dollar bond. These will be among the most attractive bonds available, which will allow pensioners who need to receive their principal, to en-cash their new bonds at the bank or broker on favourable terms,” he outlined.

In this regard, Dr. Phillips advised pensioners contemplating what he described as “extraordinary measures,” such as selling their properties, out of concern over the status of their dividends, to refrain from doing do.

“It is possible to get your interest on the bonds that are maturing and to receive a new bond at attractive rates, which would be tradable bonds. The specific terms of such a trade would depend on your specific broker. So, I am encouraging them (bond holders) to approach their broker, if they have such a need. But most of all, there is no need to believe there will be a specific disadvantage, and I want to make that clear,” Dr. Phillips stated.