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Story Highlights

  • Co-Chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, believes Jamaica’s economy should not be significantly impacted by the financial turmoil being experienced in Greece.
  • In a referendum on Sunday, July 5, Greeks voted no to international terms of bailout and reform measures set by its creditors, after failing to honour its debt payments.
  • The Government is expected to begin re-negotiating a new deal for the country.

Co-Chair of the Economic Programme Oversight Committee (EPOC), Richard Byles, believes Jamaica’s economy should not be significantly impacted by the financial turmoil being experienced in Greece.

In a referendum on Sunday, July 5, Greeks voted no to international terms of bailout and reform measures set by its creditors, after failing to honour its debt payments. The Government is expected to begin re-negotiating a new deal for the country.

Mr. Byles believes the impact on the international financial market should not be significant.

“If you look at Greece and look at Jamaica, it’s like a tale of two countries going in two opposite directions. So, somebody may say yes, Greece has done what it has done, but Jamaica has fought the battle for two years and should be rewarded or can be relied upon. So, I don’t think it will be a negative impact,” Mr. Byles noted.

The co- Chair said his conclusion is based on critical analysis of some major similarities and differences with both countries

Mr. Byles noted that both countries have accumulated significant debt over time and has a debt to Gross Domestic Product (GDP) ratio that is way above the normal accepted level for any country.

Another similarity, he added, is that both countries are dependent on imports rather than producing enough for themselves, which he said, puts a lot of pressure on borrowing.

However, the EPOC Co-Chair noted that a major difference between both countries is where the majority of the debt resides, pointing out that most of the debt in Greece is owned by foreign investors, while most of the Jamaica’s debt is owned by Jamaican-based institutions and individuals.

“So, the impact of when they pay is different to when our government pays. When our Government pays the interest, a lot of it comes back into the economy and that would have less of a stalling impact on the economy compared to Greece, where a lot of the payments are going out of the country to other countries and would have a more dramatic stalling impact on the economy,” Mr. Byles informed.

The co-Chair said Greece has a lower primary surplus target than Jamaica, because of the cheaper rates at which it borrows, while Jamaica’s rate is much higher and therefore requires a larger primary surplus target to maintain.

In the meantime, Mr. Byles pointed out that while Jamaica can afford to allow some devaluation of its currency, Greece does not have that option since they are a part of the European Union (EU), which uses a single currency.