Gov’t Expands Allowable Foreign Assets For Investment

The Government has approved the expansion of allowable foreign assets in which domestic capital and financial market intermediaries can invest, effective April 30, 2021.

These are corporate foreign currency debt instruments issued by entities incorporated in Jamaica that generate foreign earnings, and attain an investment grade global credit rating or Caribbean Information and Credit Rating Services Limited (CariCRIS) rating of at least ‘good’ or ‘strong” on the national long- and short-term rating scales, respectively.

Also included are publicly traded shares in such organisations that are issued in foreign currency, and whose debts are similarly rated.

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, explained that the targeted intermediaries are securities dealers, collective investment schemes, and pension funds.

He was speaking during Wednesday’s (April 28) virtual launch of CariCRIS’ Jamaica office.

Dr. Clarke said the set of allowable foreign instruments also includes Bank of Jamaica (BOJ) certificates of deposit denominated in foreign currency; Government of Jamaica-guaranteed corporate foreign currency debt instruments issued by entities incorporated in Jamaica; and finally, publicly traded shares of corporate entities incorporated outside of Jamaica with shares issued in US Dollars, British Pounds, Euros, and Canadian Dollars, with market capitalisation of US$10 billion or greater”.

Dr. Clarke said the expansion was among the recommendations of the Financial Deepening Task Force, which he appointed in 2018, in keeping with its terms of reference.

These, he indicated, included a) recommending reforms that can lead to the acceleration of access to finance and the creation of investible domestic assets; b) increasing the transparency and price discovery of domestic assets; and c) standardising asset quality for sound investments through a programme to have independent issuers of domestic assets to support the transition from zero risk-rated government issues to non-government assets that support prudent investments by investors.

“This vision, laid out in 2018, was important because Jamaica has embarked on a long-term process on deleveraging public debt. By the process of the Government deleveraging itself, pools of investable funds were becoming, are becoming and will continue to become available. We want to make sure that they are channeled productively, so that we can enjoy an expansion of our economy in a sustainable way,” Dr. Clarke said.

The CariCRIS Jamaica office is the first to be established anywhere in the region outside the Trinidad and Tobago capital, Port-of-Spain, where the entity is headquartered.

The office is situated on the PanJam Building in the heart of the New Kingston business district.