Govt. To Make First Major Repayment on NDX Bonds Feb. 2016

The Government is expected to make the first major repayment of $62 billion on maturing bonds issued under the National Debt Exchange (NDX), in the first quarter of the next calendar year.

Making the announcement, Minister of Finance and Planning, Dr. the Hon. Peter Phillips, said the administration’s ability to make the payment next February, as scheduled, is due to “the fiscal discipline we have imposed on ourselves.”

The Minister was opening the 2015/16 Budget Debate in the House of Representatives, recently.

Aimed at reducing the country’s debt stock, the NDX was part of the pre-requisite to signing a US$932.3 million four-year Extended Fund Facility (EFF) with the International Monetary Fund (IMF).

Under the NDX, financial institutions and Government bond holders were required to exchange their existing bonds for bonds with longer maturities and at lower interest rates. The principal was not affected.

The debt exchange offer will make possible the reduction of the country’s debt to Gross Domestic Product (GDP) ratios by 8.5 per cent or around $17 billion per year, between the start of the offer in 2013 and 2020.

In the meantime, Minister Phillips noted that since the start of the EFF with the IMF in May 2013, the Government has been “honouring our commitments to the stakeholders.”

“We have honoured the commitments to the workers who, by their wage restraint agreements, contributed to meeting the prior conditions stipulated under the programme. And, we have honoured all our commitments to other stakeholders, including our creditors and the international community,” he said.

The Minister noted however, that even though there was the wage restraint agreement, the Government met the obligations to the workers which had been entered into by previous administrations.

These include: payments due under the health sector reclassification agreement; seven per cent back-pay to public sector workers; back-pay to teachers; and the outstanding wage payments in relation to salary realignment for correctional officers and firemen.

“In addition, we have met our obligations to pensioners, financial institutions and others,” the Minister said.

He noted as well, that to meet its commitments with full transparency, the Government established the Economic Programme Oversight Committee (EPOC), pointing out that “their regular reports have kept Jamaicans abreast as to our progress.”