Highest Sum Ever Raised Through Bonds – Finance Minister

Minister of Finance and Planning, Dr. the Hon. Peter Phillips, says the US$2 billion  raised  through the issue of two bonds on the international capital market, is the highest ever.

“This is more than twice our previous largest, which was US$800 million, at the lowest interest rates ever achieved by Jamaica in the international markets,” Dr. Phillips said.

The Minister  was addressing the Rural Electrification Programme’s (REP) 40^th anniversary staff awards banquet, held at the Jamaica Pegasus Hotel, in Kingston,  on July 24.

Dr. Phillips revealed that the Government was able to raise US$1.35 billion at a rate of 6.75 per cent and secured a 30-year issue for $650 million at 7.87 per cent.

“This reflects long term confidence in Jamaica’s economic future being manifested in the international markets,” the Minister argued.

“This will enable us to buy back a substantial portion of our debt to Venezuela. I hear estimates of the extent of the reduction in the price of that debt. I am bound by confidentiality agreements, but  I will speak on it later,”  he added.

Jamaica has benefitted from close to US$3 billion in concessionary financing and balance of payments relief under the PetroCaribe Energy Cooperation Agreement with Venezuela, since its establishment in 2005.

The PetroCaribe Agreement was established under the leadership of  the late President of Venezuela, His Excellency Hugo Chávez, in response to the sudden increase in international oil prices.

Meanwhile, Dr. Phillips said the country has been able to reduce its reliance on borrowing and has achieved a reduction in interest rates, under the Extended Fund Facility with the International Monetary Fund.

“We have been spending less on imports and saving more of our foreign exchange earnings. As a result, Jamaica’s balance of payments deficit on current accounts has improved from the negative 13.4 per cent of Gross Domestic Product (GDP), which it was in 2011/12, to 5.3 per cent at the end of the last fiscal year,” he informed.

He added that the Net International Reserves (NIR) in 2013 stood at US$800 million, but is now at US$2.4 billion.

The Finance Minister also stated that the inflation rate has continued to decline and at the end of the 2014/15 fiscal year stood at 4 per cent, the lowest in 48 years.

“By maintaining a competitive exchange rate we have made our exports more competitive. We have streamlined business registration and the development approval process to achieve a 90-day window for the vast majority of development approvals, and we can be more confident in the future as a result of these achievements,” Dr. Phillips said.

He  emphasized that Jamaica has become attractive to foreign investors, with Foreign Direct Investments for 2014 being more than US$700 million, the second highest in the English speaking Caribbean.