The Government’s $700 billion Jamaica Debt Exchange (JDX) offer initiative was launched on Thursday (January 14) at the Bank of Jamaica’s (BoJ) auditorium, downtown Kingston.
Prime Minister the Hon. Bruce Golding, urged support for the undertaking, and pledged the administration’s commitment to good governance.
The JDX is a new debt management initiative involving the voluntary exchange of existing bonds, excluding Treasury Bills, issued by the Government in the domestic market for new bonds of the same principal value, but which have lower interest cost and longer maturities.
The exchange ratio will see each $100 old bond being exchanged for a new $100 bond. The offer, which opened on Thursday, is scheduled to expire on January 25, with settlements expected on February 16.
The Minister of Finance and the Public Service Minister, the Hon. Audley Shaw (at left), addressing Thursday’s (January 14) launch of the Government’s Jamaica Debt Exchange (JDX) initiative at the Bank of Jamaica (BoJ) auditorium, downtown Kingston. Seated from left, are: Financial Secretary, Dr. Wesley Hughes; Prime Minister, the Hon. Bruce Golding, who delivered the main address; and Governor of the Bank of Jamaica (BoJ), Brian Wynter.
The medium term initiative is pivotal to Jamaica securing up to US$2.4 billion in low cost financing from the International Monetary Fund (IMF) and other multilateral institutions, including the World Bank and the Inter-American Development Bank (IDB).
Addressing the launch, Mr. Golding described the initiative as unprecedented and one of the most important undertaken in Jamaica, for many years.
“We have no alternative, we have no option. It is part of the agreement that we have spent so many weeks and months negotiating with the International Monetary Fund (IMF),” Mr. Golding said.
“But, even if the IMF didn’t exist, and even if we had not turned to the IMF for assistance, what we are seeking to do is something that would have been necessary and that any good management of the economy would have required to be done,” he emphasised.
Prime Minister, the Hon. Bruce Golding, addressing Thursday’s (January 14) launch of the Government’s Jamaica Debt Exchange (JDX) initiative at the Bank of Jamaica (BoJ) auditorium, downtown Kingston.
Reiterating his appeal for support for the initiative, the Prime Minister contended that “this is an exam in which the pass mark is 100 per cent and failure is not something I want to contemplate.”
“It is a contribution that we are asking those people who invested in Government Bonds (who), in doing so, entered upon a contract of trust. We are asking them to make this voluntary contribution in the national effort,” he pleaded.
Mr. Golding pointed out that implicit in the administration’s appeal for support, was their commitment to good governance, underpinned by prudent fiscal policies and operations.
“What we are presenting to you involves a covenant, where we are asking you to make a sacrifice so that this country can have a future. And we accept that, in turn, we have to give you an undertaking that, in terms of our fiscal management, in terms of the performance targets that we are going to have to achieve, we are going to do everything possible to make sure that we hold our end of the bargain,” he said.
“If we fail to do so, we would have not only have betrayed your trust, but we would have (also) caused you to make a sacrifice without the gains and the benefits of that sacrifice being assured,” the Prime Minister assured.
Noting that the undertaking requires strong leadership, both within Government and the private sector, the Prime Minister pledged to provide the necessary leadership and expressed confidence that the private sector would do likewise. He also thanked the institutions which have responded positively so far.
Minister of Finance and the Public Service Hon. Audley Shaw, noted that the JDX was demonstrative of the administration’s recognition of the gravity of the economic challenges facing Jamaica, the administration’s decision to act boldly and introducing remedial action at a time when such action has to be taken.
He said that the Government has embarked upon a vigorous economic reform programme, to raise the real Gross Domestic product (GDP) growth rate, reduce public debt and permanently instill fiscal discipline and accountability, through a stronger institutional framework for Government finances.
“It will be characterised by fiscal consolidation strategies, including the streamlining of expenditure, public sector reform and divestment of non-core entities,” he outlined.
Mr. Shaw added that the undertaking will entail reforms to the financial system, in terms of strengthening the regulatory environment in relation to the Bank of Jamaica (BOJ) and the Financial Services Commission (FSC).
“It will see the Bank of Jamaica taking on a more central role for financial systems stability. It will see the enactment of fiscal responsibility laws, to ensure that we stick within specific limits of deficits and debt to GDP ratios,” he stated.
He explained that it also involves a comprehensive debt management strategy that did not involve minor repairs and piecemeal approaches.
“The alternative to reducing interest is too unpleasant to entertain, and would cause dramatic and far reaching damage to Jamaica’s real economy,” he said.