JDX Contingency Facility at $85 Billion

The Financial Sector Support Fund (FSSF), the contingency facility created to assist financial institutions that may become stressed in the wake of the Jamaica Debt Exchange (JDX), is currently at US$950 million (J$85 billion).
Governor of the Bank of Jamaica (BOJ),Brian Wynter, in an interview with JIS News following his recent quarterly press briefing, stated that although there were no signs of any negative fall out from financial institutions thus far, the authorities, based on the modeling of several worst case scenarios – such as margin calls from overseas lenders, capital flight and skittish response of depositors – determined the need for and the size of the Fund.
The FSSF provides a US$350-million cushion for margin calls, with another US$600 million for capital injection.
Mr. Wynter observed that while the country is past the most risky period, “there are still risks out there.” The FSSF, he emphasized, was conceptualized out of an abundance of caution.
The Governor also advised that the size of the FSSF was a moving target. The initial amount announced by the Government was US$400 million, to lend financial institutions and investment houses whose capital adequacy levels become stressed by the JDX.
“The amount we are working with continues to evolve,” the Governor said.
He also disclosed that the entire US$640 million first tranche, received by BOJ from the IMF on February 9, was available for this purpose should the necessity arise.
The Governor was optimistic that while financial sector fall-out may not call for the full use of the US$950 million contingency, the Government will not seek to stop the build-up of the fund.
He also advised that there was sufficient flexibility in the arrangement with the multilaterals, for the money to be put to other uses, if the financial sector does not fully need such intervention.