JIS News

Financial Secretary, Dr. Wesley Hughes, has said that the Jamaica Debt Exchange (JDX) has provided a turning point for Jamaica by transforming an unsustainable fiscal situation into a more manageable and favourable one.
Speaking at a recent Financial Services Commission (FSC)-sponsored investment forum entitled: ‘The Jamaica Debt Exchange: The Way Forward’, Dr. Hughes emphasised that without the JDX, the high debt service component in this year’s budget would have resulted in a strong possibility of default and increased economic uncertainty, creating conditions for social implosion.
“Had there been no JDX, there would have been a much higher debt service cost to this fiscal year’s budget, which would have resulted in a combination of, if not all of the following: strong possibility of default and increased economic uncertainty with spillover effects in the foreign exchange market; further draconian tax measures; staff cuts via redundancies, early retirement options, non-renewal of contracts, among others; and increased risk of social unrest and political instability,” he explained.
Pointing to evidence of the positive impact of the JDX since its launch in January this year, Dr. Hughes said “we are now on a trajectory of lower interest rates going forward. In recent Treasury Bill auction, rates have been sub-10 per cent.”
He further indicated that the JDX has also had a positive impact on the government’s fiscal deficit in the 2010/11 financial year as there has been a significant reduction in debt service costs and that the lower fiscal deficits will contribute to lower taxation in the future.
“The real interest rate on the public debt is expected to fall by 5.4 percentage points between FY 2009/10 and FY 2013/14. These positive spillover effects lead to renewed business and consumer confidence, which are necessary if the economy is to rebound,” he stated.
Dr. Hughes said that the improved business confidence is also evident in the fact that not one entity that participated in the JDX has requested liquidity support from the Financial Sector Stability Fund (FSSF). “This augurs well for the country’s investment prospects,” he pointed out.

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