Finance and Planning Minister, Dr. the Hon. Peter Phillips, is attributing the successful implementation of the National Debt Exchange (NDX) programme, to extensive consultations and open dialogue between the Government and participating financial institutions.
The Ministry of Finance and Planning, which piloted the programme, concluded its implementation on March 22 with commitments from eight of Jamaica’s leading financial institutions to forgo dividends on domestic client bonds, totalling in excess of $20 billion. The programme exchanges higher interest debt for lower cost debt with extended maturity periods.
Participating institutions include: the Bank of Nova Scotia (BNS); National Commercial Bank (NCB); Sagicor Life; Jamaica Money Market Brokers (JMMB); Jamaica National Building Society (JNBS); First Global Financial Services (FGFS); Victoria Mutual Building Society (VMBS); and Guardian Life Limited.
Speaking at a Jamaica House media briefing at the Office of the Prime Minister (OPM) on Wednesday, March 27, Dr. Phillips said the negotiations involved bonds worth approximately J$20 billion and US$51 million, currently held by the institutions. He advised that the talks were concluded during a second phase of discussions, after initial discussions failed to achieve the targeted result.
“The original proposal was predicated on achieving 99.5 per cent compliance. As it turned out, actual participation was in the order of 98.8 per cent, a little short of the original target, of about 3/6 of one per cent, in the 8.5 per cent savings that was needed…when the (International Monetary) Fund calculated (the figures),” the Minister said.
He disclosed that the government engaged in further discussions with the institutions which suggested some changes to the original set of proposals, resulting in the completion of the NDX on March 22.
“It goes without saying that the Government and people of Jamaica are appreciative of the commitment and the contribution made by all the bond holders and by the institutions that have participated in Phase two of the transaction. It is a very important element in our overall considerations,” Dr. Phillips said.
Successful implementation of the NDX was one of the International Monetary Fund’s (IMF) stipulations in a staff level agreement reached with the Government, which is seeking to conclude negotiations for a four-year Extended Funding Facility (EFF) to support Jamaica economic programme.
It also forms a pivotal part of the administration’s debt reduction programme aimed at reducing the debt ratio to 8.5 per cent of the country’s gross domestic product (GDP).
By Douglas McIntosh, JIS Reporter