JIS News

Holders of domestic Government bonds are to be formally invited this morning (January 14) to exchange them for new bonds that will carry much lower interest rates and extended maturities.
Prime Minister the Hon. Bruce Golding told the nation Wednesday night (January 13) that the offer, which will be launched at the Bank of Jamaica auditorium in downtown Kingston as the Jamaica Debt Exchange Offer, will remain open until January 26 and the actual exchange transaction must be completed by February 16.
He said the offer is crucial to an agreement with the IMF for the $1.2 billion standby facility the Government is seeking to plug its revenue.
He assured that the principal amount of these bonds will be fully honoured and there will be no “haircut”. In other words, someone who tenders a $100 bond will receive in return a new $100 bond, but at a lower interest rate and an extended maturity date, Mr. Golding explained.
He stated that financial institutions that participate fully in the programme will be assured of the support of the Government in any adjustment that they need to make.
“We have the full support of the IMF, World Bank and IDB and a special fund will be established to assist those financial institutions to ensure financial system stability,” Mr. Golding said.
The Prime Minister said there are $700 billion of domestic Government bonds, which is more than 50 percent of the country’s total debt, carrying varying interest rates, ranging up to 28%. He added that it is costing $182 billion to pay the interest on these bonds.
Of significance is the fact that this Debt Exchange Programme applies only to local debt. It does not affect external debt, which is far less burdensome in terms of its interest rates.
The Jamaica Debt Exchange programme cannot and does not stand alone, Mr. Golding noted.
“It is part – a critical part – of a much more elaborate programme to correct the long-standing, systemic weaknesses in our fiscal and economic management that have prevented us from moving forward, from growing even in times of global economic boom when almost every other country was growing,” he stated.