Shaw Asks Opposition for ‘Unequivocal’ Support for JDX

Minister of Finance and the Public Service, Hon Audley Shaw, has asked that the Opposition give unequivocal support to the Jamaica Debt Exchange (JDX) programme.
Closing the debate on the economy in the House of Representatives Tuesday night, Mr. Shaw accused the Opposition of giving different signals in terms of their support for the initiative.
“I don’t quite understand the position of the Opposition because, on one hand, we hear support for it and, on the other hand, you hear things like, ‘breach of trust; default and breach of trust’,” the Minister commented.
He accused the Opposition of giving support with one hand, and then taking it back with the other. He said that this was in contrast to the “overwhelming support” from the market.
“I am asking the Opposition to reconsider its position and to give us unequivocal support for this Jamaica Debt Exchange programme,” Mr. Shaw said.
The Minister was winding up the debate on his Motion seeking approval of the Government’s Medium Term Socio-Economic programme, for which it is seeking funding from the International Monetary Fund (IMF), and other multilateral lending agencies.
During the debate, several members of the Opposition expressed support for the JDX, while others voiced reservations about some aspects of the programme.
“We agree that there is urgent need to lower the Government’s interest payments on debt. In that regard, in principle, we support the Jamaica Debt Exchange Programme,”
Leader of the Opposition, the Most Hon Portia Simpson Miller, said. However, she added that that the Opposition could not give the JDX “unconditional” support, “as it involves some clear and present risks.”
Concerns raised by the Opposition included fear of repercussion by bond holders who did not wish to participate in the programme, as well as the programme’s effect on pension schemes and the sustainability of Government’s low-interest rate plan.
“As long as there is a fiscal deficit, there will be need for the Government to go back to the market.the question that arises is, at what interest rate will the Ministry of Finance seek to borrow?” Opposition Spokesman on Finance, Dr. Omar Davies asked.
Dr. Davies also cautioned that the JDX would fail, if future loans were not at the 12.8 per cent interest rate offered by the Government, or lower.
Mr. Shaw made it clear that the Government did not intend to return to interest rates above 12.8 per cent.
He said that, if interest rates continue to remain low, it would be easier for entrepreneurs to access loans for investment and, eventually, end the lending institutions’ reliance on earnings from Government paper.
“Instead of our pensioners being able to rely on the incremental productive capacity of the country, of us as a people, we are now becoming almost hooked on a high interest rate policy, and coming out of public funds. How is the country going to be able to find itself in a competitive position going forward?” he enquired.
Mr. Shaw also assured that local creditors were onboard, and had indicated that they would take up the new bonds issued at the lower rate and, therefore, the fears of repercussion were unfounded.
“When we announced today (January 26) as a deadline, it was really just to get an indication, whether in writing or just a formal indication, ‘yes we’ll participate’, then over the period from tomorrow (Wednesday) to the 16th of February is when the physical process of the exchange would take place,” Mr. Shaw said.
He explained that, in the interim, institutional investors have been “so pretty much fired up to just get it over with that, they didn’t just come with the letter, they came with the bonds.”
It is against the background of this “overwhelming response”, he said that the Government is asking the Opposition to reconsider its position and to give unequivocal support to the programme.
He noted that the JDX was a critical component of Jamaica’s economic programme.