Jamaica Pleased With Sale Of Debt On International Market: Finance And Planning Minister

KINGSTON, Jamaica CMC – The Jamaica government says the two billion US dollars raised on the international market as a result of a debt sale is the highest ever for the country.

“This is more than twice our previous largest, which was US$800 million, at the lowest interest rates ever achieved by Jamaica in the international markets,” said Finance and Planning Minister, Dr. Peter Phillips.

Last week Thursday, the International Monetary Fund (IMF) said it supported the government decision to sell some of its debt and it also welcomed the Jamaican government’s proactive move to manage its debt and its continued commitment to economic reform.

Jamaica Thursday sold two billion US dollars in bonds to help pay down debt owed to Petroleos de Venezuela SA under the PetroCaribe programme, the oil initiative Caracas has with several Caribbean islands.

Jamaica sold US$1.35 billion in bonds due 2028 to yield 6.75 per cent and US$650 million of notes due 2045 to yield 7.875 per cent.

Jamaica said in a filing Thursday that it plans to spend US$1.5 billion of the proceeds to pay down debt owed to state-owned PDVSA.

Phillips told the Rural Electrification Programme’s (REP) 40^th anniversary staff awards banquet that the Government was able to raise US$1.35 billion at a rate of 6.75 per cent and secured a 30-year issue for $650 million at 7.87 per cent.

“This reflects long term confidence in Jamaica’s economic future being manifested in the international markets. This will enable us to buy back a substantial portion of our debt to Venezuela. I hear estimates of the extent of the reduction in the price of that debt. I am bound by confidentiality agreements, but I will speak on it later,” he added.

Jamaica has benefitted from close to US$3 billion in concessionary financing and balance of payments relief under the PetroCaribe Energy Cooperation Agreement with Venezuela, since its establishment in 2005.

Phillips also announced that the country has been able to reduce its reliance on borrowing and has achieved a reduction in interest rates, under the IMF Extended Fund Facility.

“We have been spending less on imports and saving more of our foreign exchange earnings. As a result, Jamaica’s balance of payments deficit on current accounts has improved from the negative 13.4 per cent of Gross Domestic Product (GDP), which it was in 2011/12, to 5.3 per cent at the end of the last fiscal year,” he informed.

He said that the Net International Reserves (NIR) in 2013 stood at US$800 million, but is now at US$2.4 billion.

The Finance Minister also stated that the inflation rate has continued to decline and at the end of the 2014/15 fiscal year stood at 4 per cent, the lowest in 48 years.

“By maintaining a competitive exchange rate we have made our exports more competitive. We have streamlined business registration and the development approval process to achieve a 90-day window for the vast majority of development approvals, and we can be more confident in the future as a result of these achievements,” Phillips said.

He said Jamaica has become attractive to foreign investors, with foreign direct investments (FDI) for 2014 being more than US$700 million, the second highest in the English speaking Caribbean.