Tue | Sep 19, 2017

Letter of the Day: Gordon Robinson fails the fact-check test

Published:Tuesday | February 9, 2016 | 2:01 AM

THE EDITOR, Sir:

GORDON ROBINSON’s In Focus article in The Sunday Gleaner dated February 7, 2016 (‘The Great Pretenders’) contains a number of factual errors related to the PetroCaribe debt buy-back and the financing of the NDX payout.

It is understandable to make errors of this nature, given the complexities of the PetroCaribe transaction and the budget process in general.

However, I feel obliged to make the necessary clarifications in order to foster greater public understanding of the issues.

With respect to the PetroCaribe debt buyback, the facts are as follows:

(1) The PetroCaribe debt is included in the extended fund facility definition of the stock of debt, the definition used when I speak about debt numbers.

(2) The value of the PetroCaribe debt that was purchased by the Government is US$3.25b. The purchase price was US$1.5b, which represents a substantial write-down of the US$3.25b.

(3) In order to make the payment for the buy-back and support other budgetary needs, the Government of Jamaica issued a US$2b instrument in the international capital market, at the lowest rate ever received by Jamaica.

(4) In that regard, we reduced the debt stock by US$3.25b and added US$2b, resulting in a net reduction in the debt stock of US$1.25bn and a simultaneous reduction in the debt to GDP ratio of 10%.

(5) The calculations show that the debt service will be lower by approximately US$328m over the life of the funds raised in the international market, when compared with the total debt service on the full PetroCaribe debt. The calculations have been published on the website of the Ministry of Finance & Planning.

With respect to the payout of the NDX bonds totalling J$62b and maturing in February of this financial year, financing for this amount was included in the 2015-16 Budget.

It is, therefore, erroneous to the state that taxpayers will be called upon to pay for the maturity occurring in this year, via a new tax package in the next budget year. Should Mr Robinson require further clarifications, he may make contact with the financial secretary at the Ministry of Finance & Planning.

 

PETER D. PHILLIPS (PhD)

Minister of Finance