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Shaw says Petrocaribe debt deal will hurt taxpayers

Published:Friday | July 24, 2015 | 6:08 PM
Shaw ... the money generated from the issuance of two bonds on the capital market comes with interest rates that are too high.

Opposition Spokesman on Finance, Audley Shaw, is criticising the government for going to the capital market to raise money to pay off its Petrocaribe debt.

According to Shaw, the government should have opted to go to the multilaterals as they offer money at lower interest rates.

According to the Opposition spokesman, the money generated from the issuance of two bonds on the capital market comes with interest rates that are too high.

Yesterday, the Ministry of Finance confirmed that the two long-term bonds were oversubscribed, raising $4.5 billion US dollars - much higher than the intended amount of US$2 billion.

One bond, valued at US$1.35 billion, is to mature in 2028 and pay bondholders an interest rate of 6.75 per cent.

The other bond is valued at US$650 million with a 2045 maturity date and a payout of 7.875 per cent.

Shaw says the interest rates on the bonds are high and will result in what he calls expensive debt.

The current interest rate on the PetroCaribe arrangement is between one and two percent.

 

opposition spokesman on finance, Audley Shaw

Mr. Shaw says the Finance Minister, Dr. Peter Phillips, needs to shed more light on the deal.

Jamaica’s debt under the Petrocaribe programme amounts to about US$3 billion for oil received from Venezuela.