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LETTER OF THE DAY - How about a JDX for students?

Published:Monday | January 25, 2010 | 12:00 AM

The Editor, Sir:

THE Jamaica Debt Exchange (JDX) is a done deal and should see the Government meeting the International Monetary Fund's (IMF) debt-exchange threshold of 90 per cent. Not because fund managers have overnight become patriotic, but simply because, from a responsible investor's perspective, they have absolutely no choice.

Not only must they absorb an imposed interest-rate reduction which averages 6.1 percentage points, but also an extension of the maturity period by an average of 4.7 years. Inconclusive guidelines and incomplete endgames discourage the recalcitrant. Shattered for all times is the myth that government securities are risk free. That former sacred cow having now been sent to the meat house, it will be amusing to see just how our ever-nimble retail brokers 'reposition' the term.

My real interest, however, lies at the other end of the wealth spectrum. So, on behalf of all financially stressed tertiary students, I would ask this question of the two ministers whose decisions will have an impact on them.

Given the interest rate of 12 per cent appropriated by the Government of Jamaica (GOJ) for its local borrowings, do you recognise an obligation arising from applied ethics to adjust students' loan interest rates downwards from their current 12 per cent level? This question arises from a long-permitted differential and considerations of social equity. Will you really charge the students what you offer the captains of finance?

By my reckoning, a case could be made for a loan rate somewhere between six and 7.8 per cent based on proportionality. For starters, Messrs Ministers, you could use the Public Sector Reform Programme to determine how much more cost efficient the Students Loan Bureau (SLB) can become. A look-in at that agency two days ago saw one professed student seeking information and a sprinkling of older folks talking mainly to each other.

Reduction in delinquency rates

Perhaps you could determine if the resulting loss from the SLB'S interest-rate spread can be compensated for by cost savings and any projected reduction in delinquency rates. If elasticity is claimed to work for tax-forgiveness programmes, and now, presumably the economy, why not for our debt-stressed students?

On the other hand, when the IMF is on a rescue mission, requiring morality and conditionalities to be sustainable bedfellows is seldom part of the script. Let's see.

I am, etc.,

GEORGE CAMPBELL

Stony Hill