NDX closes today
The National Debt Exchange offer (NDX), which was launched last Tuesday, closes today.
Jan Kees Martijn, the head of the IMF mission to Jamaica, has said the success of the initiative requires a high participation from creditors in the NDX offer.
Yesterday, Scotiabank said its board of directors and its subsidiaries have discussed "the impact of accepting the NDX offer and have approved the full participation in the offer".
"The NDX offer represents a significant opportunity for the Government to improve the fiscal imbalance and long-term sustainability of the country's debt dynamics. The respective boards felt that full participation in the NDX offer was prudent and in the best interest of all our stakeholders," Bruce Bowen, president and CEO of Scotia Group Jamaica, said.
Other major institutions such as the National Commercial Bank, Sagicor Life Jamaica and GraceKennedy have already accepted the NDX.
Second in three years
It is the second debt exchange in three years and was launched outside the glare of the media at the Bank of Jamaica. Finance Minister Dr Peter Phillips said it would involve no haircut on principal investment.
Phillips has said the offer could lead to the reduction of the country's debt-to-GDP ratios by 8.5 per cent or around $17 billion per year between now and 2020.
The minister has pointed out that the country's debt, which stands at 140 per cent of GDP, as being the largest consumer of government revenue and said the situation has to be cauterised.
"The numbers say it all: for every dollar of the Budget that we spend, approximately 55 cents goes to pay the debt, another 25 cents to pay wages, which leaves just 20 cents to fix roads, maintain schools and hospitals and provide other critical services for the Jamaican people," Phillips said.
The NDX is an offer to all holders of domestic marketable securities, both US dollar and Jamaican dollar, for a par-to-par exchange with no reduction in the principal amount, a reduction in interest rates and an extension in the maturity profile of the debt.
The results of the NDX are expected to be announced tomorrow.