Phillips says no to another debt swap

Published: Sunday | December 29, 2013 Comments 0
Dr Peter Phillips (left), minster of finance, at a recent press conference with IMF Mission Chief to Jamaica, Dr Jan Kees Martijn. - File
Dr Peter Phillips (left), minster of finance, at a recent press conference with IMF Mission Chief to Jamaica, Dr Jan Kees Martijn. - File

Finance Minister Dr Peter Phillips has rejected any notion of a third debt swap.

With holders of Jamaican debt instruments taking a beating with lower interest payments and longer maturity dates in 2010 and 2013, Phillips yesterday indicated that is not an option the Government is considering for a third go-round.

"We are not looking at any debt exchange," Phillips told The Sunday Gleaner.

"We are looking at things like asset swap but not with any bond holder," added Phillips.

The finance minister's response came hours after the International Monetary Fund (IMF) indicated the possibility of a third debt swap as part of efforts to move Jamaica's debt-to-GDP ratio from approximately 140 per cent to under 100 per cent.

IMF wants debt reduction

In its latest review of Jamaica's economic performance, the IMF said a further direct debt reduction will likely be needed to achieve the programme's debt target.

The programme aims to reduce public debt to 96 per cent of GDP by 2019-20 through the domestic debt exchange, fiscal consolidation and further direct debt reduction.

"In line with the programme, the (Jamaican) authorities have been preparing debt-asset swaps or asset sales to reduce debt by at least one per cent of GDP," said the IMF.

However, the Fund said its staff estimates that, even with these measures, an additional reduction in debt by about two percentage points of GDP would be needed to achieve the 2019-20 debt target.

"The mission reiterated its advice to explore the scope for further direct debt reduction, including possible asset sales."

In 2010, the then Jamaica Labour Party administration introduce the Jamaica Debt Exchange where high-priced debt was swapped for lower-cost debt with a longer maturity period.

But in February, the new administration led by Portia Simpson Miller returned to the country with the National Debt Exchange which had similar features.

arthur.hall@gleanerjm.com

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