Your Financial FactSheet

Jamaica’s fiscal deficit is now estimated at 10 per cent of gross domestic product (GDP), and the overall public-sector deficit will likely round out the year at 12.75 per cent of GDP, according to information presented to Parliament by Finance Minister Audley Shaw Tuesday.

A temporary freeze on the licensing of securities dealers whose business models are skewed towards trading in repurchase agreement and other short-term liabilities will take effect next Tuesday as part of the financial-sector reform in adherence to International Monetary Fund (IMF) conditionalities for the 27-month standby loan to Jamaica.

The proposed Jamaica Debt Exchange (JDX) is really “an offer we can’t refuse” in that the Jamaican government requires that the exchange succeed as a condition of Jamaica’s request for a combined U.S. $2.4 billion in IMF and other multilateral assistance.

AN executive from a leading US investment bank has said that while credit is available in that country, lending terms have become far more stricter and will never return to the relatively lenient standards of the past decade.

FINANCIAL secretary Wesley Hughes expects flat growth and single digit inflation for fiscal year 2010/11, provided Jamaica secures the debt swap next week.

Governor of the Bank of Jamaica (BOJ) Brian Wynter has said that Government’s debt management programme will be a critical first step to repaying the US$1.25 billion loan agreement that the country is expected to sign with the International Monetary Fund (IMF).

THE Bruce Golding Administration has received kudos for taking the bull by the horns and tackling the country’s crippling debt burden head on. Its newly launched Jamaica Debt Exchange (JDX) programme and medium-term economic plan are stepping stones toward sustained economic growth.

The international ratings agencies followed through to place Jamaica in default on announcement of the $700 billion debt-exchange programme, JDX, that is recalling 350 domestic bonds.

BEARING in mind the overall exposure of bank of Nova Scotia to Jamaica’s sovereign debt, it is appropriate that the first international analyst to respond to Jamaica’s proposed debt deal was Scotia Capital’s New York based Joe Kogan, who sent out his response only one hour after the end of the PM’s speech on Wednesday night.

The Jamaica Debt Exchange may not be perfect, but this move by the Government to begin to rein in its debt interest payments reflects well the idea that “the perfect is the enemy of the good”.

The International Monetary Fund (IMF) has, in principle, approved Jamaica’s request for a US$1.3-billion standby agreement. However, the deal will still need the stamp of approval of the executive board of the fund before Jamaica begins to draw down on the money.

Key stakeholders in the financial sector yesterday warned the Bruce Golding administration that they would not let his Government off the hook if it fails to deliver on its promise of a prudent fiscal-management programme to supplement the debt-exchange initiative.