The Government of Jamaica has undertaken consistent measures to ensure a steadfast path of fiscal consolidation and debt reduction in order to build a strong and prosperous economy. We have had to make sacrifices to ensure this.The sacrifices have been deep and there is still more to be done. However, the Government is committed to making it work and the pain is bearing fruit.
The most recent demonstration of the green shoots was the Government’s bold and successful entry into the international bond markets in August,2017.
US$145 million of high interest rate shorter term global bonds were repurchased by the Government. US$869 million in long term global bonds were also issued in the international bond market providing the funds utilized for the repurchase.
The Government also exercised its option to prepay US$526 million of USD bonds in the domestic market through utilization of some of the proceeds from the international bond market issue.
Market analysts marveled at the high level of over-subscription of the external bond issue(3.8times the take-up) and the historic low yields that are equivalent to rates that apply to investment grade issuers.The yields were:5% on bonds due in 2028 and 6.45% for those due in 2045.
Minister Shaw asserted, "these are historically the lowest yields that the Government of Jamaica has been able to secure for long maturity global bonds.” He explained that the interventions in the bond market were fully in concert with overarching efforts to reduce the national debt; and extend maturities.
“This is a resounding vote of confidence in the on-going work to maintain macroeconomic stability and to reform the Jamaican economy.This includes fundamental changes in: independence of the Central Bank; exchange rate flexibility; public sector transformation; and reduced red tape for business activity. These are vital reforms but hardwork remains to be done to ensure that growth is strong and equitable.”
Minister Shaw expanded on the essential role of sparking growth to return Jamaica to prosperity and stability. He pointed out that private investors will be the engines of that growth.
This includes major projects to increase bauxite exports; accelerate the booming BPO sector; expansion and diversification of the hospitality sector (stop over tourism is already booming); and important productive infrastructure enhancements (primarily ports,road ways and irrigation). Specific focus has been placed on the linkages between the agricultural sector and the tourism sector. The competitive exchange rate and free movement of capital already are contributing to powerful improvements in the current account.
These positive trends have served to increase employment to the highest level since the 2008 international financial crisis. Minister Shaw highlighted the strong performance of the tourism sector to create jobs.The recent Labour Force Survey showed that 35,800 new jobs were created between April 2016 and April this year. He stressed the fact that there was a marked increasein employment for women.
He pointed out the importance of the Government’s continued over-performance with regard to its commitment to maintain extraordinarily tight fiscal controls.The result has been the lowest rates of inflation and interest rates in over three decades.This stability in major economic indicators has been essential to preserve the hard won competitive exchange rate and to stabilize the foreign exchange market. Stable exchange rates are vital to investment decisions and to meeting the debt reduction targets.
He closed by reminding us that the sacrifices are being made by all Jamaicans,“these successes are vital to show the population that it is worth it. Jamaica needs stability as a vital condition for achieving the growth rates that will benefit everyone. It has been essential in encouraging the important private investments that will drive that growth.”
Communication Advisor to the Minister of Finance and the Public Service
Ministry of Finance and the Public Service
30 National Heroes Circle Kingston 4,JamaicaW.I. Tel:(876)932-5503