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In the initial announcement of the success of the Government’s Euro bond offering, the Prime Minister indicated that if conditions appeared favourable the issue would be re-opened to accommodate a larger sum. It is with great pleasure that I inform this Honourable House that the issue was re-opened and was subscribed to the tune of an additional 100 million Euros. The additional sum came at a lower cost than the original 100 million Euros. Whilst the original amount came at a spread of 572 basis points (5.72 percentage points) over German interest rates, the additional amount came at a spread of 553 basis points (5.53 percentage points). This successful re-opening is significant not only in terms of indicating strong confidence in Jamaica in the Euro bond market, but also in terms of the positive implications for the domestic foreign exchange market and for the fiscal budget. As regards the foreign exchange market, the additional 100 million Euros was not programmed for by the BOJ and will assist greatly in rebuilding the Net International Reserves faster than projected. Furthermore, negotiations are far advanced for another loan which will further strengthen the Central Bank’s reserve position. The implications for the fiscal accounts and for domestic interest rates are no less positive. The additional resources, combined with the improvement in the revenue inflows which have been above projections for December and January, will not only guarantee that the deficit target for 99/20000 is met, but assures the Government of secure funding for much of the first quarter of fiscal year 2000/01. As such, the reduced requirements of Central Government for financing from the domestic market should logically lead to interest rates falling in line with the objectives which have been articulated by the Administration.
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