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First mentioned in a public address to the people of Jamaica on February 11, 2013, the National Debt Exchange Offer (also called NDX or JDX2) is the Government’s programme to reduce the borrowing costs of the Jamaican Government for the long-term betterment of the Jamaican economy and people, as a pre-condition of getting an agreement with the International Monetary Fund (IMF).
The Aim
The Government’s aim is to mobilize the nation
… around the national objective of reducing Jamaica’s debt ratio from over 140% of GDP (currently using the higher IMF numbers) to approximately 95% of GDP over the next 7 years.
and to reduce “our debt to GDP ratios by 8.5% or around $17b per year between now and 2020.”
As the Finance Minister said in his speech,
Essentially this programme exchanges higher interest debt for lower cost debt and will entail significant sacrifices from our financial institutions and the holders of our domestic bonds, it will be painful and difficult but we have no option.
Other Key points made during the address to the nation
- New Unit in the Ministry of Finance – We shall be establishing by the end of March 2013 a coordinating and implementing unit in the Ministry of Finance, staffed with persons recruited from outside and within the public sector charged with nothing else than ensuring that everyone – all agencies and departments “get with the programme” and meet the timelines.
- Economic Programme Oversight Committee including Stakeholder representatives (such as the private sector and trade unions) and government officials to among other things monitor the compliance and progress of the Ministries, Departments and Agencies with regard to the implementation of the IMF agreement with full authority on their part to inform the public of their findings.
- The programme is designed to secure the major reforms “up front” either as “prior actions” or benchmarks for the first year. This in itself enhances the chances of success.
Other Pre-Conditions
- Wage to GDP Ratio – We will also need to have a contract in place with public sector workers which will enable the achievement of a wage to GDP ratio of 9% by 2015/2016. We are in active discussion with the representatives of public sector workers to achieve this objective.
