Washington (CMC) — The International Monetary Fund (IMF) says it supports the Government’s decision to sell some of its debt.
“The buyback is firmly anchored in the goals of the Government’s reform program. It’s an important step in reducing the value of the country’s public debt and will help to put debt firmly on a downward trajectory,” said Gerry Rice, IMF Director, Communications Department.
Speaking with international reporters Rice said that the Washington-based financial institution “welcome the Jamaican Government’s proactive move to manage its debt and its continued commitment to economic reform.
“The IMF fully supports the transaction,” he said.
Jamaica Thursday sold US$2 billion dollars in bonds to help pay down debt owed to Petroleos de Venezuela SA under the PetroCaribe programme, the oil initiative Caracas has with several Caribbean islands.
Jamaica sold US$1.35 billion in bonds due 2028 to yield 6.75 per cent and US$650 million of notes due 2045 to yield 7.875 per cent.
Jamaica said in a filing Thursday that it plans to spend US$1.5 billion of the proceeds to pay down debt owed to state-owned PDVSA.
Jamaica’s total debt under the program is about US$3 billion. Market sources said that since the PetroCaribe programme was conceived in 2005 by then President Hugo Chavez, Venezuela has sold more than US$28 billion of oil to Caribbean and Central America countries that pay for only a portion of the bill upfront and finance the remainder at one or two per cent over 25 years.
Jamaica’s credit was raised by two rating companies in the past two months. Standard & Poor’s lifted Jamaica to B from B-in June, saying the island is making progress in lowering debt levels that remain among the world’s highest.
Moody’s Investors Service raised its grade by one level on May 28, saying the government’s commitment to fiscal reform should help fuel economic growth in the next two to three years.
Bank of America Corp. and Citigroup Inc. are managing the sale. Jamaica last tapped global markets in July 2014, selling US$800 million of 10-year notes. The remaining proceeds of the sale will be used for general budgetary financing.
Rice told reporters, that looking ahead the IMF believes that the “full implementation of the ongoing economic reform programme…should help maintain access to international financial markets at favourable terms.
“We see the program as being on track and Jamaica just recently completed the 8th review,” he added.