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Clean Slate: Jamaica working to pay off oil debt to Venezuela
Jamaica will return to the dollar bond market in the fiscal year beginning April 1, Phillips said. The country sold US$800 million of bonds in July last year. The government is also in discussions to take advantage of the drop in crude prices by hedging to lock in prices at current rates, Phillips said.
Jamaica dollar bonds have returned 8 percent in the past 6 months, second only to Argentina’s 22 percent for emerging markets, according to JPMorgan Chase & Co.’s EMBIG index. Phillips said that reflects improving economic fundamentals and the government’s commitment to cut its debt.
“The foundations of this coming phase of growth will be stronger and firmer than before,” he said.
Jamaica has passed seven straight IMF reviews as it has tackled inflation, cut the unemployment rate and improved its rankings for doing business since the default and subsequent restructuring.
The Simpson-Miller administration is also pushing new sectors for development, including outsourcing, energy and logistics. Investors gathered at the Chinese-built convention center overlooking Montego Bay this week as the government pitched more than US$1 billion in projects.
Jamaica is heavily dependent on services, which accounts for 79 percent of the US$14 billion economy. Inflation for the fiscal year ending this month will be at or below 5 percent, the lowest level in 45 years, Bank of Jamaica Governor Brian Wynter said in a separate interview. That should help stabilize the Jamaican dollar, which has lost 6 percent of its value against the U.S. dollar in the past 12 months and remains a chief complaint for manufacturers, he added.
The government will set an inflation target of between 5 percent and 7 percent for next fiscal year, Wynter said.
Progress on slowing inflation appeared derailed last year when a drought decimated crops and sent the economy into contraction. Gross domestic product (GDP) shrank 0.3 percent in the quarter ending in December, and 1.4 percent the previous quarter, according to the Planning Institute of Jamaica.
“That was a disappointment but it was driven by a drought that was deeper than we thought,” Wynter said. “Jamaica is definitely not in recession.”
