PANAMA CITY – Jamaica will restructure its local debt for the second time in three years as the Caribbean island struggles to boost economic growth and secure a new accord with the International Monetary Fund.
The nation asked bondholders late Monday to exchange “higher-interest debt for lower-cost debt,” Finance Minister Peter Phillips said in a speech with Prime Minister Portia Simpson Miller. There will be no “haircut” on the principal investment, he said.
The government will target a debt-to-gross domestic product ratio of 95 percent within seven years, down from the current 140 percent, Simpson Miller said.
“The numbers say it all: for every dollar of the budget that we spend approximately 55 cents goes to pay the debt, another 25 cents to pay wages, which leaves just 20 cents to fix roads, maintain schools and hospitals and provide other critical services for the Jamaican people,” Phillips said. “It just isn’t enough.”
The Caribbean nation swapped $7.8 billion of local bonds for securities with longer maturities and lower interest rates in 2010. Since then, central bank reserves have fallen to about $1 billion from a peak of $2.6 billion in the first half of 2011.