THE PSOJ SUPPORTS THE JAMAICA DEBT EXCHANGE
The Private Sector Organisation of Jamaica (PSOJ) supports the decision taken by the Government of Jamaica (GOJ) to execute the Jamaica Debt Exchange (JDX). This transaction is consistent with the PSOJ’s own Economic Policy Framework and recommendations made to the Government.
The PSOJ believes that the fiscal deficit and the debt represent the largest short-term risks to Jamaica’s macroeconomic stability. Furthermore, it believes that the size of the fiscal deficit constrains economic growth and employment by creating high rates of taxation and the crowding out of private investment.
The PSOJ believes that the JDX will result in meaningful interest cost savings that will significantly improve the fiscal deficit and overall macroeconomic stability. As a result, the JDX is likely to lower the interest rates faced by businesses and entrepreneurs and create enhanced economic activity and job creation.
The participation of the financial sector in the transaction would represent true private sector cooperation and burden sharing which would be laudable. In turn, we commend the GOJ for the care it has taken in structuring the JDX so as to maintain the integrity of the financial sector and the orderly and efficient functioning of our domestic financial market.
The PSOJ is hopeful that JDX will form only one component of a broader fiscal strategy which will encompass fiscal responsibility legislation, a central treasury management system and efficiency improvements and cost reductions throughout the public sector.
According to PSOJ President, Joseph M. Matalon: “while the PSOJ believes that macroeconomic stability is a necessary component of achieving high rates of sustained economic growth, we also believe that it is insufficient by itself. As a result we call on the GOJ to release and explain its Medium Term Economic Programme. Such programme should include the implementation of recommendations contained in The PSOJ’s Economic Policy Framework, including: reform of the tax system, the creation of an enabling regulatory and legal system and the transformation of industrial, trade and investment promotion policies”.
The PSOJ notes that initial discussions have taken place between the GOJ and important stakeholders in the society – the Opposition, Unions, private sector and the general public – and is hopeful that these discussions will assist in building the consensus and trust required to make other difficult decisions that will become necessary to implement the proposed IMF programme.