Davies
Monique Hepburn, Staff Reporter
WESTERN BUREAU:
MINISTER OF Finance and Planning, Dr. Omar Davies, is defending the Government's position on borrowing in euros as opposed to borrowing in United States dollars, the currency of Jamaica's main trading partner.
Last week, the minister met with business leaders at the Ritz Carlton Hotel in Montego Bay, as part of his efforts to maintain ties with local business communities.
Responding to questions from business leaders concerning the issuing of debt instruments in euro, Dr. Davies said there were positives in sticking to such a policy.
"The major one is that the European buyers of our bonds hold (the instruments)," he said. "As long as you pay your interest, they stay with you.
The Government has started placing greater emphasis on borrowing from Europe to satisfy its budgetary borrowing requirements. Earlier in the month, 150 million in euros (J$11.8 billion) was reised through a bond issue in London and Frankfurt.
"There is a market in Europe and I can assure you that we are seeking to diversify our markets at this time," Dr. Davies said. "Europe has an appetite for Jamaica because we pay our debts and we pay our debts on time."
Opposition Spokesman on Finance, Audley Shaw, has criticised the Government's overseas borrowing policy, suggesting that money could be borrowed cheaper elsewhere.
Dr. Davies has dismissed such suggestions: "Jamaica has a record for not reneging on its loans," Dr. Davies said. "After Ivan we have indicated that we are sticking to our targets. The bond prices have increased since that announcement."
Mr. Shaw has also pointed to the risks to Jamaica of borrowing in euros when the country functions in tandem with the U.S. economy. This can prove costly to those who borrow in euros when that currency strengthens agains the US dollar.
"You can purchase hedge protection so that you can pay back in U.S. dollars," Dr. Davies said in response to that query.
