Finance Minister Audley Shaw now has a record debt stockto service. - File
The United Kingdom (UK) is writing off £5 million (J$703 million) of Jamaica's debt, saying it is freeing the funds to be pumped into services and poverty programmes.
Jamaica owes the UK more than $1.6 billion, which the write-off would cut by approximately 43 per cent.
"High levels of debt are a significant drag on economic growth and on the ability of any government to adequately address social needs," said UK Minister for International Development Shahid Malik in a DFID-issued release.
"Rather than money leaving Jamaica, it can now go towards key services like education, water and sanitation, security and justice, that will improve the well-being of Jamaican citizens."
External creditors
At the end of March, Jamaica's overall debt stock hit the $1 trillion mark for the first time, up 8.4 per cent year on year.
But the finance ministry is reporting that on the plus side, the debt to GDP ratio, a key indicator of the debt's performance, has fallen six points to 126.1 per cent, down from 132.4 per cent.
Jamaica owes $438.6 billion to external creditors and, outside of the multilaterals who, combined, are owed $85 billion, is most heavily indebted to the United States and Japan.
Total bilateral debt, that is, money largely owed to country governments and their agencies, is now $49 billion.
Another $280.55 billion is held by bondholders, which, together with the funds owed to other commercial creditors, places more than 69 per cent of the external debt in private hands.
The UK write-off was announced as a signal of confidence in the Golding administration.
"The Jamaican Government led by Bruce Golding has made commitments to bring about faster progress in economic management, good government and poverty reduction and we want to seize this opportunity to align our support behind these positive steps," said Malik.
Within the past decade, under the Commonwealth Debt Initiative launched in 1997, the UK has written off £51 million of Jamaican debt, said DFID.
It also provides £2.5 million of aid annually.
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