Jamaica announces crisis debt-swap plan
February 13 , 2013
Jamaica announced on Tuesday plans for its second debt swap in three years due to a "serious economic crisis".
Speaking in a televised address, Prime Minister Portia Simpson Miller said steps must be taken to reduce the island nation’s debt, which currently stands at 140 percent of GDP, one of the highest ratios in the world.
She went on to say that her People's National Party (PNP) would launch a national debt exchange, which will seek to exchange Jamaica's domestically issued debt.
The measure is aimed at meeting conditions under a deal with the International Monetary Fund (IMF).
As part of the agreement, Jamaica must reduce debt as well as the government wage bill.
Around 55 percent of government spending currently goes towards paying the nation's debt, while 25 percent goes on wages leaving just 20 percent for education, security and health.
Following the announcement, rating agency Standard & Poor’s cut Jamaica’s credit outlook to Selective Default from B-/B.
In 2010, the previous Jamaica Labour Party administration announced a similar plan when its debt burden exceeded 120 percent of GDP.
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