Jamaican Government to implement NDX, essentially JDX2 2.0 to get IMF Agreement - Tax Reform and FDI Investments Bullet to the Head and Oblivion

Seems as if Jamaicans have awoken to yet another shocker in the form of the NDX (National Debt Exchange) which was announced jointly by Prime Minister Portia Simpson Miller and her Finance Minister Peter Phillips! All without stating a timeline for the IMF (International Monetary Fund Agreement) as noted in “PM, Phillips giving Jamaica the runaround”, published Wednesday February 13, 2013, By Gary Spaulding, The Jamaica Gleaner.  

Still, it’s a necessary fiscal measure to secure the IMF Agreement, which requires a 100% take-up of this latest Debt Exchange in order to get the IMF Loans as noted in “'JDX2' seeks five-point cut in interest rates”, published Wednesday, February 13, 2013 BY CAMILO THAME Business Co-ordinator, The Jamaica Observer.

This in a bid to avoid a Double Dip Recession via a dose of Austerity Packages as stated in my blog article entitled “EU Debt Deal Reached on Wednesday October 27 2011 - Austerity measures for sustained Recovery” as is now being unleashed all around the world by various Developed and Developing World Governments

By spreading the local debt owed via GOJ Treasury Bills over a seven (7) year period up to the year 2020, it reduces the current payments owed to bondholders by some US$17 billion gives the GOJ (Government of Jamaica) a longer time to repay. Thus they can use this time period to implement other Fiscal measures such as increased FDI (Foreign Direct Investor) inflows and Tax Reforms in order to achieve Macro-Economic Stabilization.

Jamaica, once these measure take effect with IMF help, would be on a Growth Path as correctly asserted by the IMF in “IMF rep says NDX an important step in tackling fiscal challenges”, published Wednesday February 13, 2013, The Jamaica Gleaner.  

The Banks, major holders of GOJ Treasury Bills, have no choice but to accede to the GOJ’s Request, as a failed GOJ means delayed payments interest on maturing GOJ Bills, which they’d have to pay investor out of their own pockets as noted in “Our hands are tied - Stakeholders reluctantly accept new debt exchange”, published Wednesday February 13, 2013 by Anastasia Cunningham, News Coordinator, The Jamaica Gleaner. Thus better to accept late payments on maturing GOJ Treasury Bills instead of having to pay investors upfront out of your own pocket.

The PSOJ (Private Sector Organization Of Jamaica) supports the move as noted in “PSOJ gives support to NDX”, published Wednesday February 13, 2013, The Jamaica Gleaner, despite the lack of transparency on the issue of the IMF Deal, save for the fact that it’s understood to be a necessary pre-requisite to the IMF Deal.

If this sounds familiar, it should. Even more enlightening if you stop to peruse the hyperlinked articles for further details!

It’s really version 2.0 of the JDX (Jamaica Debt Exchange) that was implemented by the JLP (Jamaica Labour Party) back in 2010 as described my blog article entitled “JDX - Progress since the start of the new financial year 2010-2011”. Now, as was the case back then, it’s necessary to secure an IMF Agreement, as the IMF’s not lending until the GOJ can demonstrate a willingness to pay via the removal of Debt obligations in the form of GOJ Treasury Bills and reduction of GOJ spending in a comprehensive Austerity Package.

This’ll make the Government more efficient in how it spends money. Coupled with Tax Reforms to increase GOJ Tax inflows via Taxing previously untaxed or collecting Taxes that weren’t being collected as noted in “Tax shocker - Phillips announces, Opposition protests 'massive' package”, published Wednesday February 13, 2013 by Gary Spaulding, Senior Gleaner Writer, The Jamaica Gleaner, it is in essence forcing the GOJ to become more transparent and efficient in its deals, a logical requirement for any loan lender to lend you money.

Of course pensioners, whose trust funds are based mainly in GOJ Treasury Bills, will be non-too happy, as their Banks and Financial Institutions have no other choice but to pass on the reduced payouts associated with the NDX. Hence the initial comments by leaders within the Private Sector expressing shock at the announcement that seems to have caught them off guard as noted in “Private sector leaders say gov't has lost trust”, published Tuesday February 12, 2013 | 9:18 pm, The Jamaica Gleaner .

It’s hoped that the GOJ will take this breathing space offered yet again by holders of GOJ Treasury Bills for the next seven (7) years to implement Tax Reforms that includes everything from Import Waivers to improving Tax collection from Businesses. 

A lower Crime Rate, which a push towards MNP (Mobile Number Portability) and thus MRSI (Mandatory Registration of Subscriber Information) can achieve as noted in my blog article entitled “Librarian of the Library of Congress makes smartphone unlocking Illegal - How Jamaica can benefit from the Safe Haven of MNP by banning unlocking of smartphones and Tablets” is also a factor, albeit it relates more to Tourism.

Ditto too for improved infrastructure via the continuation of various Chinese backed Infrastructure projects as described in my blog article entitled “Chinese in Broadcasting - Investment in Jamaica to reach the USA” and “The People's Republic of China and the Developement of Brand Jamaica”.

But for hard foreign currency to top up our NIR (Net International Reserves), an increase in FDI Foreign Exchange investment is very necessary to jump-Start Jamaica’s ailing Economy, specifically in the following areas that fall under the portfolio of the ministry of Science, Technology, Energy and Mining:

1.      Alternative Energy

2.      Telecoms

3.      Mining

4.      Information Technology

Already Mining’s off to a good start with Rare Earth Mining in the Mining Sector as chronicled in my blog article entitled “Japan’s Nippon Light Metal Company Limited to mine Rare Earth elements in Jamaica - Jack Reacher recycling gadgets for Rare Earth Elements”.

The recent application by the OUR (Office of Utilities Regulation) for a New Area Code in February 2013 as noted in “Jamaica To Get Additional Area Code”, published Thursday February 7, 2013, The Jamaica Gleaner, signals the coming of competition in the Telecoms Sector, as numbers have to be provisioned for any new Entrant.

Hopefully DSO (Digital Switch Over) will still be achieved by 2015, freeing up more spectrum for Data Telecom Services as hoped for in my blog article entitled “Phillip Paulwell allocates 700Mhz and Fiber Optic License for LTE - Broadcasters effectively on notice for Digital Switch Over”.

The continued expansion of the BPO (Business Process Outsourcing) aka Call Centers is off to a roaring start, thanks mainly to the increasing laziness of First World Countries when it comes to reading manuals as noted in my blog article entitled “Data Outsourcing comes to Jamaica via MobileWorks and Freelancer.com - Flexi-Work propelled by Crowdsourcing and MicroWorking Anaconda” and my blog article entitled “Convergyns and Aegis Communications Call Centers Coming – FDI powered Call Center Renaissance in Jamaica thanks to our Good English”.

Investment islandwide is now possible, thanks to Telecom Provider LIME’s early liberalization of that sector as noted in my blog article entitled “Montego Bay Freezone Liberalized as LIME's Jamaica DigiPort International gives up its Monopoly - Call Centers Age of Empire as Mandeville Beckons”.

The main sweeteners needed to attract such foreign investment to Jamaica, however, is a reduction of the cost of Electricity via the diversification and Liberalization of our Energy Sector which should be achieved with construction in the LNG Plant slated to start in Second Quarter of 2013 as reported in my blog article entitled “SJPC, the Marubeni, EWP and JPS Co consortium's to begin LNG Plant Construction in Q2 of 2013 - Jamaica's On A Mission towards The Impossible Promised Land”.

Not to mention reducing GOJ Red Tape. A Very simple prescription, alongside Austerity, that’ll put Jamaica on the path to Growth

To do otherwise means Jamaica will not only not achieve Vision 2030, but will end up taking a Bullet to the Head (2012) and plunging Jamaica into Oblivion (2013) in the Next seven (7) years up to the year 2020.