Falling dollar pushes up foreign debt

Total debt down, but falling dollar pushed up foreign debt in 2018

Senior staff reporter

Wednesday, February 20, 2019

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THE country's total central government debt stock increased by $2.3 billion between the end of March, 2018 and the end of December, 2018, according to the Fiscal Policy Paper (FPP) tabled in the House of Representatives on Thursday.

According to the FPP, the stock of central government debt at the end of the third quarter of 2018/19 was $1.944 trillion, consisting of external debt of $1.191 trillion and domestic debt of $752 billion.

Total central government debt increased by $2.363 billion, or 0.1 per cent, over the end-of-March stock of $1.941 trillion.

“This increase was due to a rise in the external debt stock, largely on account of the depreciation of the Jamaican dollar relative to the US dollar, which outweighed the reduction in the domestic portfolio,” the FPP explained.

December 2018 debt stock saw a reduction in domestic and net public bodies, while the stock of external debt increased, compared to March, 2018. However, collectively, the stock of debt declined and continues to trend downward.

“The fall in the domestic debt stock was the result of net outflows from a large amortisation of a benchmark investment note (BIN), which exceeded domestic loan receipts for the period,” FPP noted.

The FPP also pointed out that there was a reduction in outstanding loans that contributed to the lower domestic debt, which was partially offset by an increase in treasury bill issuances.

The net public bodies debt at the end of December 2018 was $7.5 billion which was $2.8 billion, or 27.4 per cent lower than the $10.4 billion recorded at the end of March, 2018. This decrease was driven by a reduction in guaranteed loans, loans from central government and an offset due to an increase in non-guaranteed loans held by the public bodies.

Year over year, the stock of debt also declined. The end of December 2018 debt stock of $1.951 declined by $1.3 billion, or 0.1 per cent, compared to the $1.952 trillion recorded in December 2017. Central government debt increased while the stock of non-central government debt declined.

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