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Debt-to-GDP ratio to dip below 100% — Clarke

Thursday, May 17, 2018

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KINGSTON, Jamaica — Jamaica's debt-to-gross domestic product (GDP) ratio is projected to fall below 100 per cent at the end of the 2018/19 fiscal year.

This was disclosed by Minister of Finance and the Public Service, Dr Nigel Clarke, who was speaking at the Pension Funds Association of Jamaica's annual luncheon at The Knutsford Court Hotel in New Kingston yesterday.

Clarke said at its height, Jamaica's debt as a proportion of GDP was about 147 per cent.

“At the end of this financial year, we are projecting that for the first time in this century, the debt to GDP rate is going to go below 100 per cent,” he said.

This, he noted, will allow the Government to create more investments and job-generating opportunities for Jamaicans.

“What that means for pension funds and institutional investors is that the Government coming out with a need to borrow, borrow, borrow…is going to be curtailed.

“That provides a tremendous opportunity to accelerate our efforts to convert and redirect savings away from the Government and into investments and into job creation and into economic empowering activities for all Jamaicans,” he pointed out.

The debt-to-GDP ratio is a measure of a country's debt compared to its economic output.

A low debt-to-GDP ratio indicates an economy that produces and sells goods and services sufficient to pay back debts without incurring further debt.

Government debt as a per cent of GDP is used by investors to measure a country's ability to make future payments on its debt, thus affecting the country's borrowing costs and Government bond yields.

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