LABOUR and Social Security Minister Pearnel Charles has dismissed concerns that the recently concluded Jamaica Debt Exchange will negatively impact the already strained National Insurance Scheme (NIS).

Charles was responding to questions posed by Central Kingston Member of Parliament Ronald Thwaites on the effect of the recently concluded Jamaica Debt Exchange (JDX) on the NIS and the benefits of pensioners and beneficiaries, due to inflation during, Tuesday's sitting of the House of Representatives.

The JDX, which ended last month, involved the swopping of the bulk of public sector domestic debt notes in exchange for securities carrying lower interest rates and longer tenures. The lower rates are expected to yield an average rate on domestic debt of 12.25 per cent and save the Government $40 billion in its first year of implementation.

Charles said the NIS is projected to earn $4 billion in interest income on Government of Jamaica instruments for the 2010/11 fiscal year.

The Labour and Social Security Minister who admitted that this was $1.2 billion less than would have been earned if interest rates remained at the pre-JDX levels, however said the ability of the Fund to pay benefits would not be affected.

"It is to be noted that the Debt Exchange programme will contribute significantly to a containment of the fiscal deficit without which, inflation would erode the value of the benefits paid to beneficiaries," the labour minister said.

"The Goverment's economic programme of which the debt exchange is a crucial element projects that inflation will moderate to five to seven per cent over the next two years which is well within the adjustments that the Fund expects to be able to make," he said further.

Charles also pointed out that a significant portion of the Fund's investment portfolio is held in real estate which due to projected capital appreciation will enhance the Fund's ability to meet future payments to beneficiaries. He said the Fund, which is now being reviewed will be intact up to 2030.

Thwaites' concern was also based on indications by the ministry last year that Jamaica's ageing population was beginning to put a strain on the Scheme, which Government was at the time paying out over $8 billion yearly, two billion more than its annual intake.

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