Governor of the Bank of Jamaica, Brian Wynter, yesterday lauded the financial sector’s response to the Jamaica Debt Exchange (JDX) as a ‘remarkable achievement’ following a reported 91 per cent participation from bondholders, even while denying the Bank’s assistance to the Jamaican government.

“The government announced yesterday that over 90 per cent of holders of eligible bonds have participated in the JDX offer. By any measure this is a remarkable achievement. It is a remarkable achievement for which we must recognise, not only the tremendous support of the financial sector that holds the majority of domestic debt, but also the invaluable support by so many hard working individual savers and investors, who also chose to demonstrate their support for the JDX and by extension the economic programme,” Wynter, who was a guest at the Rotary Club of Kingston’s weekly luncheon, held at the Jamaica Pegasus hotel, said.

Continuing on the importance of the success of the exchange, Wynter said the participants have added their contribution to the recovery of the Jamaican economy.

“2010 may well be remembered as the year Jamaica took some very bold steps to deal with the problems that I began by outlining. While only time will tell the results, surely this is a time for all of us to bend our resolve and the power of our commitment towards grasping the opportunity that this moment provides,” declared the BOJ boss.

However questions on the extent of the central bank’s commitment

a reported $13 billion loan this month, made to the government were met with guarded responses from the Governor.

If true, the total amount loaned to the government would amount to $36 billion. But Wynter would neither confirm nor deny the loan. He instead told journalists that the BOJ would do everything to maintain stability in the face of the impending deal with the International Monetary Fund (IMF) and the successful completion of the Debt Exchange Programme.

“During this period of the Debt Exchange Programme when people are making up their minds and entering into this very far reaching transaction, the market has not been operating normally and so we will take whatever steps are necessary to make sure there is stability in the market,” Wynter said.

THe former head of the Financial Services Commission (FSC) believes that when this exchange settles and the markets are able to absorb the implications of the new interest rates, the government itself will in due course return to normal activities, but in a completely new environment.

“Remember the objective of the Debt Exchange includes reducing interest rates on the high cost debt. That is just one part of it. Another important part of the debt exchange was the pushing out of maturities so that during this fiscal year coming there will be dramatically reduced borrowing needs of the government,” Wynter added.

While speaking about the Medium Term Economic Programme which he said was designed to address the “perennial problems” facing Jamaica which are anaemic growth, adverse debt dynamics and the related, unsustainable economic imbalances, Wynter outlined fiscal targets as set out in the Letter Of Intent and the attached memorandum of economic and financial policies to the IMF.

“The programme that was developed has been endorsed by the IMF and the other multilateral financial institutions, all of whom have committed to providing the necessary financial support to enable us to move towards economic prosperity,” Wynter said.

Among the plans outlined were actions to reduce inflation, the fiscal deficit, interest rates and grow the economy over the next four years.

“Achieving the objectives in the programme, means among other things, the achievement of lasting single digit inflation. We at the Bank of Jamaica expect inflation to fall to the six to seven per cent range by the end of the fiscal year 2013- 2014. At the end of the current fiscal year, interest payments by the government are projected to be 15 per cent of GDP. We expect this to be reduced to 9.7 per cent by the end of the year 2014- 2015,” announced the Governor of the BOJ.

He added that attainment of the inflation and fiscal targets within the medium term, along with a recovery in world demand would improve the balance of payments.

“So the current account deficit which this fiscal year is expected to end up at 10 per cent of GDP is expected to narrow significantly to about 5 per cent of GDP by fiscal year 2013 -2014,” Wynter concluded.