The Jamaica debt exchange (JDX) has made exporting more attractive due to the declining yield on instruments, asserted Jamaica Exporters Association (JEA) president Titus Evans.

It should result in more businesses producing for export Evans told the Monday Exchange meeting of Observer journalists at the newspaper’s Beechwood Avenue, Kingston headquarters.

“Generally what we have found was that people would sit back and invest in government paper but the reduction in interest rates has created a shift now in terms of people looking at more ways to create money,” stated Evans JEA president and president and chief executive officer of the Jamaica Agricultural Development Foundation (JADF). “People are enquiring into going into agriculture and that was not there before and it is a signal of one of the markets they are looking at.”

The JEA, Jamaica Manufacturers Association and Jamaica Trade and Invest–guests at the Monday Exchange–discussed the Expo Jamaica 2010 the island’s premier trade fair that will showcase locally produced goods from June 17 to 20.

Jamaica’s trade balance (or its exports minus imports) improved by US$2 billion between January to October 2009 compared with the corresponding period in 2008 from negative US$5.13 billion to negative US$3.04 according to latest Bank of Jamaica data. The bulk of the improvement was due to a US$2 billion saving on fuel imports during the review period as a result of a the fall in price of oil.

The JDX, which ended in February 2010, 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. Since January to March, Government of Jamaica Global Bonds yields dipped 330 basis points reflecting increased confidence following the JDX, stakeholders said.

The average yields on US dollar denominated bonds dipped to 7.89 per cent on March 11 from 11.26 in December according to the Ministry of Finance. Yields averaged 10.6 per cent at the end of January. Similarly, yields on the Euro denominated bonds have declined to 8.14 per cent from 11.84 per cent in January.

Jamaica had executed a voluntary debt swap, reached as a conditionality of the US$1.2 billion stand-by arrangement with the International Monetary Fund (IMF) last month. The debt swap registered a participation rate of more than 99 per cent and will result in Government saving some $40 billion on interest cost payments in its first year–due to a reduction in interest rates and extension of debt maturities.