Joe Issa Supports Holness Support Call for Debt for Policy Swap, Not Debt Forgiveness

Less than a week after Joe Issa suggested that Jamaica could benefit from a debt swapping initiative of The Nature Conservancy, which raises funds to buy the debt and then allow it to be used for environmentally sustainable projects, Prime Minister Andrew Holness is reported to be eyeing a debt-for-policy swap.

Issa, who is a Civic leader and environmental advocate had earlier hailed the initiative, in which six countries in the region, including Jamaica were reported to be positioning for the deal, particularly as much of the region is reeling from a huge debt burden. He noted that after paying down on their debt there is little left for development, including environmental sustainability.

“It would be a great relief and a positive move for Jamaica should it be freed from its huge debt burden and allow it to focus on environmental projects for sustainable development,” Issa said in the blog.

In an article titled “’NO EASY TASK’ " Holness Eyes Debt-For-Policy Swaps, Urges Innovative Thinking To Spur Economic Growth”, the prime minister is said to have proposed the implementation of debt-for-policy swap initiatives in the region. He was addressing the recent opening of the CDB’s 46th Annual Board of Governors meeting in Montego Bay, St James.

In noting the mechanics of the swapping deal, Issa said it sounded too good to be true. The Nature Conservancy, one of the biggest and most reputable fundraisers in the world arranges for a country’s debt to be bought outright by a third party, and instead of the country making payments to the external creditor, the payments are made to a special account, which then becomes available for the country to implement environmentally sustainable projects.

“This sounds too good to be true,” Issa said then, adding, “but because we are dealing with a reputable organization, I believe there is integrity in the deal. It will be a great relief to have our huge debt totally wiped out and all we have to do in return is to implement projects already in our programme for environmental sustainability.”

While acknowledging that some progress has been made by the region in terms of its development, the Prime Minister told the CDB meeting that much of that progress has not come through productivity and economic growth, but from borrowing.

He made the point that after some 50 years of independence as a region, it has made very good progress as measured by social and economic indicators, “such that the region has graduated to a category, as classified by international development institutions, where it no longer qualifies for certain types of assistance.”

Stating that much of the region’s development has been achieved at the expense of the accumulation of debt, Prime Minister Holness said the region’s growth ought to be led by a risk-taking and dynamic private sector as it cannot be stimulated by counter-cyclical spending, noting, as a result, the region’s need to pursue policies that improve the enabling environment to attract local and foreign investment.

“This is no easy task, and the CDB has a crucial role to play in the transformation in thought and policy required … They (debt reduction and growth) won’t be achieved through conventional thinking and incremental measures… while debt forgiveness is not on the policy menu, debt-for-policy swaps could be,” the prime minister is quoted as stating.