
Dr. Peter Phillips – former Minister of Finance
By the end of March, it is expected to be lowered to about 139 percent of GDP, the finance minister said. Dr. Phillips further stated, “the Government would continue to implement measures to reduce the debt, as it aims to have a balanced budget for the next financial year (2014/15). Part of the way forward is to ensure that we convince the market that we are not about to return to our national addiction of excessive borrowing, and that means running a very tight set of budgetary arrangements”.
The government ran a deficit of $55 billion for the fiscal year ended March 2013 but slashed that to $8 billion in their projection for 2013/14 but the final out turn is expected to a be a near balanced fiscal outcome. That is a sharp reduction from what was achieved in 2012/13. Phillips as indicated above is planning for another year of balance as he strives to cut the impact of debt on government’s operation.

Minister of Finance Audley Shaw carried on from where Phillips left off.
Lower fiscal deficits mean less borrowing and less government spending. All of these will lead to lower interest rate locally, lower inflation and less pressure on our exchange rate ultimately. The initial stage will be a more sluggish economy as the country moves from and economy driven a lot by government spending to one where the private sector is the driver. Currently, private sector confidence level are not high but are slowly improving based on data form the central bank. With improvement taking place in the global economies, Jamaica is likely to benefit, as such, we may see slow but continuing growth for awhile. Against this back ground, interest rates are likely to be lowered providing government with lower interest cost with the measures now being pursued.
Investors could therefore be seeing the end of an era of super high interest rates, to an extent this has been happening, but rates have not yet reached levels enjoyed by some of our neighbouring countries.
Investors should not ignore the impact of the logistic hub on demand and on foreign exchange inflows in the construction phase.

Falling Interest rates rising stock market.
Investors should be making the shift in their portfolio from now, to be there when the change takes full effect.
This article was published by the Investor’s Choice in 2014.