S&P’S RATING UNWARRANTED AND PREMATURE…says PM

S&P'S RATING UNWARRANTED AND PREMATURE...says PM

Prime Minister Bruce Golding has described as "unwarranted and premature" the decision by Standard and Poor Ratings Services to lower Jamaica 's foreign and local currency credit ratings from a B- to a CCC+

The Prime Minister said that in March Standard and Poor had indicated a downgrade possibility if certain requirements were not achieved. These requirements included fiscal tightening, no further increase in interest rates, exchange rate stability and domestic confidence in government instruments. "On all of those we have been taking strong action" he continued. "Our interest rates have been coming down; we have been having relative stability in the exchange rates since February; our NIR has been stable, inflation for the last twelve months has been under nine percent. Up to the end of July our expenditure was 18 billion dollars below budget; albeit our revenue collection has been 10 billion below."

He added that the government felt the rating was premature for a particular reason. "What motivated Standard & Poor's, and they said so in the report, was the possibility that the government might be induced to enter upon a debt exchange arrangement with its creditors which it (S&P) defines as a distressed debt exchange...You can't pay back your debt and therefore you are seeking to come to some arrangement with your creditors." Mr. Golding emphasized that the government has sought to do nothing of that nature.

"What happened was that, people in the financial sector came to the government and said this is an idea we feel would help the government through this difficult time and would reduce the cost of interest. We would like to explore it and we have had discussions...We engaged a specialist legal advisor to guide the discussions and those discussions have been ongoing, but from the very outset we knew that it had complexities that had to be handled very carefully...We made it clear that any re-arrangement of existing debt would have to be done with the full agreement, voluntary compliance on the part of the holders of those debts." Mr. Golding explained.

He stated that S&P interpreted that step to be a direction in which the government was moving but it was actually a direction in which the government was being led by the holders of those debts. Mr. Golding's views were expressed during an interview programme aired earlier this week on CVM television's ‘Direct'