Camilo Thame, Business Reporter

Financial Secretary Collin Bullock. - File

The Jamaican Govern-ment has spent 65 cents out of every dollar on servicing its debt during the first four months of the current fiscal year, missing its target of 59 per cent due to a $7.2 billion increase in amortisation costs above budget.

The Finance Ministry spent $104 billion on principal repayment and interest payments, which made up about 40 per cent of debt service cost.

Financial secretary Collin Bullock, in attempting to explain the 13 per cent increase on what was supposed to be $56.6 billion amortisation cost between April 1 and August 31 this year, said the higher level of borrowings for the first four months pushed up principal repayments.

"The payments during the course of the year would have been occasioned by the fact that domestic borrowing would be higher than programmed," Bullock told the Financial Gleaner on Wednesday in an aside at a press briefing held at the Finance Ministry at National Heroes Circle, Kingston.

Higher borrowing

The higher borrowing, he said, was attributable to "a commercial bank that was privatised by government exercising its option to call on the Government to provide them with government securities as part of that agreement."

This, he estimated, is in the region of $5 billion.

Indeed, Financial Gleaner checks on government borrowings showed the Government raising 96 per cent of its borrowings through the issuance of Jamaican-dollar denominated debt instruments, 3.3 percentage points higher than budgeted.

Also the difference between total borrowings through debentures, local registered stocks and bonds and what was reported in the central government fiscal operations for the year to August was $5 billion.

However, domestic borrowing has been tracking at $26.6 billion above budget, to yield as at August 31, 2006, a $5 billion balance on the state's fiscal accounts after all debt payments and expenditure were taken away from revenue and loan receipts, contrasting the $19 billion deficit that was projected.

No further comment

The Financial Gleaner was unable to secure further comment from the financial secretary up to press time yesterday, leaving uncertainty about why the Government had attained a $5 billion cushion by August and the use for which the funds were designated.

Moreover, none of the LRS, bonds or debentures issued during the course of the year had redemption dates before 2008, so it also remains unclear why the $7.2 billion increase in amortisations would have been consequent on the loan arrangement with the unspecified commercial bank.

The stock of public debt, to July 2006, was running at $881.1 billion, a new record. The majority $510.5 billion was domestic debt.

- camilo.thame@gleanerjm.com