Jamaica’s government is using bonds to fund part of the national budget. Is it a big deal? Let’s talk about it.

So I’ve seen some comments talking about the Government reopening $17.5 billion in bonds to help fund the budget. That’s about US$109 million.  To put that in context, the government is planning to spend $1.3 trillion this fiscal year.  So the new bonds would make up about 13% of the budget.  Needless to say, there’ve been mixed reactions. 

So let’s break it down. The Government is actually reopening three different bonds.  The first is valued at $2 billion, has an interest rate of 7.5% and matures in February 2035.

There’s another $2 billion bond with an 8.25% interest rate that matures in March 2040.  And finally, there’s a $13.5 billion bond that pays 9.6% interest and matures in November 2031.

The concern is that the Government is borrowing money to fund the budget. This is common practice among governments. The budget is normally funded by tax revenues, grants, and debt.  Debt usually takes the form of government bonds. But some countries, including Jamaica, have gotten in trouble with debt before.  

Not too long ago, Jamaica was one of the most highly indebted countries in the world.  It had been borrowing at really high interest rates.  You could earn well over 20% interest by buying Jamaican government bonds. 

This was unsustainable, and there came a point where they couldn’t pay it back.  That’s when the IMF stepped in and forced them to do the Jamaica Debt Exchange (JDX) and National Debt Exchange (NDX).

Under these deals, GOJ Bondholders had to accept new terms which included lower interest rates and longer maturity dates.

Fast forward to this year, and GOJ is again borrowing money to fund the budget, which has some people thinking hmm.  Is this going to get us in trouble again?

No.  A lot is different now than it was fifteen years ago at the peak of Jamaica’s debt problems.  First of all, the interest rates.  I mentioned them earlier.  Interest on these new bonds ranges from 7.5% to 9.6%.  That’s much much lower than the bonds that got Jamaica in trouble.

Secondly, Jamaica’s debt-to-GDP has been consistently falling.  Debt-to-GDP measures a country’s debt versus the total value of that country’s economy for the year.  At the peak of Jamaica’s troubles, the debt-to-GDP ratio was 152%, meaning we owed more than we earned.

In 2025, that’s now down to just 64%, the lowest it’s been in over thirty years.  As you can see from this chart by Statista, it’s projected to fall to 52% by 2029.  And that’s not by luck.  The government has been taking strategic and very deliberate measures to gradually reduce the debt.

So even though they do continue to borrow, it’s on much better terms, and the debt trajectory is still heading in the right direction – down.

And that’s the bottom line.