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The International Monetary Fund on Tuesday urged Jamaica's domestic creditors to join a new debt-swap program to help reduce the government's deficit and open the way for IMF financial support.
IMF mission chief in Jamaica Jan Kees Martijn welcomed the debt-swap program announced late Monday in Kingston, calling it "an important element aimed at helping to put public debt firmly on a downward trajectory."
"A successful debt exchange will require high participation from creditors to help secure financing assurances for a Fund-supported program," he said in a statement.
Prime Minister Portia Simpson Miller and Finance Minister Peter Phillips said in a national address late Monday that the swap -- aimed at exchanging high interest-rate debt for lower-rate bonds -- would cut the government's debt service burden and allow it to pursue stronger growth.
"As long as our debt as a percentage of our economy remains this high, our capacity for growth and development will be severely limited," Simpson Miller said.
Jamaica's debt burden is around 140 percent of gross domestic product, and 55 percent of the budget goes to debt service, Phillips said.
The proposed debt swap, the country's second debt restructuring in three years, was a condition set by the IMF as part of talks for a new financing program for Kingston, said Phillips.
Martijn said the country needs to slash its debt by "a very sizeable amount" to reach a sustainable level.
"The structural impediments to growth -- including the excessive debt burden -- need to be addressed with urgency, to lay the foundation for a sustained recovery in economic fundamentals," he said.