The head of one of the island's largest dealers in Jamaican government debt yesterday suggested the need for a "partnership" between the administration and financial houses to lower interest rates.

While Keith Duncan, the CEO of Jamaica Money Market Brokers, in a speech at a Private Sector Organisation of Jamaica forum, did not spell out what mechanism he had in mind for this partnership, he later told The Gleaner that his most immediate call was for "enlightened self-interest" in operating in the foreign-exchange market.

"The increase in interest rates has been in response to what is happening in the foreign-exchange market," he explained. "If you manage the foreign-exchange market right and there is stability in the value of the dollar, interest rates will come down."

Nobody benefits

In other words, Duncan said, it made sense not to operate in the foreign-exchange market in a manner that relentlessly drives up the greenback against the Jamaican dollar, forcing the authorities to hike interest rates in defence of the local currency.

"Nobody benefits from high interest rates," he said. "Rather, everybody suffers. And in any event, the availability of foreign exchange is finite, so even if you bid up the price, no more will be available."

Duncan's remarks came against the backdrop of hikes in recent months that pushed central benchmark rates upward of 20 per cent, meaning higher costs to service the Government's debt of more than $1 trillion.

Indeed, the Government projects to this year spend $309 billion, or over 55 per cent of its Budget, to service debt. And some analysts suggest that even that could be an underestimate if the fiscal deficit runs higher than the programmed five per cent of gross domestic product and the Government has to borrow more than the projected $215 billion.

Some analysts have called for negotiated relief on debt, possibly even asking Jamaican lenders to take lower rates.