THE Government's debt management programme received a significant confidence booster last week when the online edition of the influential Times of London held it up as a model for the Greek authorities, even as the newspaper acknowledged that, compared to Jamaica, much more of Greece's sovereign debt is owed by foreigners.

In his column last Wednesday, Times Deputy Business Editor Ian King said that Jamaica has shown that a debt default need not

be disorderly."The conventional wisdom, when a restructuring of Greek debt is discussed, is that such a move would be disorderly in the extreme. But that may not necessarily be the case, to judge from recent events in Jamaica, the one example of a sovereign default so far this year," wrote King.

"Jamaica exchanged its entire $7.8-billion stock of outstanding domestic debt in February for longer-dated, lower-yielding paper, with an extraordinary 99 per cent of all bond-holders accepting the terms. The move, which slashed the island's debt servicing costs, also paved the way for an IMF loan of $1.25 billion. Crucially, it was achieved with no capital flight or run on the Jamaican dollar, possibly because the default did not cover sums owed to external creditors," said King.

He pointed out that since the Jamaica Debt Exchange, all three international rating agencies have raised Jamaica's credit rating, while other indicators, such as inflation, are going the

right way.

"Audley Shaw, the finance minister, says that the next time Jamaica taps the bond markets it will be charged single, not double-digit, interest rates," King wrote, adding that "after years of decline, jobs are again being created in the agricultural and tourism sectors, loss-making state enterprises such as Air Jamaica have been offloaded and, in a good example for Greece, Mr Shaw is trying to bring the informal economy into the revenue base by introducing a low flat tax. He may even persuade an army of civil servants to show wage restraint".

However, King pointed out that Greece is not Jamaica, as much more of its sovereign debt is owed by foreigners. "But the island has shown a debt default need not be disorderly. Ask Audley,"

said King.

The Times Online article appeared on the same day that Shaw pointed out that the interest rate on Treasury Bills fell to 9.97 per cent, which he said was the lowest rate in 28 years and was indicative of the success of the debt exchange and growing confidence in the Jamaican economy.

"The last time interest rates on Treasury Bills were this low was in 1982. This means that the stakeholders are buying into the post-debt exchange model of lower interest rates," Shaw said at a send-off function at the Alhambra Inn for the outgoing managing director of the Ex-Im Bank, Pamella McLean.

He said that the stage was being set for a more aggressive fall in commercial bank lending rates which, he urged, needed to be accelerated.

Last night, in an interview with the Sunday Observer, Shaw was modest in his acceptance of the praise given to him in the Times Online article, saying that credit for the debt exchange in particular should go to the holders of the debt who participated.

"I think it's generally acknowledged, not just in Jamaica, but globally that the debt exchange was a home run, and the credit must not be taken by the minister, the ministry, the Government alone. In fact, the credit must be taken by everybody, mostly in my view, the stakeholders, the holders of the debt that came out voluntarily in a 99.2 per cent compliance," said Shaw. "It's remarkable, unprecedented globally, so I say the accolades go to our stakeholders for buying into this model."

Shaw described the Government's relationship with the private sector as a partnership, and attributed the response from the business sector to their satisfaction that the Government was serious about managing the business of the economy.

"We're doing things that are not necessarily politically very popular, but in terms of the long-term best interests of this country it is the right thing that we're doing,"

he said.