A new administration and with it a new minister of finance will be going to the IMF in the next few weeks to begin working on mending our relationship with the lending agency due to an agreement that went off the rails. This is a good time for me to repeat a suggestion I made in a column last year April, in meetings with former Prime Minister Golding, and a suggestion I made to former minister of finance Audley Shaw. I actually have to change very little from my previous column.

The Jamaican diaspora must be seen as more than just remittances. Overseas Jamaicans represent an untapped resource for much greater good than just handouts, and the Government must engage them in a multitude of ways. This year more than any other offers a great chance to allow them to contribute to the next 50 years of development in a unique way, helping to refinance higher interest debt in order to free up money to be spent on areas such as health, education and security.

Each year at budget time, Jamaicans are reminded of just how much of it goes towards paying down debt, a frightening number to discover each year, even after the JDX. Anyone managing money knows that if they have debt at 15 per cent and can get a loan at 10 per cent and pay off the old debt, they save five per cent per year.

The Golding Administration was successful in going to the international capital markets to finance repayment of a U$400-million eurobond that matured in May 2011. The new rate of 7.95 per cent was still around the same spread in comparison to the rates more stable countries would get (using the LIBOR as the benchmark) compared to the old rate secured of 11.75 per cent secured back in 2001. But it was lower, and that means a savings of J$1.3 billion per year on that bond which frees up money that would otherwise be going towards debt payments.

It was simply refinancing a loan at a lower interest rate and the IMF had no problem with it because it was not new debt, just replacement debt at a lower rate.

The appetite for Jamaican debt at that rate, and even with all our problems, was so great that the new bond was three times oversubscribed, indicating that many institutions and individuals saw it as a good investment for their portfolios.

If Jamaica wanted to refinance US$100 million (roughly J$8.5 billion) of debt currently at 15 per cent per year that has 10 years remaining, issuing a diaspora bond for the same amount at five per cent per year would generate savings in the region of US$6.6 million (J$561 million) per year.

To put that in perspective, the allocations for feeding grants (lunch programme) and for commodities used to prepare meals in the 2010/11 budget totalled J$380 million. The Sports Development Foundation was allotted J$408.8 million in a country which excels at sport and brings Jamaicans all over the world such joy and pride. The Ministry of Youth, Sports and Culture had expenditure estimates of J$218.5 million and the estimates of expenditure for the Ministry of Water and Housing was J$546 million.

These are all simple examples of where J$561 million per year in savings could be better deployed than paying down high interest debt.

Why would Jamaicans in the diaspora accept such a low rate? The highest rate I can find for a five-year certificate of deposit in the USA right now is 1.95 per cent and 10-year US Treasury Notes are yielding around two per cent, so five per cent is way better and helps the country reduce debt load, thus freeing up capital to be spent elsewhere — win-win.

Some individuals will point out that the current IMF agreement makes it clear that the Jamaican Government cannot issue any new government-guaranteed debt. A diaspora bond that is refinancing debt is not “new” debt because the total volume of debt does not change, just like the US$400 million eurobond mentioned earlier. Hence, if Jamaica has not increased its debt, I see no reason for the IMF to react any differently to a diaspora bond. This bond idea should also be specifically discussed during the meeting between the IMF and the new administration.

Still more people will indicate that overseas Jamaicans could simply buy Government of Jamaican bonds that are issued at low rates right now and contribute from that angle (some overseas Jamaicans already do buy GoJ bonds). This, however, ignores the fact that the primary purpose of these bonds is not to refinance debt but to continue allowing the functioning of the Government. The high interest debt will still remain.

The pull of a diaspora bond is the fact that it gives overseas Jamaicans a clear chance to play a financial role in improving Jamaica’s debt financial position. It engages the diaspora and helps the country. Israel has been doing it since 1951, India since 1991, Sri Lanka since 2001 and even Greece filed paperwork in the USA last year with a plan to attempt to raise US$3 billion to help with the local debt situation.

Diaspora Bonds have been talked about since the Biennial Diaspora Conference in 2006 when some delegates first proposed the idea. It makes sense to get something done by the 50th anniversary of Jamaica’s Independence in 2012.

This is a real chance to engage the diaspora, tie it into the 50th anniversary celebrations, reduce expenditure on debt and put the savings towards other areas of the budget.

I sincerely believe that we can raise US$200 million or more from Jamaicans overseas via a bond that will save the country and taxpayers more than J$1 billion per year in interest payments. All Jamaicans would like to see a smaller debt burden and more spending in improving healthcare, reducing crime and improving education. If the savings are committed to those areas and it is transparent, even more may be raised.

We have talked and talked since 2006. It is time for action.

David Mullings was the first Future Leaders Representative for the USA on the Jamaican Diaspora Advisory Board. He can be found on Twitter at twitter.com/davidmullings and Facebook at facebook.com/InteractiveDialogue