The Government of Dominica has set a new record low rate for Treasury bills on the Regional Government Securities Market, RGSM, according to a statement from the office of the prime minister.
On Monday, March 17, 2014, the Government raised EC$20-million at a record low 1.999 percent through the first of a series of three 91-day Treasury bill offerings.
Prime minister, Roosevelt Skerrit, has welcomed the low rates, viewing it as a vote of confidence in his administration’s policies.
“Many countries in the developed world especially in Europe have had difficulty in raising monies at concessionary rates,” he said. “The discount rate achieved in Monday’s Treasury bill offering means that Government can now raise the financing it needs at a lower cost to the taxpayers of Dominica.”
The prime minister noted that the government has had to grapple with our own challenges “but we have worked actively to build a strong platform for sustained economic growth.”
“Our prudent fiscal and economic policies have insulated the country from the more severe effects of the global recession,” PM Skerrit stated.
The rate of 1.999 percent is 50 basis points below the previous record of 2.49 percent.
Investors view the purchase of the 91 day Treasury bill as a low-risk investment opportunity.
The low Treasury bill rate demonstrated the ability of the Government of Dominica to raise money at relatively low cost.
Encouraged by this success in raising revenue government will seek to raise an additional EC$60-million on the RGSM through the remaining two 91-day Treasury bills and one five-year, EC$25-million dollar, according to the statement.
“This is to finance part of government’s operating budget and refinance existing government debt, the interest rate on which is much higher than the interest rate government obtains on its Treasury bills,” the statement noted. “Treasury Bills present an avenue to invest outside of the normal banking system.”
The statement went on to say that the Dominica Labour Party Administration is committed to creating a local economy that develops the lives of the people of Dominica without creating unsustainable debt burdens.
that’s fantastic news!! it allows the diaspora and other investors to directly invest in the Dominican economy!
Another knock out punch. Thompson on the floor.
E-bills are short term loans, i,o,u’s in other words. A term of 91 days is not unusual. However, at 1.9999% I make it an annual rate of 8%, which is not that clever in today’s money market but of course in P.R. terms 1.9999% always sounds better.
Mr. Skerrit, what you crowing about? In the U.S.A. and U.K. people can get mortgage rates half of that.
Stop lying! Where on earth can you get a mortgage at 2%. also why are you trying to compare the US and UK to little Dominica?! UDOHREADYET!
Youre really not a mathematician or you do not know what you referring to. 2% every three month is the same 2% per annum. You just do not multiply 2% by 4 to get 8%
Thank you Jude but 4x 2=8 any time I learn in primary school.You’re commission broker for these bills by any chance are you?
Definition of ‘Treasury Bill – T-Bill’
A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.
Investopedia explains ‘Treasury Bill – T-Bill’
For example, let’s say you buy a 13-week T-bill priced at $9,800. Essentially, the U.S. government (and its nearly bulletproof credit rating) writes you an IOU for $10,000 that it agrees to pay back in three months. You will not receive regular payments as you would with a coupon bond, for example. Instead, the appreciation – and, therefore, the value to you – comes from the difference between the discounted value you originally paid and the amount you receive back ($10,000). In this case, the T-bill pays a 2.04% interest rate ($200/$9,800 = 2.04%) over a three-month period.
http://www.investopedia.com/terms/t/treasurybill.asp
For example 2% on 20 million is 400,000. Divide that amount by 4 will give $100,000.00 every three months.
So the government will pay interest of EC100,000.00 (one hundred thousand dollars) every three months.
You must understand that interest rates are always quoted per annum. Therefore the 1.999% is per annum. Therefore the interest amount is prorated every three months.
90 days is just that 90 days at 2%. end of story. if you want more after that 90 days you can get more at 2%. 2% is 2%. don’t add hypothetical months to get some blown up total its not a 12 month bill.
Uwp is going to make all dominicans rich we will never have financial problems ever again with team dominica change is a must…
Continue the good works MR.PM.
Prime minister, Roosevelt Skerrit, has welcomed the low rates, viewing it as a vote of confidence in his administration’s policies.
Comrad, If I were you I would use this ‘vote of confidence’ in your administration’s policies to call the long awaited election. Boss, Dominican’s CANNOT wait to vote you out and you know that. Although we all expect you to win in the Vieille case constituency, as a voter in that constituency I can assure you your margin of victory will be very slim in compared to the last election where I myself voted and campaigned for you.
Why don’t you stop complaining about nothing! and put your money where your big mouth is and buy/invest in some treasury bills for your country! you negativity doesn’t help anyone… put some money up if you really concerned about the country.
all these things happens just before election,and when electons is gone ,back to misery,
SKERITT ,stop fooling your foolisk supporters,
good thing possie is changing,slowly but surely,
SOON you will be speaking to penville people only, for only they will believe ,and listen to you, for if you fool me once ,youre a fool , But if you fool me twice ,THEN IM A FOOL
TIME UP , stop taking dominica for a fools paradise
You are a fool. your comment has nothing to do with the article. the article is about economics and the governments ability to pay its bills.
Boss don’t try EDUCATING them MAMA LOOK can’t you see the level of their comment way of base never have anything to do with the topic, if you need INFO & FACTS check out this FACEBOOK PAGE: TELL IT LIKE IT IS
Stop scaring the voters!
Make your point,move on.
This is reflective of the parking of cheap money wrought by a history of quantitative easing by global central banks, particularly the Federal Reserve.
http://markets.ft.com/RESEARCH/Markets/Interest-Rates. As indicated above, Dominica is not the only Caribbean country to enjoy this “overdemand” of government securities. What would be interesting is a sudden increase of the US fed fund rate and the impact on investing countries like Dominica. Even though the US is monetizing its debt, China, Gulf sovereign funds, and Russian funds still have the power to demand and effect higher interest rates. That being said, I would keep a close look out on the yields of long term debt. If you thought times were tough under previous economic restructurings, this will make you think twice.
US market and debt nor their rates have anything to do with ?Dominica. We don’t borrow from the US, we don’t export to the US, the person on our money is the queen of England… and our exchange rate to the US dollar is the most stable in the world it hasn’t changed in over 40 years regardless of fluctuations in the market. so take you summations about US this and that and tell them’ nobody got time for dat!’
Of course our trade with the US is minimal. However, being privy to know what large/institutional US funds are investing in, that’s why I made this statement. It has nothing to do with exchange rates, but US interest rate changes will affect it down the line.
This financial statistics data means nothing to the poor mothers with children who are forced up the stairs of the financial centre to beg or money. This is an insult. What does this have to do really with these poor people.
Talking and promoting this crap means nothing to us poor people and all these poor families out there.
Skerrit , come again
Change is a must……TIME FOR CHANGE….TERAM DOMINICA
Yes hector and team dominica is going to make all dominicans rich.. when uwp comes into office there will be no problem for dominica change is a must. we all going to have plenty money in our pockets
like seriously….does hector has a money tree or he working with some god fairy….lets be real for once, even if we have change things will not turn to gold
Now i know why you people want to kill HAITIAN and CHINESE, it’s because you all are LAZY and that’s a FACT. Now tell me why are all the foreigners making a good life for themselves, yes check out the FARMERS, MARKET VENDORS, LABORERS, CONSTRUCTION WORKERS, BUS OWNERS & BUS DRIVERS, BEST BARBER SHOPS, SALONS, SECURITY GUARDS, SECURITY COMPANY, EMPLOYMENT AGENCY should i continue ? they are doing very good for themselves and it’s a FACT ask WESTERN UNION & MONEYGRAM. They building home in Dominica, sending for family and love ones. WHY can’t you all do the same ? DID they came here with the JOBS ?
Contrary to what this may show, the low interest rate accepted by investors is reflective of the current market place environment,not a vote of confidence in any particular government, or Dominica’s government, for that matter. Commercial banking channels are offering less than 1% return so investors have little choice where they place money when it comes to treasury bills. True, the low rates environment gives the opportunity to get cheap money and the government would do well to take advantage of this and payoff higher interest debts. However, the true vote of continued confidence, which the prime minister claims, will come when the repayment date matures. I sincerely hope we meet these repayment schedules.
Lol! And the “current market environment” is faciliatted by aliens living on Mars, right?
What he cannot do is turn an investment into a profit.
Bottom line!
mr pm base on your rejoices will the people of this country see a reduction in the cost of leaving immedeatly or is this a good formular for winning an election
leaving? lol
This is another way of charging you a little so that it does not pass as grants
WHO Cares
A True measure of the ability or the trust and confidence that persons have in the country is the 5 year note that is about to be issued. The 91 day treasury rate is simply a result of there being too much money looking for a place to reside in the region. The high levels of liquidity means that persons are looking for short-term placements and the 91 day treasury is guranteed by the central bank so there is no risk.
You explain that to the dude who pose as Bogoroy or Fast N furious etc and they will be lost. I am not even sure that Skerrit understand the concept cause if he did then he would not be pumping his chess. Those idiots will grab at a straw to stay alive.
Parry I would advise the Prime Minister to explain to the youth of Dominica and the man of the street what are Treasury Bills and how can they participate in such a venture.
Ah yes!
(Insert singing and dancing emoticon) “Something is happening!!!)
Eat your heart out, who-the-cap-fits.
Bogoroy, you must be an idiot. So the government borrows money at 1.99% and somehow you think we should declare a national holiday for that?
Re-financing debt at a lower rate is a good thing to do, but this is really elementary stuff.
Short term treasury bills to meet immediate operarting expenditure is not a major deal.
Lately, the government has been on a spending spree because elections are around the corner, but sooner or later, someone has to pay back that debt. That is my real concern.
Once again I must inform my fans and family that the idiotic comments which were made under the pen name BogoRoy have absolutely no connection with me.
WOW ,Roy Williams has fans. He is a self appointed celebrity of iconic proportions. Seriously!
We cannot confuse you with the pen name “BOGOROY” who backs up his slants with facts. You on the other hand are just blowing bubbles in an effort to ingratiate yourself with the team of thieves. Maybe Linton and his two sisters will stone you again.
You don’t have a clue what that means.
It takes 14 years to see this news. Chavez financing slowing. Toooo late shall be your cry. I do not think pm even understand what all this means. We have reports that came from pm office before that was full of crap. This info should be out consistently not just spurr of moment. It seem like pm pleading labour party/his case. Too little too late. 14yrs is time to go
Zulu, the Zulus has move on, educate your self.
Yes I, we need Thomson’s spin. Well, they say change is a must….
Dominicans don’t be easily fooled by this failed regime. Please remember how the Democratic Labour Party in Barbados was boosting of great economic performance during the last Barbados election and as soon as election was over the DLP Barbados government started implementing hardship on the Bajan people.
Dominica is on the edge of an economic precipice and the DLP regime continue to put plaster on big sores to woodwink our people. Vote Labour in and see the economic hardship that they will put on Dominicans. Can we see they can no longer boast of getting money from Venezuela and other counterparts. The country is broke, the government is broke.
Boss u have the perfect name Brave Heart I know its hart but for u to just post what u just posted u well brave even before the Bajans went to the polls their credit ratings was not at 1.99%.
Well, there you have it, Brave Hart just gave you the first part of Fontaine’s rebuttal.
Do you even understand what the treasury bill is . If so please explain you ignoramus.
As if everytime I turn on the new Dominica doing something to accumulate more debt.
Not bad. I will give you thumbs up for that.