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The Gleaner - April 16, 2001

 

FINSAC offers lifeline

FINANCIAL SECTOR Adjustment Company (FINSAC) debtors have been given a temporary reprieve, says Dr. Omar Davies, Minister of Finance and Planning.

He told the House of Representatives during his Budget speech on Wednesday that he had asked the board and management of FINSAC to "give one last comprehensive review of the proposals for repayment which have been submitted."

"I give the assurance that no serious, reasonable proposal will be rejected," he said.

The Minister's announcement was applauded by Karl Samuda, Jamaica Labour Party (JLP) spokesman on Industry and Commerce, who had called for a two-month extension of the period for FINSAC debtors to finalise arrangements for repaying their loans. This was after Dr. Davies announced a deadline of March 31 for debtors to pay off their loans or face whoever purchased the institution's bad debt portfolio at discounted prices.

In a statement on behalf of the JLP following that announcement, Mr. Samuda suggested that the debtors should also be offered the same option of discharging their debts at deeply discounted prices, in line with offers from potential purchasers. He warned of widespread dislocations and distress facing all or most of the 18,000 debtors, arising from the deadline and the sacrificial sale of the debt portfolio.

The Minister had stated that he would sell the portfolio to the highest bidder. Speculation is that bids have ranged from below 10 cents to 30 cents in the dollar. Dr. Davies has refused to confirm any figure although, he did suggest a price of 30 cents in the dollar in April, 2000.

Dr. Davies told the House: "I would not claim that the officers of FINSAC have been perfect, but the attempt which has been made to characterise them as heartless, insensitive persons seeking to destroy the lives of innocent bad debtors is unfair, unkind and untrue."

He said the question facing the Government was whether it should maintain, for an extended period, an institution to collect on the bad loans. This seemed the perfect option for many, he said. However, such an appro-ach was untenable, as the Government had no intention to remain in the loan-collection business. Having taken the resolution of the problem to that point, it was imperative to move to phase out FINSAC, as per the original scheduled, he said.

"There have been calls for greater leniency to be demonstrated, including an extreme position which demands that all outstanding debts be forgiven. This would be a most difficult act, not only within the context of other FINSAC debtors who have made genuine efforts to settle, but moreso to all the other debtors in the financial sector who have consistently honoured their obligations," he said.

He said that nonetheless the Government remained sensitive to the plight of some remaining debtors, who feel that their cases have not been fairly treated.

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