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The Gleaner - January 21, 2001

 

FINSAC to begin winding down

ACCORDING to the Finance Minister Dr. Omar Davies, the Financial Sector Adjustment Company (FINSAC) is to begin scaling back its operations as it has now almost completed its assigned task of restructuring the country's financial sector.

Speaking at the Mayberry Investor's Workshop at the Courtleigh Hotel, New Kingston this week Dr. Davies said: "Unfortunate as it was, the circumstances that led to the formation of FINSAC, represents one of the more positive examples of public sector management because none of us had been through this before. FINSAC is now at the point where there are only six distinct tasks to undertake. These relate to the completion of the sale of Union Bank, bringing NCB to the point of sale, dealing with Life Of Jamaica (LoJ), addressing the non-performing loans on its books and the sale of the hotels where we are literally down to just the divestment of Ciboney. From the sale of some fifteen hotels we are down to just one."

Dr. Davies pointed out that as far as NCB was concerned a major step was the Government's acquisition of 75 per cent of the bank rather than the Group. The sale of Union Bank to Royal Bank of Trinidad and Tobago (RBTT) was due to be completed in December but the Minister said he was now looking to do so later this month with the lawyers now going through the finer points of the sale. Regarding LoJ, he said the Government had to make a big decision as to whether to retain the present majority shareholders with it now moving to toward selling its majority interest. He made it clear that the Government had no interest is retaining its stake in the company and are actively seeking a buyer. The packaging of the non-performing loans portfolio he added was well under way.

"In terms of what we set out to do with FINSAC we have done well. I now see advertisements with Guardian Life and Island Life doing well but let us not forget these are all products of action taken by the Government.

"Am I satisfied in terms of with where we are with FINSAC? I would have hoped that RBTT would have taken over Union Bank by now and perhaps we waited too long to move on LoJ but by and large what occurred with FINSAC last year was satisfactory."

Dr. Davies said that in the coming weeks a major divestment of a Government asset would take place and that he did not want to pre-empt the Prime Minister by going into details right now. Speculation is that this may well be the announcement of the sale of Jamaica Public Service Company (JPSCo).

He added that fiscal targets for this fiscal year were on course to be met, and that will take place. He maintained that the aim continues to be the containment of inflation and that inflation for the month of December stood at 0.7 bringing inflation for the calendar year back to 6.1 per cent.

"I am firmly of the view that any other administration can never ever again allow Jamaica to slip into a situation of a high inflation economy. It is totally destructive and drains confidence in savings and is a cruel punishment on the poor and, as a society, we should accept that as a national objective that we shall never be out of whack in meeting inflation targets."

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