The Gleaner - July 14,
Davies in bid to clear up
AN EFFORT is now being made to clean up the relationship between
the Bank of Jamaica, the Ministry of Finance and Financial Sector
Adjustment Company (FINSAC), Dr. Omar Davies said in Parliament yesterday.
The process would mean that FINSAC's debt could be reduced by about $30
billion, now owed to the central bank and the Ministry.
Dr. Davies was seeking the authority of the House of Representatives for a
Government guarantee to the Bank of Jamaica in respect of a Debenture note
issued by FINSAC in the amount of $11.2 billion. Approval was given.
The Minister explained that the central bank had facilitated the Eagle
Group and Century National with debentures. Maturity of the $11.2 billion
is in April 2007.
Opposition spokesman on Finance Audley Shaw wanted to know whether this
was a first attempt to guarantee the total debt; and whether other FINSAC
debts would be brought to parliament.
Dr. Davies responding said that FINSAC also had assets which were to be
sold to help pay down the debt; and it had been able to collect $2.4
billion of debt which had been written off as bad debt before FINSAC took
over. All these strategies, he said, helped to reduce the debt.
He noted in passing that the final cheque for the Holiday Inn Hotel had
been received and details of the sale agreement would be tabled in
The Finance Minister also told Parliament that as of March 31 this year,
45 per cent of the island's internal debt was held by public corporations,
parastatal agencies/statutory corporations, the Bank of Jamaica and
entities under the control of FINSAC.
Responding to questions asked by Central Kingston MP the Rev. Ronald
Thwaites, Dr. Davies said that while there was no accurate data on the
size of the commercial paper market, surveys by the Securities Commission
estimated the market to be in excess of $15 billion.
He said that the Securities (Disclosure of Interest) Regulations 1999
would enable the Securities Commission to regulate and monitor
developments in the commercial paper market and to track issues more
"As a result, in the future the Commission will have more precise
data on the market. In addition, the withholding of taxes on interest
income at source which came into effect on June 1, 1999, will result in an
improvement in the data collection," the Minister said.
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