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
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
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