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Gov't Maintaining Strict Fiscal Prudence - Shaw

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  • Gov't Maintaining Strict Fiscal Prudence - Shaw

    Minister of Finance and the Public Service, Audley Shaw, has said that the Government is maintaining strict fiscal prudence, given the global economic crisis that has led to a credit crunch on the international market.

    "Given the limitation of global financing, it is important for us to strive to maintain our deficit target, and despite the pressures for additional expenditure to meet hurricane damage and public sector wage adjustments, we continue to exercise strict fiscal controls," Minister Shaw said, while addressing a public forum yesterday (Dec. 3), at the Northern Caribbean University (NCU) in Mandeville, Manchester.

    "I am pleased to report that up to the end of October, our projected fiscal deficit remained on target, even as we know that the rest of the financial year will be challenging," he stated.

    In the meantime, Minister Shaw said that the Government's move to source cheap money, long before the financial crisis, is now paying off, as the multilateral institutions "have given us access to hundreds of millions of foreign exchange flows, which has proven to be vital in the face of the global financial crisis".

    "Some of this funding will replace the flows we would have hoped to access from the private capital market, which is now closed to most emerging markets. The Government is serious about accessing cheap resources in order to facilitate growth and development of the economy, and it is working," he stated.

    He indicated that the Government has secured some US$300 million from the multilateral developments banks and "I will sign an additional three policy-based loans with the Inter-American Development Bank (IBD) for a total of US$ 101 million. By February 2009, significant additional flows are expected from the World Bank and the Caribbean Development Bank, which when combined with a possible US$300 million liquidity support programme for commercial banks, will see a total inflow of approximately US$950 million by the end of this fiscal year."

    According to Minister Shaw, "the loans represent an unprecedented level of inflow of foreign exchange loans at low interest rates and is due to the aggressive policy of re-engagement with the multilaterals".

    "Significantly, increasing access to financing from the multi-laterals makes sense since their lending rates are considerably lower and more stable than the commercial markets. The challenge, since the loans from these agencies are largely policy-based loans, is to harmonise our domestic policies especially dealing with fiscal and administrative reform, with the lending policies of these agencies. This is not a difficult exercise because there is a convergence of policies given this Government's commitment to good governance," Minister Shaw stated.

    http://www.jis.gov.jm/finance_planni...NCE___SHAW.asp
    "Jamaica's future reflects its past, having attained only one per cent annual growth over 30 years whilst neighbours have grown at five per cent." (Article)

  • #2
    Scandalous, retrograde' decision - Small businesses group lashes BOJ on interest-rate hike

    The Bank of Jamaica (BOJ) is facing more fire over its decision to drastically hike interest rates. This time it is the Small Business Association of Jamaica (SBAJ) that has launched a broadside on the central bank and demanded the immediate rollback of the interest rates.

    According to the SBAJ, the sharp increase in interest rates announced on Monday was "scandalous, retrograde and consistent with poor fiscal leadership".

    SBAJ President Edward Chin-Mook said the interest-rate hike was part of a continuing attack on the entrepreneurial spirit of Jamaicans.

    "The SBAJ must question the motives of the nation's leaders when a decision by the BOJ to restore predictability and order to local financial markets threatens the core business fundamentals and further destabilises the already fragile economic and social stability," Chin-Mook said in a release yesterday.

    Sector held ransom

    According to Chin-Mook, since 1991, efforts to protect the value of the Jamaican dollar have resulted in the productive sector being held to ransom.

    He said the SBAJ was proposing several measures that could help solve the problems facing the country without increasing interest rates.

    These include creating "business-in-box" bundles targeting Jamaican entities.

    The SBAJ joins the Private Sector Organisation of Jamaica and the Jamaica Manufacturers' Association as private sector bodies which have expressed concern at the interest-rate hike.

    However, the BOJ has defended its move, which it says was implemented to mop up excess liquidity and protect the value of the dollar.

    Some of SBAJ's recommendations


    ✓ Immediate rollback of the interest rates outlined on December 1.

    ✓ Convene an action team to study the platform of the central monetary system, with the focus on employment, production and development.

    ✓ Replace the senior officers at the Planning Institute of Jamaica, whose performances have not indicated any innovation over the last 14 months.

    ✓ Review the mandate of the Development Bank of Jamaica, which has failed to spark the productive sector of Jamaica.

    ✓ Create 'business-in-box' bundles targeting Jamaican individuals and groups):

    Leased land (agriculture, factory, office space).

    Finance package - ($1-$10) million sizes.

    (Low interest rate loans 5 per cent, 24-month principal moratorium).

    Incentives (start-up statutory tax concessions, waive customs duty on equipment, motor vehicle, raw material and back-office assistance).

    Marketing machinery - (local/regional/ international).

    http://www.jamaica-gleaner.com/glean...ead/lead4.html
    "Jamaica's future reflects its past, having attained only one per cent annual growth over 30 years whilst neighbours have grown at five per cent." (Article)

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