The Gleaner - July 14, 1999

Davies in bid to clear up FINSAC debt

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.

Agreement

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 Parliament.

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 closely.

"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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