Moontown

Bank of Jamaica Governor Brian Wynter. - File

Sabrina Gordon, Business Reporter

Jamaica’s prospects for economic recovery have improved significantly, particularly in a post-Jamaica Debt Ex-change (JDX) period with relative stability in exchange rates and declines in market interest rates, the central bank chief reported at his quarterly press briefing on Wednesday.

“We have begun to see some encouraging signs in the financial markets as investors’ anxiety about the JDX morphed into a more positive perception of Jamaica’s medium-term economic prospects,” said Brian Wynter, governor of the Bank of Jamaica (BOJ).

Wynter, who is now close to six months into his tenure as governor and still without a formal employment contract, said that financial institutions remained liquid and adequately capitalised during and after the JDX transaction, with the US$950-million Financial Sector Support Fund (FSSF) still untapped.

But the governor remained cautious about the likelihood of any financial institution needing assistance from the fund.

“No, there has been no use of it, so we have the money still sitting there in our coffers ready in case it is needed,” said Wynter.

“I can’t ever know for sure because the nature of the fund is to cover risk that could happen, but that is not likely at this point. As time passes, problem caused by the JDX gets less and less and I think it’s fair to say now that there is not much likelihood of a JDX-related problem, but having said that, we cannot know for sure; so the fund is there,” Wynter told the Financial Gleaner following his presentation.

forex market steady

Holding to a positive outlook, Wynter, in his presentation, told journalists and financial analysts that the exchange rate had appreciated by 0.1 per cent during the period under review despite early pressures prior to the JDX and approval of the IMF agreement.

Foreign-exchange inflows from tourism were kept afloat, with an increase in stopover arrivals that translated into an 8.2 per cent rate of growth for the sector in the March quarter. The JMD is now trading at $89 to the USD.

Along with the stability in the foreign-exchange market, the central bank governor said a continued downward trend was reflected in domestic interest rates with the yield on the benchmark six-month Treasury bill falling by 6.31 percentage points, or 631 basis points.

“The central bank sees the declining trend in interest rates as an indicator of significantly improved market perceptions about the Government’s fiscal-debt profile, as well as a measure of the prospects for stable economic conditions in the medium term,” Wynter said.

Consequently, for the coming June quarter, headline inflation is expected to slow within a range of 2.5 per cent to 3.5 per cent, with fiscal-year inflation remaining within the targeted range of 7.5 per cent to 9.5 per cent.

The projected deceleration in the inflation out-turn for the quarter ahead is to come from low consumer demand and the stable exchange rate environment, but will be tempered by the impact of an anticipated increase in oil prices over the year, the central bank chief said.

Although economic conditions will continue to be constrained by weak demand, Wynter noted that the spillover from the positive economic trends in Jamaica’s main trading partners will continue with some turnaround in Jamaica’s position by the latter part of this fiscal year. Jamaica is projecting growth of half a point.

“The bank is cautiously optimistic that the buds of economic recovery will begin to be seen in the latter part of the fiscal year. The prospects for mining are encouraging, while growth in tourism and agriculture is expected to continue,” he said.

And with the improved outlook and signs of a return of investor confidence, Wynter said BOJ was moving to sterilise the liquidity impact of the financial support that the central bank extended to the Government in December, by selling GOJ securities from its portfolio on the secondary market.

Of the J$20.6 billion in govern-ment medium- and long-term securities purchased during December, approximately J$17.6 billion has already been sold on the secondary market, Wynter said.

Additionally, Wynter noted that all J$13.6 billion worth of securities bought during the March quarter were redeemed along with the repayment of the bridging loans extended to the Government. (Jamaica Gleaner)

sabrina.gordon@gleanerjm.com

Scotia center

Scotiabank Jamaica has spliced more than two percentage points off its base lending rate, pushing the cost of its credit to a five-year low, the bank said Thursday.

The move to cut the interest rate to 17.75 per cent on retail credit, which takes effect June 1, comes a day behind strong signals from the central bank that it was bullish on the economy post the International Monetary Fund (IMF) agreement, and that for now the financial sector was weathering the effects of the Jamaica Debt Exchange (JDX) (see story on Page 2).

The yield on the April Treasury bill auction, too, for the first time in decades, fell below 10 per cent, at 9.99 per cent on the benchmark six-month issue and 9.97 per cent for the three-month bill.

“This will be the bank’s lowest base lending rate in five years, as well as the lowest lending rate among the major commercial banks locally,” said Scotiabank in a statement announcing the adjustment.

no special for businesses

The price of personal loans averaged 23.99 per cent at December 2009 across the commercial-banking sector, while commercial loans were weighted at 12.67 per cent.

Despite pressure from businesses and the Government to cut commercial rates, Scotiabank had no special offers for the business sector this time around, choosing instead to trumpet its two most current loan sales launched within the past six months - the J$100-million Farm Loan Fund priced at 9.95 per cent and backed by the Ministry of Agriculture and Fisheries; and the J$500-million Productive Sector Growth Fund, similarly priced, which comes to an end on June 30.

The bank said there was still some J$156 million in the latter fund available for lending.

supporting private sector

Bruce Bowen, president and chief executive officer of Scotia Group Jamaica, still tried to sell the current adjustment as support for Jamaica’s private sector, saying it offered access to affordable loans to stimulate economic recovery in all sectors.

“Following Jamaica’s signing of the IMF standby facility and completion of the JDX in February, foreign-exchange markets and security markets have stabilised, allowing for commercial lending rates to start reducing,” said Bowen.

“As the country’s largest and most successful financial services group, we are once again taking the lead in lowering rates and making loans more affordable to our customers.”

Jamaica Manufacturers’ Association President Omar Azan, the chief spokesman in the lobby for lower commercial rates, said the rate cut was the right move, but still not enough.

“It’s a step in the right direction, but still not where we want to be,” Azan told the Financial Gleaner.

He urged the bank not to increase fees to compensate for the lower interest revenue, but seek instead to reclaim revenue by growing the volume of loans sold.

The bank first amended base rates last summer after the Bank of Jamaica demonstrated that it was serious about a policy shift to a low interest-rate environment with a series of cuts to its policy rates that began in July 2009.

In August, Scotiabank led the commercial-banking sector with a one-point rate cut to 20.5 per cent, and three months later another adjustment to 19.875 per cent.

The new cut reduces that rate by 2.125 percentage points, or 10.7 per cent.

The bank said that in the past 11 years, from September 1998 to April 2010, it has put on the market 17 concessionary loans worth J$5.7 billion. (Jamaica Gleaner)

business@gleanerjm.com

Christopher ‘Dudus’ Coke is wanted in the United States on drug and gun charges. - File

Prime Minister Bruce Golding rebuked the United States for its attitude to the ‘Dudus’ extradition case. - Ricardo Makyn/Staff Photographer

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Daraine Luton, Senior Staff Reporter

The Jamaican Government has accused the United States of being headstrong in efforts to resolve the extradition saga involving alleged gunrunner Christopher ‘Dudus’ Coke.

Speaking in Parliament on Tuesday, Prime Minister Bruce Golding said the Government had not taken a definitive position that Coke will not be extradited.

“The matter has become one of significant controversy. The United States government has remained virtually intransigent on the matter … or intractable or inflexible,” Golding said.

The prime minister told Parliament “Government will, without hesitation, facilitate the extradition of any Jamaican citizen wanted to stand trial for extraditable offences once the obligations under the treaty are met.”

The Jamaican Government has said that the wiretapping evidence the US has - bolstering allegations against Coke regarding drug trafficking and gunrunning - was obtained illegally and was in breach of the mutual extradition treaty. Golding said his administration would not be signing the request on that basis.

“Christopher Coke is wanted for an alleged crime in the US for which he ought to be tried and the Government of Jamaica, consistent with its obligations under the treaty, will do everything to facilitate his extradition once it is done in accordance with the provisions of the treaty and the laws of our country,” the prime minister said.

Central Kingston Member of Parliament Ronald Thwaites, who was in a fiery mood, said the issue of wiretapping was a red herring. He urged the Government to reflect on how the treatment of the extradition was marring the image of the country. (Jamaica Gleaner)

daraine.luton@ gleanerjm.com

Arthur Hall, Senior Staff Reporter

The government is continuing to downplay the significance of Wednes-day’s late-night meeting at Prime Minister Bruce Golding’s official residence, Vale Royal.

Government officials, who spoke on condition of anonymity, yesterday echoed the claims of Information Minister Daryl Vaz that there was nothing unusual about the lengthy meeting, which seemed to be coming to an end when the Gleaner team left close to midnight.

Vaz, who was the only person willing to talk, told reporters at the gates of Vale Royal that there was nothing special about the meeting.

“The prime minister was away in Montego Bay from yesterday (Tuesday), and based on all that is happening, you couldn’t expect anything different,” Vaz told reporters.

“As minister of information, I have to come and brief him and tell him exactly what is happening, nothing out of the ordinary. I’m here most evenings and most nights, so there’s nothing to be alarmed about,” added Vaz.

Developments discussed

He admitted that the meeting discussed the developments following the prime minister’s announcement that he had sanctioned moves by the Jamaica Labour Party (JLP) to contract the American law firm Manatt, Phelps & Phillips to intervene in the dispute over the United States request for the extradition of West Kingston strongman Christopher ‘Dudus’ Coke.

“This (meeting) is about everything that has transpired in the last 24 hours. It would be irresponsible of us not to meet with the prime minister and have detailed discussions on the situation that has unfolded,” said Vaz.

Other government ministers and JLP members drove out of Vale Royal without speaking with journalists, while those who stopped gave no comment.

Government backbencher, Dr St Aubyn Bartlett, also refused to comment as he drove into Vale Royal after 10 Wednesday night.

The Government has been on the defensive since Tuesday when the critics came out of the woodwork in the wake of the prime minister’s announcement. (Jamaica Gleaner)

Edmond Campbell, Senior Staff Reporter

IN 2006, then Opposition Leader Bruce Golding demolished the argument that ministerial responsi-bility could be separated from party duties.

Four years later, Golding, now prime minister, drew on parliamentary rules to shut down questions from the Opposition, which attempted to quiz him on his role as party leader in the deepening Manatt saga.

Golding made a stunning revelation in Parliament on Tuesday that he had sanctioned the initiative to retain the services of US law firm Manatt, Phelps & Phillips to lobby US government officials on an extradition dispute.

During a fiery debate on the Trafigura Beheer scandal in 2006, Golding’s theatrical description of a minister who purportedly tried to make a distinction between his role as government minister and that of party official has returned to haunt him.

“There seems to be an attempt to differentiate between Colin Campbell, the party official, and Colin Campbell, the minister of government.

“Now, we can’t just jump out of one skin and jump into another. And we have to understand that given the nature of our political system, when we act as a minister to whatever extent, we carry party responsibilities, that you are not going to be able to simply separate them, that the one is going to impact on the other, especially when what you are seeking to do in the one capacity is contingent on the constitutional powers that you have in the other capacity. Cannot be separated,” he charged.

In Gordon House on Tuesday, Member of Parliament for St Andrew East Central Dr Peter Phillips, directed a number of questions to Golding.

He wanted to know why Golding did not divulge information on March 16 that he, as party leader, had approved the Manatt scheme when he denied that the Government was involved.

“…Why did he not say so then?” Phillips questioned.

Standing Orders shield

Responding, Golding reached for the Standing Orders, the rules of Parliament, stating, “I am going to start staying scrupulously by the rules.

“The member ought to be aware that in Standing Order 16, he can only ask a question of the minister in his official capacity in relation to his portfolio responsibility. You cannot ask in the House anything about my responsibility as party leader,” he declared.

Trafigura Beheer is an international commodities-trading company that donated $31 million to the People’s National Party in 2006. Dutch law prohibits such contributions and as a result, the company was investigated by that Government for allegedly offering bribes to the then Jamaican Government.

That scandal led to the resignation of Campbell as minister of information and development and party general secretary. (Jamaica Gleaner)

edmond.campbell@gleanerjm.com

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