By Lynford Simpson, Staff Reporter
Shaw
AUDLEY SHAW, Opposition Spokes-man on Finance, said on Tuesday that the Government could access loans in the international marketplace at rates significantly cheaper than what the country is now getting.
This, he said, would result in significant savings of between $15-$20 billion annually, money that could be channelled into critical areas of the economy. Mr. Shaw who was making his contribution to the 2002/2003 Budget Debate in the House of Representatives, promised that a future Jamaica Labour Party Government (JLP) would tap into such sources.
In a presentation titled "A framework for wealth creation", he pointed to countries such as Brazil and Tunisia which, according to him, have managed to raise in excess of US$20 billion in Samurai Bonds in Japan. He noted that Brazil, with a credit rating similar to Jamaica's, was able to raise a bond at less than four per cent.
"Another method of raising money is to target overseas retail Jamaican investors, rather than institutional investors which has been almost the exclusive focus of this Government...," Shaw said. Such investors, he noted, demand a high rate of returns on their loans.
He pointed to India where the Government in 1998 managed to raise US$5billion in what was called resurgent bonds, targeting overseas nationals in the United States, Europe and Asia. The money was raised at rates ranging from five to seven per cent. Similar bonds were issued by the Indian Government in 2000 called millennium bonds.
Mr Shaw also encouraged the Government to access more funding from the multilateral agencies. He asserted that the Government would save between $15 billion and $20 billion per year in interest and principal payments if low-cost funds were raised in Japan through retail bonds targeted at overseas Jamaicans, and through multilateral agencies.
These savings, he said, would provide significant additional funds for critical areas such as education, crime-fighting, health, road building and maintenance, among others.
The JLP finance spokesman also implored the Government to find ways to attract a major single investor, which he claimed could go a far way in solving the country's economic woes; this, because of the "comparatively small size of the economy...". According to Mr Shaw, "...even just one or two investments of a billion dollars or more could literally transform the country".
Again he cited examples from elsewhere, including Costa Rica, where a US$500 million investment by INTEL, the US computer chip making company, transformed that country's economy. Costa Rica's exports reportedly doubled overnight, moving from a trade deficit to a trade surplus. The country's growth jumped to over eight per cent in 1997.
Mr. Shaw pointed to an earlier Budget presentation by Opposition Leader Edward Seaga, who called for investment of US$1 billion per year for the country to achieve meaningful economic growth levels of between five and 10 per cent per annum.
