Omar Anderson, Gleaner Writer
THE COUNTRY'S indebtedness to overseas lenders was reduced yesterday by 9.45 million pounds sterling ($1 billion) thanks to a write-off from the British Government.
The announcement was made at a joint press briefing by British High Commissioner Peter Mathers, and Finance and Planning Minister Dr. Omar Davies. The briefing was held at the Ministry of Finance and Planning at Heroes Circle, Kingston.
Yesterday's debt cancellation brings to £37.5 million ($4 billion), the total debt relief the United Kingdom has given Jamaica since the Commonwealth Debt Initiative (CDI) began in 1997. However, up to press time last night, the size of Jamaica's remaining debt commitment to Britain could not be ascertained.
The British High Commission, however, notes that the decision to cancel the $1 billion debt was the result of efforts by the Jamaican Government to reform the public sector, reduce poverty, and heighten the island's national security.
It said the assessment to underwrite the debt was undertaken by officials of the British Government's Department for International Development (DFID), working closely with local officials from the Finance Ministry.
"The decision by the British Government is different from earlier debt relief, as it included loans made by the Commonwealth Development Corporation (CDC) to the Government in respect of two State agencies.
These are the Forest Industries Corporation (FIDCO), and the National Housing Development Corporation (NHDC)," the High Commission said in a release.
It stressed that the assessment for the debt cancellation considered "the effects of Jamaica's high-level debt and its impact on poverty reduction programmes, and the level of crime and violence."
It also noted that Jamaica received the write-off so "the Government can develop medium-term socio-economic policy framework which will provide the leeway within which it can make policy decisions."
Audley Shaw, the opposition spokesman on finance, in reacting to the news, said yesterday that if the amount written off was programmed in the recently-announced Budget, "the Government now has more resources which it could use to address pressing house-keeping matters."
"I call on the Minister of Finance to apply this $1 billion to expenditure on improving the fire services, and repair some of our police stations which are not fit for human habitation," he said.
GRANT
But Dr. Wesley Hughes, director-general of the Planning Institute of Jamaica (PIOJ), told The Gleaner yesterday that the debt cancellation forms part of the $4.5 billion grant the Government placed in the budget for this financial year. In other words, he said, there was no excess cash waiting to be used.
"This is just, in a sense, the first instalment of the expected grant portion," he said, adding that grants can come in the form of debt cancellations."There's no guarantee the other rest will come, but we are hopeful it will," he said.
Dr. Hughes added that the Government usually gets grants mainly from the European Union, but he noted that the amount budgeted in the last financial year was not realised.
According to the British High Commission, the debt relief is provided under the CDI which was launched in October 1997 by Gordon Brown, the British Chancellor of the Exchequer.
RELIEF
The CDI aims to provide additional relief in respect of government-to-government loans to low and middle-income countries in the Commonwealth committed to achieving the internationally agreed Millennium Development Goals.CDI funds are also given to Commonwealth countries which promote transparent and accountable government, and pursue economic policies that encourage sustainable development.
A breakdown of the write-off showed that the Government was expected to repay a total 6.44 million pounds sterling($682 million) in the present 2004/2005 financial year, when it is eagerly seeking to borrow $33 billion to help fund this year's budget. Another 3 million pounds sterling the Government repaid in the last financial year is to be reimbursed.
