Camilo Thame, Business Reporter

Grantley Stephenson, honorary consul general for Norway, was part of negotiations for sale of a ship that was previously acquired under the Norwegian ship credit facility. - File

Norway's decision to write off debt incurred by five developing countries under a two-decade-old ship export credit facility, will reduce Jamaica's overall debt, which totalled $873 billion at the end of June, by just under $200 million.

On Monday, Norwegian International Development Minister, Erik Solheim, said Jamaica, together with Ecuador, Egypt, Peru and Sierra Leone, still owed a combined US$80 million (J$5.28 billion) between 1976 and 1980 when Norway exported 150 ships to the five countries, as part of a programme called the Shipping Export Credit Campaign that was aimed at boosting exports from its shipyards.

According to Jamaican Finance Ministry officials, the amount to written off involves 19 million Norwegian Kroners ($190 million), which amounts to 75 per cent of the debt owed to the Nordic country.

Jamaica took on the debt in the mid-1970s to finance the building and purchase of a Norwegian-made ship to significantly improve the cargo handling capacity of Jamaica Merchant Marine (JMM), incorporated in late 1975.

"We had established JMM with the first ship we had leased," recalled Horace Clarke, who was Transport Minister during the 1970s.

"Then we manufactured one - the MV Morant Bay - largely using the credit facility."

The thinking at the time, Clarke explained, was that "as an island, one of the significant opportunities for development would be through maritime operations."

According to a report by the World Trade Organisation's predecessor, the General Agreement on Tariffs and Trade (GATT), dated September 16, 1985: "The annual reports of the three companies studied indicate that developing countries may profit from participating in the shipping of their bauxite."

"The Jamaica Merchant Marine," the report added, "reported operating profits in 1978, 1979 and 1980, respectively."

Mainly bauxite

JMM's business included the transport of banana and grain, but mainly oversaw the shipping of bauxite.

The entity was privatised in the 1980s and the vessel - which was operated by the government under the management of now Kingston Wharves' chief executive officer, Grantley Stephenson - was sold.

Stephenson, who is also the honorary consul general for Norway, was integral in the negotiations for the sale of the vessel, but Wednesday Business was unable to get a comment from shipping manager up to press time despite several calls.

The Norwegian debt has been the topic of debate for some years now among several non-governmental organisations that since the mid-1990s have been calling on developed nations to cancel debts held by highly-indebted countries.

Such calls have come from the European Network on Debt and Development (EURODAD), a network of 49 NGOs across 15 European countries; Jubilee Debt Campaign from the United Kingdom and The Norwegian Campaign for Third World Debt Cancellation, which was established in 1992, and recognised on a national level in Norway in 1994, when the campaign was called SLUG.

According to a 2003 report by SLUG, between 1977 and 1980, Norway exported a number of ships to developing countries, in order to secure employment in a ship-building industry in crisis.

"In the borrowing countries the state was required to guarantee for the private buyer who received export-credits in order to buy the ships," said SLUG.

"Many of the projects lacked a satisfying evaluation by NORAD (the Norwegian Developmental Aid Agency), to insure developmental effect, and in some cases also by GIEK (the export credit institute of Norway) to insure the economic viability of the projects."

It added: "About 80 per cent of Norwegian claims on developing countries (in 2003) originates from this campaign."

The Norwegian authorities introduced the Debt Plan of 1998, according to the SLUG report, having recognised the limited developmental value to the borrowing nations.

The plan provided 100 per cent debt cancellation to Heavily Indebted Poor Countries (HIPCs), but heavily-indebted middle-income countries, like Jamaica, were not included in this part of the plan.

An attempt to make amends

Erik Solheim, the Norwegian International Development Minister said the programme was a mistake, referring to the write-offs as a "little honourable" attempt to make amends.

"This campaign represented a development policy failure. As a creditor country, Norway has a shared responsibility for the debts that followed. In cancelling these claims, Norway takes the responsibility for allowing these five countries to terminate their remaining repayments on these debts," said Solheim.

The debt cancellation must first be approved by the Norwegian Parliament which will be presented as part of the Government's 2007 budget proposals on Friday.

camilo.thame@gleanerjm.com