Davies' update positive - Minister touts global bond, single-digit inflation in Parliament
December 19, 2001
WITH YESTERDAY marking the last sitting of the House of Representatives for the year 2001, Minister of Finance Dr. Omar Davies took the opportunity to update the nation on the state of the economy.
The Minister took particular pride in the launch of the Government Of Jamaica (GOJ) Securities Exchange Commission (SEC) registered global bond. The bond has a 20-year maturity and will carry a coupon of 11.625 per cent. The issue was priced to offer a yield to maturity of 11.875 per cent. The manager/underwriter for the transaction is Bear, Stearns & Company Limited.
In a statement to Parliament, Dr. Davies said: "It is the first SEC registered bond offering ever by the GOJ. Obtaining SEC registration is a major achievement as this institution of the US Government is meticulous in conducting its due diligence exercise given the weight associated with its endorsement.
"A major benefit is that SEC registration allows for broader distribution of GOJ bonds and faster access to the market in the future. It will also facilitate trading of Jamaica bonds on the secondary markets."
Dr. Davies drew attention to the fact that in the main, inflation was largely contained and that there were moderate price increases. Fig-ures by STATIN on the Consumer Price Index (CPI) show that prices in Nov-ember increased by 0.1 per cent, bringing the figure for the first 11 months of the calendar year to 8.4 per cent and for the first eight months of the fiscal year to 6.7 per cent.
"It is clear that we will once again have single-digit inflation for calendar year 2001," said Dr. Davies. "The challenge is to ensure that for the remaining four months of the fiscal year, December through March, increases in all the major prices are moderate in order to keep the fiscal year figure in the single digit range."
Revenue collection had suffered a downturn, exacerbated by the September 11 attacks on the United States which stymied inflows from the tourism and travel trade. Nevertheless, statistics for the fiscal year to date, April to November, indicated tax revenues were 0.5 per cent above budget. However, this represented a significant weakening of the relatively strong revenue situation which was the case up until August. For the period April to August, tax revenues were five per cent above budget.
"For the three month period, September to November, revenue collection has fallen to six per cent below budget, reflecting a downturn in various sectors, particularly those related to travel and international trade," Dr. Davies said.
"However, given the linkage between our tourism sector and all the sectors of the economy this downturn has been widespread. It is this reduction in tax revenue which has forced us to revise the targets in the Staff Monitored Programme," he told Parliament.