Government take-over of Petrojam unlikely to affect ratings — analyst

Observer writer

Friday, February 22, 2019

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THE Government's plans to acquire Venezuela's 49 per cent share in the Petrojam refinery is closely being monitored by international rating agency, Moodys Investment Services.

In an interview which preceded Tuesday's passing of legislation in the House of representatives allowing for the acquisition and ownership of the Petrojam shares, analyst David Rogovic said “we are waiting to see how this [the buyback of the share] is resolved”.

He was responding to queries from the Jamaica Observer about concerns that the move could be viewed negatively by some investors. Prime Minister Andrew Holness who piloted the Bill said the government has not been able to get Venezuela to honour a 12-year agreement to “upgrade the refinery”. The government first announced its intention to acquire the shares in January, noting that it was in Jamaica's economic security to do so.

In parliament on Tuesday the parliamentary opposition re-iterated its concern about the speed at which the government has gone about the issue and suggested an extension of the period to undertake the acquisition.

Rogovic meanwhile said that the government's move was not surprising since it had provided funds in the last budget for the purpose, and that the move is unlikely to have any significant negative effect.

Meanwhile, Rogovic said that Jamaica's credit rating is currently at B3 positive. He listed a number of positive economic fundamentals for the rating. Among them are a more stable inflation rate, fiscal consolidation, signs that growth is picking up, increased infrastructure spending and increased tourism revenue.

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