Business

VIDEO: 'Value from JEEP grant still being assessed'

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, December 11, 2013    

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WESLEY Hughes says that the Petrocaribe Development Fund continues to monitor the value gained from pumping $1.3 billion into the political Jamaica Emergency Employment Programme (JEEP).

"It's still ongoing," said the CEO of the state-run agency about the evaluation on funds used for short-term employment, the provision of housing and gully repairs.

Last year, JEEP received a special one-off amount from PetroCaribe some four times the estimated $300 to 400 million offered annually for grant projects.

The jobs programme — a major thrust of the Portia Simpson Miller election campaign — aims to provide short-term employment by inducing maintenance projects.

"We think that repairing the gullies in Kingston for example would be money well spent and [providing] wooden housing for the indigent," said Hughes. "I don't know how you measure these things. If you were in desperate need for these things then you would think it's the greatest thing that has happened, but if you are not poor and have your own house and its not something on your agenda, then you would probably question the use of funds."

Hughes and managers of the fund were hosted by business reporters at the Jamaica Observer head office in Kingston on Monday.

PetroCaribe Development Fund was created by the Government of Jamaica in 2006 to manage the proceeds which accrue to Jamaica under a concessionary oil importation arrangement with the Governmnet of Venezula. When oil exceeds US$40 a barrel ,between 30 and 70 per cent of each invoice is financed and the loan repaid over 25 years at one per cent interest rate per annum.

Below US$40 a barrel, between 5.0 and 25 per cent of each invoice would be financed over 17 years at a 2.0 per cent interest rate per annum, according to official documentation from the Fund.

Since inception the fund has issued some US$1.7 billion in loans with another US$1 billion invested in securities, making it one of the largest holders of government paper.

Last May, Audley Shaw, opposition Spokesperson on Finance, wrote to Auditor General Pamela Monroe Ellis seeking intervention on the practice of successive administrations raiding public agencies.

The 2013/14 budget reportedly listed as Apropriations in Aid $1.3 billion taken from the PetroCaribe Fund to finance the JEEP; some $600 million from the National Health Fund to support expenditure in the Ministry of Health; and moneys from the Tourism Enhancement Fund used to fund more than 50 per cent of the promotion needs of the Ministry of Tourism and is listed as Appropriations in Aid.

Hughes indicated that the fund "theoretically" could have rejected the decision for the use of funds.

"It was a cabinet decision. A government priority," he said. "We funded JEEP to the extent of $1.3 billion that was a one-off... It was a special distribution."

The 2012/2013 annual report indicates that the fund issued $1.67 billion in grant financing in the period, listing JEEP among other recipients including Jamaica Social Investment Fund, The Youth Upliftment Through Employment Programme, and Land Administration Management Programme.

"Additionally, specific job creation opportunities and housing were provided by the JEEP, which was conceptualised to provide short-term employment, particularly for persons at the lower socio-economic level," indicated the financials.

The deferred oil payments under the PetroCaribe arrangement effectively provided some US$500 million in balance of payment support to Government last year.

In addition, the fund played an "important" role in lending budgetary support to the Government by participating in the National Debt Exchange, it indicated.

Disbursements during the 2012/13 period included revolving facility of US$125 million to Petrojam to finance the purchase of oil, US$12 million to the Students Loan Bureau and US$3.4 million to the National Export Import Bank to finance loans to the productive sector.

Also US$2.2 million was provided to the Port Authority of Jamaica to partly finance the development of the Falmouth Cruise Pier, and US$3.9 million to the Urban Development Corporation for infrastructure development under the Historic Falmouth Town Centre Redevelopment Programme.

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