This huge tree, which served as a landmark for decades on the Sheffield Road just outside the Negril town centre, was unable to withstand Hurricane Ivan's powerful winds on September 11 and eventually crashed into this house. Luckily, the house was unoccupied, residents told the Observer. (Photo: Michael Gordon)

Prime Minister P J Patterson last night reassured foreign creditors that Jamaica will meet all its obligations despite the hard knock it took from Hurricane Ivan.

But Patterson, at the same time, primed Jamaicans for the possibility of a downward adjustment in economic growth projections and for the knock-on effect on other macro-economic indicators.
The finance minister, Omar Davies, will speak to economic implications of the hurricane in Parliament on Tuesday, Patterson said.

"While the restoration of utilities is proceeding well, the hurricane is bound to have a negative impact on our overall economic situation," the prime minister said in a radio and television broadcast. "Even with the considerable assistance that we are receiving, there will be need for increased expenditure to cover relief efforts and for reconstruction."

PATTERSON... hurricane bound to have a negative impact on our overall economic situation

The Government had pledged to its creditors to keep the public sector deficit to within four per cent of gross domestic product (GDP) this fiscal year, and deficits of 7.7 per cent and 5.6 respectively in the 2001/2002 and 2002/2003 fiscal year. The deficit was to be eliminated by the end of the next fiscal year, in April 2006.
The improvement in the fiscal account was to have come on the back of growth of up to three per cent, and tight fiscal discipline, including measures to rein in government borrowing, the servicing of which takes up more than 60 per cent of the annual budget.

But with Ivan having done serious damage to agriculture, infrastructure and other areas of the economy, there have been fears that the economic targets - including returning inflation to single digit - could be undermined, causing foreign creditors to become reticent about Jamaica.
But these lenders had no cause to be worried about being paid, Patterson said.
"Our external creditors have been assured that all our obligations will be met when they become due," he said. "The confidence of the private capital market in Jamaica's economy is amply demonstrated by the fact that our bond prices are still trading at pre-hurricane levels."

Patterson would have been buoyed, in part, by the central bank's net reserve, which at the end of August stood at US$1.643 billion, a three per cent increase over the previous month's.
Critically, though, the reserves provided a 16-week cushion for goods and services imports - a fact alluded to by Patterson in his broadcast when pointing to the need for additional food and petroleum imports to meet the current post-Ivan situation.

"We have sufficient foreign exchange to satisfy the additional import bill," he said.
He, however, restated the Government's already shrill warning to merchants who may attempt to use the current environment to jack up prices - a complaint that has come from consumers.
". The Government is prepared to respond swiftly and decisively to any attempt at price gouging," Patterson said, echoing remarks he made at the weekend. "If it becomes necessary to take drastic action, we will not shirk in our duty in accordance with the law."

Similar warnings have also previously come from the commerce and technology minister, Phillip Paulwell.
In terms of the general reconstruction, Patterson said that up to Friday, the light and power company, Jamaica Public Service (JPS), had already reconnected 270,000 of its approximately 500,000 customers.

Of the 400 water systems operated by the Government's National Water Commission, 150 had already been put back into operation, and the National Works Agency had cleared 330 of 642 blocked roads.
"You must understand that we have given priority to hospitals and other essential services and to the critical economic sectors so that production of vital goods and services can resume quickly," Patterson said.

The broader aim, according to the prime minister, apart from alleviating human suffering, was to ensure that the economic momentum of the first eight months of the year was quickly regained.
"Our development projects, including the construction of new hotels, are continuing on track," Patterson said. "We sent a strong signal that Jamaica remains open for business by the remarkably short time we took to reopen our two international airports."

The fear factor

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