Former finance minister Dr Omar Davies yesterday reiterated his position that the Finsac intervention was the best solution to the 1990s financial sector meltdown, while refusing to accept arguments that his Government’s high interest rate policy was at its root.

Even with the revelation by debtors earlier in the week about the suffering that they endured in the aftermath of the meltdown, Davies said yesterday that he still believes the approach taken by the Financial Sector Adjustment Company (Finsac) was the best decision.

Saying that he heard the impassioned pleas of the debtors, Davies argued that focus should also be given to the number of people who were helped during the crisis.

Davies said that millions of dollars in depositors’ accounts and pensioners’ funds were protected by Finsac, adding that even some debtors who were now complaining had savings accounts which were salvaged.

Davies, in his third day as a witness, was facing questions from attorney-at-law David Wong-Ken, representing the Finsac debtors in the Finsac Enquiry held at the Jamaica Pegasus Hotel in Kingston.

In a testy exchange with Davies, Wong-Ken argued that it was Government’s high interest rate policy that pushed the banks’ bad debt portfolio to the level it reached.

Davies, however, strongly retorted that the high interest rate policy at the time was necessary to bring stability to the foreign exchange market and contain inflation.

He charged that prior to his administration’s interest rate policy the Bank of Jamaica was purchasing foreign currency on the black market and the exchange rate was held artificially as the two largest purchasers were pulled out of the market and sold funds separately.

That could not continue, Davies emphasised.

In a back-and-forth question and denial Wong-Ken asked Davies if he went into a high interest rate policy without knowing when it would end.

Davies’ indirect response drew comment from the enquiry chairman, retired Justice Boyd Carey, who said that the answer suggested that the high rates would stay as long as necessary.

Davies also dismissed an assertion from Wong-Ken that his administration had no intention of rehabilitating the debts held by the ailing business people.

A defiant Davies responded that such a statement was “untrue”, adding that he knew of no policy position that would waive all debts and satisfy everybody.

“Have you checked how many debtors have been helped?” a fuming Davies questioned.

“Even people in this very room have been helped,” he continued, to grunts of disapproval from observers at the enquiry.

Davies, saying that he hoped such a situation never again arises, told the enquiry that he brought the highest level of competence to deal with the issues of the meltdown.

Carey, after consultations with attorney-at-law Michael Hylton, who is representing Davies, said that the former finance minister should return to the sittings next Wednesday to continue deliberations.