KINGSTON POL/ECON ROUNDUP: FEBRUARY 4, 2006 -

UNCLAS SECTION 01 OF 03 KINGSTON 000336

SIPDIS

STATE FOR WHA/CAR (BENT) AND WHA/PDA
STATE ALSO FOR INL/LP (BOZZOLO),EB/TPP, AND EB/IFD
STATE ALSO DOE CA/OCS/ACS/WHA (RUTH BRANSON)
STATE PASS OPIC FOR TABERNAKI
CUSTOMS MIAMI FOR LOWEN AND MAHABIR
SANTO DOMINGO FOR FCS, FAS, AND LEGATT
STATE PASS USTR FOR A. GASH-DURKIN
DOJ FOR OPDAT/R LIPMAN
TREASURY FOR LAMONICA

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: FEBRUARY 4, 2006 -
FEBRUARY 17, 2006


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1. This week's topics:

-- New Governor General
-- Economic Prospects Favorable
-- First Supplementary Estimates to Be Tabled
-- Tourism Back In Earnest
-- Jamaica's Hunt for Oil
-- Sugar Industry Developments
-- Jamaica-Cuba: Light Bulbs and Cement
-- International Arrest
-- Crime Rates Down

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New Governor General
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2. On February 15, Kenneth Hall, former Pro-Vice
Chancellor and Principal of the University of the West
Indies Mona, was sworn in as the fifth Governor General of
Jamaica. Hall was a history professor in the 1980s at the
Sate University of New York at Oswego. He replaces Sir
Howard Cooke, who served as Governor General for almost 15
years. The Ambassador represented the US at the
installation ceremony and the reception following the
ceremony.

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Economic Prospects Favorable
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3. Minister of Finance and Planning, Dr. Omar Davies, and
Bank of Jamaica Governor, Derick Latibeaudiere, expressed
optimism in connection with the country's economy in the
first quarter of the calendar year. Speaking at a February
14 lunch with the Canada-Jamaica Business Council, Davies
stated that he expected inflation to remain at a low level -
the figure for December 2005 was 0.1 percent - and remarked
that "single-digit inflation for 2006" was likely.
Latibeaudiere, speaking at the Bank's quarterly press
briefing, added that he believed that as inflation subsides,
the foreign exchange market will stabilize. He further
noted that increased investment in public infrastructure in
the run-up to the 2007 Cricket World Cup would spur growth
in 2006.

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First Supplementary Estimates To Be Tabled
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4. Fin Min Davies also announced that the first
supplementary estimates for the 2005/06 fiscal year, that
are traditionally tabled in December, will be tabled on
March 7, only three weeks before the end of the Jamaican
fiscal year. The announcement was prompted by constant
criticisms from the opposition Jamaica Labor Party (JLP).
The JLP attributed the delay to the campaign for the
leadership of the governing People's National Party (PNP) in
which Davies is a candidate. The first estimate is expected
to reflect the steep deterioration in the fiscal deficit due
to a reduction in revenues relative to program. Davies
assured investors that regardless of the outcome of the PNP
leadership race, the stability and policy consistency of the
last several years will continue.

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Tourism Back In Earnest
--------------


5. Despite the passage of two hurricanes and the subsequent
slump in tourist arrivals, the tourism sector still managed
to grow 4.5 percent in 2005; its third consecutive year of
growth. The performance also marked another year of record
tourist arrivals, with stopover arrivals reaching just under
1.5 million. The record performance was largely
attributable to the strong recovery during the latter part

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of the year, due to increased marketing and a diversion of
visitors from hurricane ravaged Mexico. The buoyancy
continued into 2006, with arrivals for the month of January
jumping by 11 percent, making it one of the best
performances on record.

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Jamaica's Hunt for Oil
--------------


6. For the fifth time in 36 years, Jamaica will be
embarking on a search for oil and gas. However, unlike
previous outings, the entire cost associated with the
exploration will be borne by Finder Exploration Limited
(Finder),the company licensed to undertake the prospecting.
The last time (1980-1983) Jamaica was involved in oil and
gas exploration it cost the GOJ a whopping USD 18 million
(JMD 1.2 billion). Exploration activities will be conducted
under a product sharing arrangement whereby Finder would pay
a 12.5 percent royalty to the GOJ in cash or kind and would
split any oil or gas produced with the Petroleum Corporation
of Jamaica. Preliminary information from the current search
will be available in just over six months.

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Sugar Industry Developments
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7. The Jamaica Country Strategy for the Sugar Industry
over the period 2006-2015 has been submitted to the European
Union (EU). In response to the EU's proposed elimination of
special preferences, Jamaica proposes restructuring (perhaps
by increased mechanization),diversification, and
development programs that will enable inefficient producers
to move out of the market, while training their employees
for other industries. Full details of the strategy are not
yet publicly available, but Prime Minister Patterson has
been clear that the industry will not be abandoned, as some
commentators have recommended. It is hoped that the EU will
provide much of the funding to transition the industry.

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Jamaica-Cuba: Light Bulbs and Cement
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8. The Cuban Government has given residents of East
Kingston and Portmore some 30,000 energy-saving light bulbs
in an effort to bring down Jamaica's high energy bill.
Commerce, Science and Technology Minister Phillip Paulwell,
on February 14, said that the donations were part of a pilot
energy conservation project aimed at reducing the country's
USD 1.2 billion oil bill. Meanwhile, Carib Cement - the
monopoly producer in Jamaica - has been forced to turn to
Cuba to help meet a shortfall of 40,000 metric tons to
satisfy local demand.

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International Arrest
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9. On February 15, Dwight Perry was arrested in Kingston
without incident. Perry is wanted in the Eastern District of
Virginia for Conspiracy and Distribution of over 1,000 kgs
of marijuana based on a December 2005 complaint. Perry is
scheduled to appear in Magistrates Court on Thursday,
February 16. Perry will remain in custody pending
extradition proceedings and his return to the United States.

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Crime Rates Down
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10. As of February 15, Jamaica's homicide rate stood at 154,
compared to 198 for the same time period in 2005. The JCF
reported a decline of 12% for overall crime.

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