KINGSTON POL/ECON ROUNDUP: DECEMBER 23, 2005 -

UNCLAS SECTION 01 OF 02 KINGSTON 000045 SIPDIS SENSITIVE 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 E.O. 12958: N/A TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM SUBJECT: KINGSTON POL/ECON ROUNDUP: DECEMBER 23, 2005 - JANUARY 6, 2006 Ref: ¶1. This week's topics: -- Chinese "Aid" Pipeline Deepens -- Venezuelan "Aid" Also Deepens -- Fiscal Deficit Widens -- Remittances Remain Buoyant -- Income Tax Threshold to Increase -- International Arrests -- Jamaica - The World's Murder Capital -------------- Chinese "Aid" Pipeline Deepens -------------- ¶2. (U) The Chinese government continues to extend its sphere of influence in Jamaica with the grant of USD 2.5 million (JMD 160 million) worth of pipes and equipment to the National Water Commission (NWC). This shipment represents the first batch of pipes and equipment from China under the Jamaican Water Systems Rehabilitation and Extension Project. Another shipment is expected later this month and the remaining shipments will be completed by August 2006, bringing the total value of the aid package to USD 12.5 million (JMD 800 million). The pipes will be used in several NWC developments and should boost capacity to meet the GOJ'S objective of providing 85 percent of the island with potable water by 2010. -------------- Venezuelan "Aid" Also Deepens -------------- ¶3. (SBU) The Venezuelan government has agreed to provide the GOJ with up to USD 300 million (JMD 19.2 billion) in concessionary financing to jump-start the Ocho Rios leg of the ambitious Highway 2000 project, as well as to finance island-wide road repairs following a series of hurricanes and heavy rainfall. While details have not been made public, sources suggest that the idea of the loan was first discussed between Patterson and Chavez in August 2005, when Chavez came to Jamaica to sign the PetroCaribe Oil Accord. Sources also suggest that the deal will be structured to ensure that it does not impact the country's debt ratios. Consequently, Planning Institute of Jamaica officials (who are responsible for external cooperation) told emboff that Highway 2000 officials were directly negotiating the technical aspects of the loan. Post will report further as details become available. -------------- Fiscal Deficit Widens -------------- ¶4. (U) Central Government's fiscal operations generated a deficit of USD 39.1 million (JMD 2.5 billion) during November, bringing the fiscal deficit for the first eight months of the year to USD 391 million (JMD 25 billion). This development means that the GOJ will almost certainly fail to meet its balanced budget objective by the end of the 2005/06 fiscal year, which ends March 31. The deviation in the deficit continues to be influenced by lackluster revenues, which are running USD 21.1 million (JMD 1.35 billion) behind projections. The moribund revenue performance has forced the GOJ to continue on its expenditure restraint program, resulting in savings of USD 88 million (JMD 5.6 billion). -------------- Remittances Remain Buoyant -------------- ¶5. (U) Remittances have soared by almost 20 percent to USD 1.43 billion for the first nine months of 2005, consolidating its position as Jamaica's single largest source of foreign exchange. If remittances continue to grow at the same rate it could reach the USD 2 billion mark by the end of the fiscal year. The record growth in remittances occurred despite a number of natural disasters in U.S. areas which are highly populated by Jamaicans, reinforcing the fact that remittance is one of the most resilient forms of income. The gap between remittance and tourism earnings is expected to widen since tourism has been adversely affected by hurricanes Dennis and Emily. -------------- Income Tax Threshold to Increase -------------- ¶6. (U) Effective January 1, the income tax threshold (the income level at which a person must begin to pay income taxes) has increased to USD 3,022 (JMD 193,440) from USD 2,642 (JMD 169,104). This is the second increase in the threshold in FY 2005/2006. The two increases are expected to result in a loss in revenue of approximately USD 21.9 million (JMD 1.4 billion). -------------- International Arrests -------------- ¶7. (U) On January 04, members of the Jamaican Fugitive Apprehension Team arrested Tyrone Morrison without incident. Morrison is wanted in the Western District of Virginia for Conspiracy and Distribution of Cocaine based on a 2003 indictment. Morrison is currently being detained pending extradition proceedings. In April 2004, an extradition request was initiated with the DOJ Office of International Affairs. ¶8. (U) On December 29, 2005, members of the Jamaican Fugitive Apprehension Team and USMS Jamaica Field Office arrested Alex Anderson upon his arrival in Jamaica from Canada. Anderson is wanted in Queens County, New York for kidnapping, robbery, burglary, and false imprisonment based on a 2002 indictment. Anderson is currently being detained pending extradition proceedings. -------------- Jamaica - The World's Murder Capital -------------- ¶9. (U) The year 2005 did not bring a respite in the number of murders in Jamaica. There was an increase of thirteen percent over 2004. According to the Jamaica Constabulary Force (JCF) Statistical Department, 1,669 murders took place in 2005 compared to 1,471 in 2004. This number may increase slightly as the final statistics for 2005 will not be released for two more weeks. In addition, twenty children were killed as opposed to 16 in 2004 and seven in 2003. ¶10. (U) The number of females murdered increased by 43 with a total of 184 being killed in 2005. Over all, the JCF is reporting a decrease of four percent for major crimes. However, this decrease may be due to underreporting by the police force as well as by citizens fearful of possible repercussions. Additionally, under current reporting practices, a victim is categorized under the most egregious crime committed against him/her; therefore, a person who is raped and then murdered would be counted only as an additional murder but not an additional rape. VALDEZ