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




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Chinese "Aid" Pipeline Deepens
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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.

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Venezuelan "Aid" Also Deepens
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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.

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Fiscal Deficit Widens
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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).

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Remittances Remain Buoyant
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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.

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Income Tax Threshold to Increase
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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).

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International Arrests
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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.


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Jamaica - The World's Murder Capital
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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