KINGSTON POL/ECON ROUNDUP: April 1 - April 18, 2006

UNCLAS SECTION 01 OF 02 KINGSTON 000745

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: April 1 - April 18, 2006


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1. This week's topics:

-- "Zeeks" Found Guilty of Murder
-- Buoyant Tourism Season
-- Sluggish Economic Growth in 2005
-- Inflation Slows During First Quarter
-- Estimates of Expenditure Tabled


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"Zeeks" Found Guilty of Murder
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1. The high profile murder trial of Donald "Zeeks" Phipps,
reputed Kingston area drug don, concluded April 12 with a
guilty verdict. Zeeks was convicted of the April 2005
murders of Dayton "Scotchbrite" Williams and Rodney
Farquharson and is scheduled to be sentenced April 20.
Zeeks could face the death penalty for the double non-
capital murder conviction; however, his defense attorneys
indicated there will be an appeal. Paula Llewellyn, Senior
Deputy Director of Public Prosecutions, expressed the hope
that the conviction will create a renewed a sense of faith
in the justice system.


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Buoyant Tourism Season
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2. Preliminary estimates from the Jamaica Tourist Board
suggest that the tourism industry is enjoying one of its
best years on record. Total arrivals for the three-month
period January-March jumped by 10 percent over the same
period last year, to approximately 851,551. The improved
performance stemmed from buoyancy in both segments of the
market, with stopover arrivals jumping by 11.7 percent and
cruise arrivals climbing by 8.3 percent. The robust growth
reflects the addition of 2,000 hotel rooms and the increased
airlift from the U.S, the country's major source market.
Industry sources also attribute the increase in arrivals to
the physical improvement of cruise ports and resort towns.
Further growth is expected during the next three months
based on forward booking, but cruise arrivals could suffer
from the fallout caused by the recent fire aboard a cruise
ship en route to Jamaica.

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Sluggish Economic Growth in 2005
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3. Data released by the Statistical Institute of Jamaica
showed that the economy grew by 1.5 percent during 2005.
This was well below the 2.5 to 3 percent growth projected
for the year. Output performance was moderated by a number
of weather-related and oil price shocks during the year.
The full year result would have been worse were it not for a
recovery during the final quarter of 2005, when the economy
grew by 2.7 percent due largely to a 27.2 percent increase
in agricultural production.

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Inflation Slows During First Quarter
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4. The consumer price index shows that prices rose by 0.1
percent during March, continuing the trend observed since
the latter part of 2005. The result also brought inflation
for the first quarter of 2006 to 0.1 percent, following the
zero percent recorded for the first two months. Inflation
for the comparative period of 2005 was 1.4 percent. The
first quarter inflation figure influenced a marked slowdown
in the fiscal year (April to March) result to 11.4 percent.
Prices are expected to rise in upcoming months, given the
inflationary impulses expected from oil and cement price
increases. Significant salary adjustment in especially the

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bauxite industry is also expected to drive inflation and
inflationary expectations.

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Estimates of Expenditure Tabled
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5. The GOJ has tabled a JMD 358 billion (USD 5.5 billion)
expenditure-budget for the 2006/07 fiscal year, 3.5 percent
above the revised estimates for 2005/06. However, with
inflation of 11.2 percent for the last fiscal year it means
that expenditure has been reduced by 7.7 percent in real
terms. This has prompted Opposition Spokesman on Finance,
Audley Shaw, to suggest that the budget is not realistic and
is an election budget. He expects the real budget to come
after the elections. Recurrent expenditure, up 11.7
percent, will account for 61.7 percent of the budget, while
capital spending will account for the other 38.3 percent.
The proposed budget will place emphasis on Agriculture (up
58.6 percent),Tourism (up 48 percent),and Industry (up
26.4 percent). Interest payments of JMD 92 billion are up 9
percent and will continue to account for a large portion of
the recurrent budget.