KINGSTON POL/ECON ROUNDUP: April 19 - May 2, 2006

UNCLAS SECTION 01 OF 02 KINGSTON 000854

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 19 - May 2, 2006


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1. This week's topics:

-- "Zeeks" Sentencing Postponed
-- MOU on Slippery Slope
-- Electricity Bill to Increase
-- Public Debt Jumps


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"Zeeks" Sentencing Postponed
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2. The sentencing of PNP linked inner-city Kingston "area
leader" Donald "Zeeks" Phipps, who was found guilty on two
counts of non-capital murder last month, was postponed from
April 21 to May 16. Zeeks' attorney requested more time to
get character witnesses to speak on his client's behalf.
Zeeks could face the death penalty.

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MOU on Slippery Slope
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3. Finance Minister Omar Davies made his contribution to
the budget on April 27, without a new MOU in place. This
after the Jamaica Confederation of Trade Union (JCTU)
rejected the GOJ's offer of a 20 percent increase in public
sector wages. The trade unions are also asking for a number
of issues to be addressed in a new MOU, including, a system
to maximize tax compliance and greater access to housing.
According to the JCTU, the increase was deemed inadequate to
meet the expected demands of public sector workers; and
consequently, JCTU has made a counter proposal to the GOJ.
The negotiations have also been rocked by the pull out of
the powerful nurses association and the possibility of
similar action by the even more powerful teachers
association. Both associations, under pressure from their
members for a more lucrative settlement, seem to believe
that they can secure a better deal on their own.

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Electricity Bill to Increase
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4. Already reeling from increases caused by record oil
prices, Jamaicans are bracing themselves for a further jump
in their electricity bills. The Mirant-owned Jamaica Public
Service (JPS) Company has made an application to the Office
of Utilities Regulation (OUR) to recover over USD 3 million
from losses it suffered during the hurricane season,
including loss of revenues. The JPS is allowed to recover
losses caused by natural disasters from customers because
the power company cannot get insurance (too high risk) for
its physical assets and revenues. Both the power company
and the OUR have agreed to a proposal to have consumers and
the JPS support a sinking fund for self-insurance, making
electricity consumers the de facto insurers. Electricity
prices could also be magnified if the OUR agrees to a
request from the company to move the exchange rate it uses
to calculate bills. Consumers will also face an automatic
inflation based hike later in 2006. The company, which lost
about USD 39 million to theft, has also offered an amnesty
to persons with illegal connections.

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Public Debt Jumps
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5. Data released by the Ministry of Finance showed that at
the end of February 2006, the stock of public debt was JMD
854 billion (USD 13 billion) or just under 140 percent of
GDP. This represents a JMD 95 billion (USD 1.5 billion)
increase over a one-year period. The repayment of a 175
million euro bond slowed the build up in the debt. With the
GOJ again set to borrow at least JMD 150 billion to finance
the 2006/07 budget and with no major bond maturing during

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the year, the stock of public debt could reach the one-
trillion dollar mark by the end of the fiscal year.

TIGHE