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 KINGSTON 00000854 001.2 OF 002 ¶1. This week's topics: -- "Zeeks" Sentencing Postponed -- MOU on Slippery Slope -- Electricity Bill to Increase -- Public Debt Jumps -------------- "Zeeks" Sentencing Postponed -------------- ¶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. -------------- MOU on Slippery Slope -------------- ¶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. -------------- Electricity Bill to Increase -------------- ¶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. -------------- Public Debt Jumps -------------- ¶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 KINGSTON 00000854 002.2 OF 002 the year, the stock of public debt could reach the one- trillion dollar mark by the end of the fiscal year. TIGHE