Identifier
Created
Classification
Origin
08KINGSTON561
2008-06-19 19:13:00
UNCLASSIFIED
Embassy Kingston
Cable title:  

JAMAICA: RESPECTED THINK TANK DISCUSSES

Tags:  ENRG EAIR EINV ECON PREL TRSY XL JM 
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VZCZCXRO3558
RR RUEHGR
DE RUEHKG #0561 1711913
ZNR UUUUU ZZH
R 191913Z JUN 08
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 6478
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS KINGSTON 000561 

SIPDIS

STATE FOR WHA/CAR (JTILGHMAN) (VDEPIRRO)
WHA/EPSC (MROONEY)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW

E.O. 12958: N/A
TAGS: ENRG EAIR EINV ECON PREL TRSY XL JM
SUBJECT: JAMAICA: RESPECTED THINK TANK DISCUSSES
NATIONAL DEBT

REF: KINGSTON 341
KINGSTON 277

Summary:
--------

UNCLAS KINGSTON 000561

SIPDIS

STATE FOR WHA/CAR (JTILGHMAN) (VDEPIRRO)
WHA/EPSC (MROONEY)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW

E.O. 12958: N/A
TAGS: ENRG EAIR EINV ECON PREL TRSY XL JM
SUBJECT: JAMAICA: RESPECTED THINK TANK DISCUSSES
NATIONAL DEBT

REF: KINGSTON 341
KINGSTON 277

Summary:
--------------


1. (U) The Caribbean Policy Research Institute (CaPRI) held a public
meeting on June 12 to discuss the state of Jamaica's exorbitant
public debt as a follow up to their report entitled "Jamaica's Debt:
Causes and Constraints." CaPRI hoped the meeting would bring about
solutions on how Jamaicans themselves and the government can take
responsibility for reducing the country's enormous debt burden. End
Summary.

--------------
Nature and History of Debt
--------------


2. (U) Kim-Marie Spence, Executive Director of CaPRI, tracked the
rise of Jamaica's debt from 1995, which has made it the fourth most
indebted country in the world, measured either by debt to GDP ratio
or debt per capita. Jamaica's debt-to-GDP ratio doubled between
1996 and 2003, rising from 76 percent in 1996 to 147 percent in

2003. Off-budget liabilities were a root cause of rapid growth in
the debt between 1997 and 2003. Interest payments are a key factor
contributing to the growth in the national debt.

--------------
Prescriptions for the Debt Burden
--------------


3. (U) Economic growth and increased revenue are the main solutions
for significant debt reduction and fiscal improvement. In an effort
to address the tremendous debt burden, the CaPRI report recommends:
(a) identifying, quantifying, and monitoring contingent liabilities;
(b) minimizing or hedging against contingent risks; (c) implementing
tax reform for quick revenue gains; (d) focusing on economic growth
rather than amortization. Note: Audley Shaw, Minster of Finance and
Public Service, has embarked on extensive tax reform in an effort to
raise tax revenue, bring those currently out of the system into
compliance, and ease the process of paying taxes (reftels) End Note.
Spence emphasized that trying to lay blame for the debt would not
make it disappear; instead she encourages Jamaicans to take
ownership of the problem and find a solution. Spence added, "no one
is absolved from this predicament we're all in it and we all should
take some responsibility."


4. (U) Clarifying the root causes of Jamaica's debt, Minh Pham of
the United Nations Development Program, said a "moral hazard was
evident among the government and financial institutions, where risky
lending and borrowing led to taxpayers and other parties having to
take on the burden of losses which contributed to the national
debt." The CaPRI report states that new avenues of borrowing in
both the domestic and international markets are beginning to
restructure the debt and secure funds at more favorable interest
rates.


5. (U) Other speakers included Rhian Holder and Charles Abogre of
Christian Aid, Carl Narcisse of the United Nations Development
Program, Lawman Lynch of the Kingston Action Forum, and Latoya
Richards of CaPRI.