JAMAICA: APRIL ECONOMIC REVIEW

UNCLAS SECTION 01 OF 02 KINGSTON 000325 SIPDIS SENSITIVE STATE FOR WHA/CAR (ACADIEUX) (VDEPIRRO) (WSMITH) WHA/EPSC (MROONEY)(FCORNEILLE) EEB/ESC/IEC/EPC (MMcMANUS) INR/RES (RWARNER) SANTO DOMINGO FOR FCS AND FAS TREASURY FOR ERIN NEPHEW USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA OPIC FOR ALISON GERMAK E.O. 12958: N/A TAGS: ECON ENRG SENV EAIR EMIN ASEC SOCI ETRD TRSY OPIC AID, OAS, IBRD, XL, JM SUBJECT: JAMAICA: APRIL ECONOMIC REVIEW REF: A) KINGSTON 315 B) KINGSTON 269 C) KINGSTON 245 D) KINGSTON 223 ¶1. (SBU) SUMMARY: -- Sporadic roadblocks, with some violent incidents emerged to protest a recent US 10 cent per liter gas tax, but appear to have passed for now. -- Rising aluminum inventories and a 58 percent global price decline since July, 2008 are putting a strain on Jamaica's already weakened bauxite sector. -- The Government of Jamaica (GOJ) will continue to add losses from parastatals Air Jamaica and the former sugar estates, which had not yet been privatized by the start of the fiscal year on April 1. -- The USA Jamaica Diaspora Conference planned for July will be rescheduled for October. -- GreenExpo for energy efficient and environmentally friendly products is scheduled for June 2009. Some Roadblocks In Protest Over Gas Tax -------------- ¶2. (SBU) Two days after a JD 8.75 (U.S. 10 cents) per liter tax increase went into effect, police were forced to break up sporadic roadblocks in Kingston and in the St. Catherine parish (reftels). There were reports of stone throwing at vehicles and a few instances of personal injury and robberies at the roadblocks. Press reports indicate one person was slashed on the arm at one of the roadblocks and her cell phone stolen. Police have made several arrests for destruction of property and obstruction of traffic. The Mission and many schools chose to close early for the day; however, the protests appear to have died down with no further reports on the morning of April 29. ((Note: Although the opposition People's National Party (PNP) publically urged Jamaicans to wear black clothing and to drive with their headlights on; however, contacts told Emboffs that the party had no intention to support formal protests or roadblocks on the island in response to the tax increases. Nevertheless, most of the roadblocks occurred in areas of strong PNP-support. End Note.)) Bauxite Sector Takes Beating -------------- ¶3. (U) After the closure of two Russian-owned bauxite plants (reftels),Jamaica's bauxite sector is facing falling world aluminum prices and rising inventories. Prices have fallen from a high of USD 3,200 per metric ton in July, 2008 to USD 1,339 in March 2009. Inventories are rising as the global economic downturn further reduces demand. Air Jamaica: No Sale Yet -------------- ¶4. (SBU) The 2009-2010 GOJ budget tabled in Parliament on April 7 does not contain a funding provision for the beleaguered national airline Air Jamaica. The GOJ is behind schedule on plans to divest several government-owned entities including Air Jamaica. The deadline for the sale of Air Jamaica has been pushed back from March 31 to June or possibly July (reftels),thus adding more losses to the government balance sheet. (Note: Don Wehby, the Minister without Portfolio in the Ministry of Finance and Public Service who has overseen the airline divestiture for the GOJ has announced that he will return to the private sector at the end of July. Emboffs' contacts close to Wehby say his departure date is firm; in order to leave having honored his promise to sell the airline, he will have to close the deal before the end of July. End Note). Sugar Estates: No Sale Yet, More Losses -------------- ¶5. (SBU) The Sugar Company of Jamaica (SCJ),which the GOJ had hoped to sell before the start of this fiscal year, has had to undergo a second public tender. The first tender failed when Infinity-bio-energy (based in Brazil) was unable to raise the requisite finances in the current global credit squeeze (reftels). The SCJ will receive USD 8.5 million in budgetary support from the GOJ consolidated fund for the 2009/2010 fiscal year, while the GOJ continues to seek a suitable buyer. Other unsold parastatals include the Caymanas horseracing track, which will receive USD 5.6 million in public funds this fiscal year and the Jamaica Urban Transit Company (public bus system) which will receive USD 8.8 KINGSTON 00000325 002 OF 002 million to pay operating expense. In a press briefing on April 24, Minister of Finance and the Public Service Audley Shaw hinted that he expects to raise USD 91 million through an accelerated divestment program, but did not elaborate on which public entities would be sold. Diaspora Conferences Pushed Back to Oct -------------- ¶6. (U) The first USA/Jamaica Diaspora Conference, initially planned for June, has been rescheduled to October. Reasons include the current global economic downturn and fundraising considerations. Minister of State in the Ministry of Foreign Affairs and Foreign Trade, Senator Dr. Ronald Robinson, confirmed the new date during an interview following a meeting with members of the Jamaica Diaspora Advisory Board for the Northeast USA held April 21 at the offices of the Jamaican Consulate in New York City. Green Products Expo -------------- ¶7. (U) The Jamaica Conservation and Development Trust announced the 2009 GreenExpo to be held June 5-7 at the National arena. The event is a trade show seeking environmentally friendly products and services including alternative energy systems, construction materials and energy efficient appliances and products. The GOJ accords certain products such as solar panels and solar water heaters with reduced taxes or tax exemptions in an effort to promote energy efficient projects. MOSS