Road fund cannot repay loan

Although heralded by the Government as the source from which a massive Chinese loan would be repaid, the Road Maintenance Fund (RMF) says it is not in a position to carry the 20-year burden.

A special report of the auditor general, tabled in Parliament on Wednesday, stated that Transport and Works Minister Mike Henry has been made aware of the situation.

"In a minister's note to the Minister of Transport and Works dated July 20, 2010, the executive director of the RMF reiterated the fund's inability to meet the loan obligations beyond March 2011, stating that there would be an immediate shortfall of US$10.7 million (J$930.9 million), which will be required April 2011," the report said.

Appeal for info

Dr Omar Davies, the Oppo-sition spokesman on finance and planning, had written to the auditor general in his capacity as chairman of Parliament's Public Accounts Committee for assistance in getting information on the RMF.

Davies had asked questions in Parliament and was unable to get the information. Yesterday he told Parliament that the development was one in a series of contracts that the Government has entered without giving the country the benefit of the fine prints.

Henry had declared in February that Government has entered into a US$400-million loan over 15 years from the Chinese is to be used to undertake an elaborate road-rehabilitation programme.

Tax collected

Patrick Wong, CEO of the National Works Agency, had told a post-Cabinet press briefing in February that the RMF had received $1.53 billion from the tax so far.

"The cess is to generate J$1.8 billion, or US$20 million annually. For a US$400-million programme, it would take us in excess of the fuel cess revenue. We have used this to borrow US$400 million so we can tackle the infrastructure problem in a meaningful way," Wong said.

But the minutes of a May 6 meeting indicate that the fund's board had concerns about the RMF's ability to repay the loan.

The RMF is partly funded by an $8.75 cess on fuel which was imposed in 2008 by Finance Minister Audley Shaw. The minister said a portion of the money collected would be used to maintain roads across the island.

Government had committed to pay 20 per cent of the fuel tax into the RMF in the first year of the tax and thereafter increase the amount to 35 per cent.