THE FAILURE of the Government to find a buyer for Clarendon Alumina Partners (CAP) has led to Jamaica telling the International Monetary Fund (IMF) that it will not be divested by year end as was originally agreed.
"We have had to adjust our strategy for the divestment of Clarendon Alumina Partners in light of the lack of interest from potential buyers for the company at this time," a supplementary letter of intent addressed to Christine Lagarde, the IMF's managing director, indicates.
The letter, dated September 13 and co-signed by Finance Minister Dr Peter Phillips and Bank of Jamaica Governor Brian Wynter, indictates that CAP is the only hiccup in the country's IMF programme.
The Government, through CAP, owns 45 per cent in the Jamalco alumina refinery. CAP is expected to lose more than J$1.6 billion in the current fiscal year, taking its accumulated deficit to approximately $26 billion.
In its original letter to the IMF, the Government indicated that it was committed to finalising divestment of CAP or implementing an asset lease agreement, with option of purchase, by December 2013.
The commitment was listed as one of the many structural benchmarks in the programme; however, with the strategy to get CAP off its hands not achieving results, the Government has indicated to the IMF that it has put a new plan in place. The new strategy involves preparing the company for sale at a later stage.
"Given the imperative of protecting the Budget from any operations of CAP and its partners, a new continuous structural benchmark is included in the programme," the letter said.
Going forward, there will be no financing of CAP by the Government or any public body, including the PetroCaribe funds. The Government has also committed not to provide any new government guarantee to CAP, and neither will it use state assets, other than shares and assets owned by CAP, as collateral for third-party financing.
In the meantime, Finance Minister Dr Peter Phillips, who yesterday provided an update on the state of the agreement with the IMF to Parliament, said he expects Jamaica to pass the second test under the extended fund facility.