Manufacturers might get state aid
FINANCE Minister Dr Peter Phillips has indicated that the Government is considering putting in place a facility to enable local businesses to be able to remain viable despite the devaluation of the Jamaican dollar.
"We are looking at things like trying to assist some of the manufacturers to get involved in exports through the PetroCaribe facility and see if there can be export activity that they can get paid [for] in Jamaican dollars from the PetroCaribe Development Fund," Phillips said.
He added that Jampro and the investment ministry were actively considering similar proposals.
The disclosure came from the minister as he made a statement to the House of Representatives.
Audley Shaw, opposition spokesman on finance, claimed the devaluation policy has been a disaster for many businesses, especially manufacturers, who have seen their input costs soar.
"Because we are highly import-dependent for our raw materials, the greatest victim for a policy of devalution is the fact that manufacturers continue to drive up prices to the local consumers. The biggest losers to the policy of devaluation in this policy are the poor, who are getting poorer," Shaw said.
Phillips acknowledged that there was pain being caused by the policy and noted that the most affected are manufacturers with high import dependence, "producing entirely for the domestic market, which is contracting".
"The signal of the programme is, in fact, saying you have to reorientate your productive activities," the minister said.
The Government has been hard-pressed to defend its policy to allow the devaluation of the Jamaican dollar as part of its economic programme with the International Monetary Fund (IMF).
IMF head Christine Lagarde, during a recent visit to Jamaica, said the devaluation would make Jamaica more competitive, but Shaw has said consumers and groups such as manufacturers are suffering.
Phillips said the central bank is now more than capable of intervening in the foreign-exchange market due to the acquisition of a US$800-million loan from the international capital market.
The funds - US$500 million of which is to be used to finance the budget - were raised following a non-deal road show in the USA and Europe last month.
Phillips made the comment about the central bank intervention while responding to comments made by Shaw during yesterday's sitting of the Parliament.
Shaw said the intervention of the Bank of Jamaica (BOJ) in the market last week was proof that the current policy was not working.
Phillips, while noting that it was not the first time the central bank has intervened, said the BOJ takes such decisions when there are "wild swings or sharp movements not justified by market conditions" to bring about stability.
"With the US$800 million, it has the capacity to intervene more effectively and punish speculators," the minister said.