Fri | Dec 3, 2021

Clarke, Golding in BOJ profit row

Published:Friday | March 19, 2021 | 12:05 AMRomario Scott/Gleaner Writer
Leader of the Opposition Mark Golding.
Leader of the Opposition Mark Golding.
Minister of Finance and the Public Service Dr Nigel Clarke.
Minister of Finance and the Public Service Dr Nigel Clarke.
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There is a row between Finance Minister Dr Nigel Clarke and Opposition Leader Mark Golding over a $33-billion dividend that is being paid over to the Government by the Bank of Jamaica (BOJ).

During the Budget Debate on Tuesday, Golding noted that $17.9 billion of the dividend came from foreign-exchange trading and from net gains on the BOJ’s holdings of foreign-currency assets.

“This devaluation dis-proportionately hurts low-income people. In using the $17.9 billion of foreign exchange gains from the Bank of Jamaica to fund its Budget, the Government is essentially treating the devaluation as a form of tax,” Golding asserted.

“It is a regressive indirect form of taxation paid in particular by less-well-off Jamaicans,” he added.

But Clarke said that Golding was taking the Jamaican people for “fools”.

“Golding based his attack by saying dividend came from depreciation. Depreciation is a fact. If 3.8 per cent depreciation per year is what explains records BOJ dividend, then where were the dividends when the depreciation was much higher at nine per cent per year in the period 2012-2016?” Clarke questioned.

“So, using Golding’s logic, the people suffered from nine per cent per year – twice as high as now and the people got zero. Who benefited then?” the finance minister further questioned.

NO PROFIT

Clarke pointed out that central banks around the world make profits every year and Jamaican had been an exception.

But at a People’s National Party post-Budget press conference on Wednesday, Golding doubled down on his claim.

WATCH: Highlights from the Opposition post #BudgetDebate2021​ press conference

“For us to achieve stability in the foreign exchange market, we have to grow off foreign exchange earnings and ensure that we are able to sustain, through earnings, the kind of lifestyle that Jamaica now enjoys and has enjoyed for a while.

“But ultimately, the stability of the foreign exchange market is a function of the strength of the economy.

“My point is that the profits of the Bank of Jamaica that were derived from the depreciation in the value of the Jamaican dollar [have] hurt the people. So, to stay that it is good policy and to be extolling as some kind of virtue, I think that was inappropriate,” Golding charged.

The dividend is being paid out of the profits made by the BOJ in 2018, 2019, and 2020.

The $33 billion is expected to be paid over to the Government in the first week of April and will be used to help fund the $60-billion Social and Economic Recovery and Vaccine Programme for Jamaica.