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Sale of Eurobonds postponed
Jamaica has postponed a sale of Eurobonds with borrowing costs rising on investor concern about a possible war in Iraq. The government hired Deutsche Bank AG and Commerzbank AG two weeks ago to manage the sale. The yield on Jamaica's dollar bond due 2005 rose to 6.08 percentage points more than US Treasury bonds, up from 5.67 percentage points on 1 February. Analysts say that concerns about higher oil prices and a prolonged world economic slowdown if the US attacks Iraq are driving investors to buy the safest assets, such as US Treasury bonds.
Public debt US$107bn at year end
The public debt reached US$10.7bn at the end of December 2002, up from US$10.1bn at the end of September 2002. The Finance Ministry had previously forecast that the public debt would be US$10.68bn in March 2003. Disappointing revenues, and unbudgeted expenses, have forced the Ministry of Finance into the open market to borrow more in order to meet its financial obligations. According to the Planning Institute of Jamaica (PIOJ), the fiscal deficit at end-September 2002 was US$409m. The Ministry of Finance has been to the domestic capital market at least three times since January, and is currently attempting to raise at least another US$220m on the international markets to help close the financing gap in the budget.
Trinidad & Tobago
Concern over gas reserves
Government concern over the amount of gas reserves required for development of the country's LNG industry lie behind stalled negotiations over LNG Train IV, according to energy expert Ken Julien, a former university professor. During a speech in October 2002, Prime Minister Patrick Manning had threatened to cancel Train IV in a bid to win certain concessions from foreign energy companies. No further details were provided. However, the Trinidad Guardian reported on 19 February that the "mystery" was solved following a recent speech by Dr Julien at the South Trinidad Chamber/Geological Society annual petroleum conference in which he said the following: "If you look at our gas reserves, and the Ministry of Energy has in front of it an independent study of gas reserves - what we call proven, bankable reserves which we know are there, no speculation - we could simply say, let us proceed immediately with Train IV, big project, worth at least US$1.5bn, let's go. But when you look at the reserves picture, and the country has to look at sustainable benefit both tangible and non-tangible, you will find that you are committing 80% of gas reserves to one industry, LNG. That's a frightening thought". Dr Julien heads the LNG Expansion Task Force which is negotiating with Atlantic LNG on behalf of the government.
British bankers to testify
Three British bankers will testify in the case against former Prime Minister Basdeo Panday on 24 February. Mr Panday is accused of failing to declare his London account at the National Westminster Bank for the years 1997, 1998 and 1999, to the Integrity Commission. If found guilty, Mr Panday faces a two-year prison term or a maximum fine of US$39,682. The three bankers work at NatWest, where Mr Panday is reported to have deposited funds.
LIAT in jeopardy
Regional airline LIAT requires US$9m "to stay in business", according to the airline's CEO Gary Cullen. He warned that "if LIAT does not obtain this financing our suppliers could reclaim the airline or we could foreclose". Last year, LIAT reportedly received an US$11m loan from Barbados-based CIBC West Indies Holdings to replace aging planes and finance severance packages. He added, during an interview with the Antigua Sun, published on 19 February, that Caribbean leaders are discussing the level of support they will provide to LIAT. CARICOM is carrying out a preliminary review of LIAT's business plan and a financial audit. One option under discussion is a merger between LIAT, BWIA and Air Jamaica. "Unless there is a merger", warns Antigua & Barbuda's Prime Minister Lester Bird, "I fear that LIAT may well be liquidated".