$10b mystery

(EDITOR'S NOTE: After the discussion on the M5 Business Recovery Programme ended and the committee moved on to take questions on other unrelated matters, Permament Secretary in the Ministry of Economic Growth and Infrastructure Development Arlene Williams, returned to update the committee on the programme.

She indicated that $1billion was already available to the DBJ and $3billion had been approved by Cabinet for use in the first year of the three-year M5 programme.

She pointed out that the approval was not made in time for inclusion in the Third Supplementary Estimates.

When this article was written, The Gleaner was not aware that she had returned with an update on the matter.)

Chairman of Parliament’s Public Administration and Appropriations Committee (PAAC) Peter Bunting yesterday questioned whether the Development Bank of Jamaica (DBJ) was on a “frolic of its own” when it announced a $10-billion M5 Business Recovery Programme to support businesses hit hard by Hurricane Melissa.

The question came after Financial Secretary Darlene Morrison yesterday disclosed that the sum was not approved in the Third Supplementary Estimates that was tabled in the House of Representatives on Tuesday.

During a Jamaica House post-Melissa press briefing on November 26, Dr David Lowe, managing director of the DBJ, said that through the programme, businesses in agriculture, manufacturing, distribution and tourism that qualify for assistance could obtain between $20 million and $50 million from DBJ partner institutions.

The DBJ head said focus would be placed on refinancing, rebooting and rebuilding.

However, Bunting pressed for answers on where in the Budget an allocation was made for the DBJ initiative.

Morrison told the PAAC chairman, “To the best of my knowledge, that is not included because we do not have an approval of that $10 billion.”

The financial secretary said that in relation to programmes linked to the recovery and relief efforts, the finance ministry has been operating in line with Cabinet approvals.

“There is nothing in the central government Budget to address that,” she insisted.

Morrison suggested that technocrats from the Ministry of Economic Growth and Infrastructure Development might be able to shed light on the issue.

Arlene Williams, permanent secretary in the ministry, told the committee that the money was intended to come from the DBJ’s internal budget.

Christopher Brown, programme manager of Boosting Innovation, Growth and Entrepreneurship Ecosystems at DBJ, was asked to provide clarity on the source of funds for the $10-billion M5 Business Recovery initiative.

“It is my understanding that there is some discussion with (the ministry of) finance about providing financing for the $10-billion programme,” Brown said.

The committee was also provided with an update on changes to the country’s macroeconomic projections following the massive devastation caused by the Category 5 storm.

Morrison told the PAAC, which was reviewing the Third Supplementary Estimates yesterday, that owing to the impact of the hurricane, the medium-term macroeconomic targets have been revised.

Real GDP growth, which was originally estimated at 2.2 per cent for the current financial year, is now expected to come in at a deficit of 4.3 per cent.

Inflation, previously projected at 5.3 per cent, is now expected to be 9.5 per cent. Morrison said the projected sharp rise in inflation is expected to come from increased prices from local food production, as a huge part of the agricultural sector was flattened by the hurricane.

She said the Government has started the process to suspend the fiscal rules for an initial period of March 31, 2027 to facilitate the level of expenditure required to carry out restoration works in areas of the country significantly impacted by the storm, and to assist persons who have been displaced.

The financial secretary said capital expenditure of $55.5 billion in the estimates represents a reduction of $2.2 billion when compared with the previous allocation for capital programmes.

Approximately $53.5 billion earmarked for the programmes is associated with Hurricane Melissa relief and recovery. Of that amount, $29.3 billion is to be utilised by ministries, departments and agencies, and $24.2 billion represents the proposed loan to the Jamaica Public Service to assist in the restoration of electricity in affected parishes.

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