BoJ Made no Advances to Central Gov’t – Finance Minister


Finance and Planning Minister, Dr. Omar Davies has said that the Bank of Jamaica (BoJ) made no advances to central Government during fiscal year 2003/04.
Dr. Davies’ remarks came in response to a previous enquiry made by Member of Parliament for St. Andrew North Eastern, Delroy Chuck. The Minister was making his contribution on Thursday (April 15) to the 2004/05 Budget Debate in Gordon House.
“The specific answer to his question is that the Bank of Jamaica made no advances to the Central Government in December 2003 or at any time during the fiscal year 2003/04. In fact, the last time that the BoJ made any such advance to the Central Government was in 1992,” the Minister said.
He informed that up to 1992, the BoJ acted as banker to the central Government with central Government’s revenue and expenditure accounts maintained in the BoJ.
“As the Government’s banker, the BoJ provided advances to the Central Government when the resources were inadequate to cover expenditure,” he said.
These advances, he admitted were carried forward from year to year and contributed to inflation but also created a situation, which impaired the balance sheet of the BoJ.
“In 1992, the Government took the decision to end that build up of advances to central Government by the BoJ and, as a first step, a decision was taken to establish banking relationships with the commercial banks. However, the Consolidated Fund, the Debt Accounts and some Revenue Accounts were still maintained at the central bank,” he stated.
He, however, disclosed that the central bank, from time to time, invested in Government instruments on commercial terms similar to those offered to any other institution or retail investor.
“These instruments, carrying market interest rates, are freely tradable securities and are used by the BoJ in its conduct of monetary policy,” he said.
Returning to the financial year 2003/04, the Minister said that the Government paid to the BoJ$7.55 billion in the principal and $6.4 billion in net interest for its holdings of the Government of Jamaica securities.
Meanwhile, he said at the same time, the BoJ’s investments in GoJ’s securities totalled $18.47 billion.

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