Academic Researchers Encouraged to Examine FINSAC Archives

The Government has indicated that it is prepared to take a long-term approach to ascertaining recommendations from the documents published in the Financial Sector Adjustment Company (FINSAC) Commission Archives.

Speaking during the launch of the Archives at The Jamaica Pegasus hotel in New Kingston on Thursday (October 17), Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, said, “in some ways, we’re better off by having the submissions ourselves, rather than having the conclusions of a set of three people”.

He said by inviting academic researchers to examine the archives, Jamaica stands a better chance of getting more comprehensive answers to the causes of the financial collapse during the 1990s.

“What we can potentially have, if these archives are harvested, is a deeper set of conclusions drawn from a wider set of expertise,” Dr. Clarke added.

In this regard, the Minister has made provisions in the 2024/25 Supplementary Estimates for $20 million to be shared equally among qualified researchers from the University of Technology Jamaica (UTech) and the University of the West Indies (UWI) who can provide further insights into the causes of the financial sector collapse.

He said the aim is to unearth recommendations that will prevent future policymakers from repeating the mistakes of the past.

‘If we can really entice the academic community, the retired policymaking community, [among others], to examine these archives, we can get valuable perspectives from a number of sources,” Dr. Clarke contended.

Meanwhile, the Minister has assured that the financial sector is currently on a stable foundation, compared to the period of the collapse in the 1990s.

“One of the signal lessons from this period is the role that financial stability plays in economic stability. We are rightly focused on the fiscal and inflation questions, rightly focused on the sufficiency of foreign exchange… those are all in the front,” he maintained.

Dr. Clarke further emphasised that “regulation has to keep pace with the innovations in the sector”.

“The regulations that are on the books, like the twin peaks model [financial sector] regulation [and supervision], are absolutely critical to financial sector stability, going forward, given the complexion, the make-up and the structure of our particular financial sector where financial conglomerates control 90 per cent of financial sector assets,” he said.

Notwithstanding, the Minister acknowledged that the answer to what really caused the collapse of the financial sector is more complex and will require an examination of multiple variables.

“There are a number of factors that one has to examine. It is certainly true that the economic environment was acutely hostile to economic activity and to financial sector stability. But at the same time, the foreign-owned institutions did not fail. The regulatory environment was way below what would have been required for the kinds of activities that were taking place,” Dr. Clarke noted.

“There’s no doubt that the economic environment was unfavourable, with 80 per cent inflation in 1991, 40 per cent in 1992, 25 per cent in 1993, and interest rates that reached up to 50 per cent. That was a recipe for disaster,” he added.

Dr. Clarke said, since then, there have been multiple pieces of financial services legislation which have been promulgated to shore up the sector. These include the Financial Service Commission (FSC) Act, the Pension Act, the Securities Act, the Unit Trusts Act and the Insurance Act.

Nonetheless, he maintains that there are questions regarding the decisions made at the time by financial services entities and policymakers.

In a bid to increase circulation of the information provided in the archives, the Minister has also appealed for creatives, such as film makers, to consider productions based on the series of events unfolding in the 1990s.

“Having productions on the FINSAC era in a dramatic form in the theatre or in a documentary would be very useful. We provided $500 million to the Film Commission. I would hope that they could reserve just a little small portion of that for film-makers who want to use the archives to make artistic outputs that could reach wider audiences,” Dr. Clarke stated.

The FINSAC Commission was established on January 12, 2009, and tasked to, among other things, examine the circumstances leading to the collapse of several financial institutions during the 1990s.