KINGSTON — Former Eagle Group chairman, Dr. Paul Chen Young, says it will take many years for Jamaica to recover from the failure of the Financial Sector Adjustment Company (FINSAC) to fulfill its mandate in the 1990s.
FINSAC was established in 1996, to plug the losses resulting from the 1990s financial meltdown, which has been blamed primarily on the Government’s high interest rate policy.
Dr. Chen-Young told Thursday’s sitting of the Commission of Enquiry into the meltdown and the role of FINSAC in the crisis, that the manner in which developed countries tackle the current international economic crisis, especially in the financial sector, makes FINSAC’s approach “northing short of lamentable.” He accused FINSAC of taking over troubled companies, with no intention of preserving long-standing, fundamentally strong institutions, such as his Eagle Group.
Dr. Chen-Young said that the reasons for FINSAC’s behaviour has never been explained, and urged the Commission of Enquiry to seek to find the answers. He said that some of the troubled entities, including Eagle, could have been saved, especially if given time to restructure, which was well within FINSAC’s terms of reference, instead of being sold to foreigners.
“Given the collapse of the bauxite/alumina industry, the reduction in remittances, the struggles in the tourist industry, the growing trade deficit, the outflow of investment income from the sale of the domestic financial entities will be a continuing drag on the country’s balance of payments,” he said.
He added that, by failing to rehabilitate indigenous businesses, FINSAC’s handling of the crisis was “anti-entrepreneurial and lacking in any long-term vision”. He said that, as a result, there will be less risk-taking and long-term investment in the productive sector.
“The mishandling of the financial crisis by FINSAC, by its failure to have acted according to its mandate and terms of reference, is a sad chapter in Jamaica’s history from which it will take many generations to recover,” Dr. Chen-Young said.
By BALFORD HENRY, JIS Reporter & Editor