Dividend Of $33 Billion From BOJ To Be Placed In Consolidated Fund
By: March 12, 2021 ,The Full Story
Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, has said that the one-off dividend of $33 billion from the Bank of Jamaica (BOJ) will be placed in the Consolidated Fund in the first week in April.
Opening the 2021/22 Budget Debate in the House of Representatives on March 9, Dr. Clarke said the one-off dividend of $33 billion will go towards the $60-billion Social and Economic Recovery and Vaccine (SERVE) Programme for Jamaica.
“Last year, good policy delivered $90 billion of opening cash resources, at the right time, which assisted us greatly in financing the response to the pandemic, even as Government revenues declined, without needing to borrow,” he said.
“This year, again, good policy is delivering a $33-billion dividend from the Bank of Jamaica, straight into the consolidated fund in the first week in April. This could not come at a better time,” Dr. Clarke added.
He pointed out that without this historic dividend, unprecedented in size as a single payment, this year’s budgetary process would have been an even more difficult exercise.
Dr. Clarke said it is important to note that this distribution does not represent recurring revenue, adding that this dividend is an accumulation of three years of profits.
He noted that Central Banks are designed to be profitable and in countries that pursue good policies, sustainable and prudent policies, they are indeed profitable, adding that they return these profits to taxpayers through dividends to the treasury.
Dr. Clarke informed that from 2010, the Central Bank paid $0 dividend to the taxpayers of Jamaica who fund its operations, because it made huge losses.
“We rectified this in 2018 and 2019 by transferring the securities required by law to cover the cumulative losses BOJ made over the previous decade. This was particularly important in preparation for central bank independence and with renewed focus on the central bank’s new mandate, central bank governance and central bank accountability,” he said.
He noted that $20 billion of permanent capital was also injected into the BOJ in 2018 to empower the BOJ to fulfil its mandate.
“We made a deliberate shift in monetary policy towards inflation targeting, which began in earnest in 2018. He said inflation targeting has now been given the force of law with the BOJ Amendment Act, chiseled and passed with bipartisan support,” The Minister said.
He said these series of steps have led to a reversal of fortunes for the BOJ, as they were able to reduce interest rates 10 times since 2018.
“After a loss of $6.8 billion in 2017, the BOJ made a profit of $9.1 billion in 2018, $15.8 billion in 2019 and $9.9 billion in 2020. The vast majority of these profits were from ordinary operations. Only about 20 per cent arises from realised foreign exchange gains,” he shared.
The Minister said at the end of calendar year 2020, the balance owing to the Government increased further with profits made during the year.