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A non-reimbursable, technical co-operation agreement between the Government and the Inter-American Development Bank (IDB), valued at US$440,000, was signed today (November 26), at the Ministry of Finance and the Public Service, in Kingston.
The agreement, entitled a ‘Strategy for the Divestiture of Air Jamaica’, was signed by Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby and IDB Country Representative, Gerard Johnson.
Of the amount, US$350,000 will be provided through the French Technical Co-operation Fund for Consultancy Services and Training Activities, Caribbean Contribution (FCB), while US$90,000 will be funded through the local counterpart, Air Jamaica.
Air Jamaica’s contribution includes the provision of office facilities and co-ordination, as well as the local lawyers and part of the financing for a regional airline specialist.
The objective of the agreement is to support the Government in reducing its budgetary allocations to loss-making public entities. The funds will be used to prepare a strategic plan for the divestment of Air Jamaica, by auditing the financial and technical systems and providing the required inputs for informed decision making.
“This technical co-operation will contribute to the execution of the Government’s Competitiveness Enhancement Programme. The actions to be taken with Air Jamaica will be part of the commitments agreed in the tax reform and budget balancing component of the programme, regarding the reduction of budget support for state controlled enterprises,” Mr. Wehby explained.
He also noted that in order to achieve the objective of making profound changes in the operational and financial management of Air Jamaica, and to ease the burden on the Jamaican budget, it would be necessary to carry out diagnostics, studies and audits to provide management with the information it needs to complete the airline’s strategic plan.
In his comments, Mr. Johnson observed that the initiative covered financial management analysis, a technical diagnostic study and co-ordination of the exercise, leading to the divestment of the company.
“This initiative is an integral part of a larger programme that we have agreed with the Government, which is a three-year rolling programme of budgetary support of US$150 million. The achievement that you will make is key to triggering large amounts of these funds,” Mr. Johnson disclosed.
He also noted that the initiative to assist the Jamaican Government with the divestment of loss-making state enterprises, is to help stem the haemorrhage of resources, especially in light of the global financial crisis.