Gov’t Should be Able to Access US$ 250 Million to Close Fiscal Gap – Chung

Consultant in the Ministry of Finance and the Public Service, Denis Chung, is optimistic that the Government will be able to obtain the US$250 million needed to close the fiscal gap, despite the challenging global economic conditions.
He noted that while access to capital will be somewhat hampered, “that does not mean that countries like Jamaica cannot access the markets, for after all, for the rest of the fiscal year, we only need to raise US$250 million to close the fiscal gap. When you compare US$250 million with the amount of money out there, it is really not a lot; it’s a matter of cost of funds. So I think we still can access the capital markets. I don’t think it’s a problem, the Government will find it in one way, shape or form,” Mr. Chung said at a recent JIS ‘Think Tank’.
The capital market is the market for securities, where companies and Governments can raise long-term funds to implement projects. The market includes the stock market and the bond (debt security) market. The amount of funds available on the global capital market has been significantly reduced in recent months as a result of the credit crisis.
According to Mr. Chung, “the global credit situation has reached the bottom and will start to reverse itself,” noting that guarantees given by the Governments of the major economies and the bailouts they have undertaken, have helped to minimise the impact of the credit crisis on the capital markets.
“Certainly, what we have seen over the past few months is really the freeze-up of the credit market and the effect of the crisis on the global capital markets, and that has been allayed somewhat by the guarantees that have been given by the European countries as well as the United States recently, as well as the bailout packages that have been announced. So, I expect that the credit situation has reached the bottom,” he stated.
“We see that markets are freeing up, we see that interest rates are now coming down. In September for example, three-month Libo shot up by over 200 basis points, which was the height of the credit market. We see where the US Government is now coming out in support of Citi Group and that has helped to turn the equity market conditions around. I think that we have seen the worst of the capital markets, we’ve passed it,” he told JIS News.