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Speech

From all indications, 2009 will be one of the most challenging in the history of modern Jamaica. We expect that all sectors of our economy will be impacted to a greater or lesser extent by the deepening global recession that has been triggered by the international financial crisis.
As a responsible Government, while we recognise and appreciate the full implications of the international crisis, we will calmly and resolutely implement measures proactively as well as responsively to the unfolding developments. As a result, we are encouraged by the positive response of the productive sectors, our workers, consumers and indeed all the major stakeholders in the economy. The country has not been seized by panic reaction and there are early signs that many of the players in the economy, including the small and micro enterprise sector, are turning the severe challenges into exciting opportunities.
For instance, the stimulus package is being widely embraced and although the measures may not provide 100 per cent satisfaction to all sectors and individuals, it is generally accepted as the best prescription that the Government can advance at this time, given our resource constraints and the crippling debt burden.
Specifically, for 2009, we expect that the demand pressures on the exchange rate will abate in response to the injection of over US$500 million in the economy, during the period December 2008 to the end of the fiscal year, from the multilateral loans that we have negotiated. We expect that a significant number of our small businesses will formalise their enterprises and access the nearly $5 billion that is available through state funded facilities as well as through dedicated credit provided by the financial services sector.
As the foreign exchange pressures subside and inflation and inflationary expectations recede, we expect that interest rates will trend downwards. Adequate foreign exchange flows have been identified for the next fiscal year when debts due for repayment will be significantly less than was the case this year and hence the Government’s own foreign exchange needs will be much less than last year’s. I wish to emphasise that there will be more than enough foreign exchange to meet our needs; including repaying our debts that will become due. Thus the precipitous slide in the value of the Jamaican dollar against the US dollar since the beginning of September by 10 per cent is expected to subside in 2009, through the injection of foreign currency from multilateral funding.
The support to the manufacturing sector will include the removal of customs user fees payable on capital goods and raw materials. In addition, the time allowed for depreciating the cost of capital equipment will be reduced from two years to one year, and Government procurement policy will be adjusted to provide a 10 per cent margin of preference to Jamaican-owned companies. All of these measures become effective on January 1, 2009.
The manufacturing sector will benefit from a US$300 million credit facility that the Government will be signing in January with the Inter-American Development Bank (IDB). The facility will provide loans to the productive sector, which will be made available through commercial banks and the EX-IM Bank, at a time when most countries’ credit is drying up on the world sphere.
In 2009, we expect that our banking sector and financial institutions will remain secure. Despite the fact that a few of our securities dealers were faced with margin calls as the liquidity crisis in the US pressed heavily on the value of Jamaican bonds, our banks remain sound and well regulated.
As the global economic crisis deepens and international credit from the capital markets remain virtually frozen, this strategic decision to deepen our relationship with the multilateral institutions like the World Bank, the Caribbean Development Bank and the IDB is critical in helping us to weather the storm in 2009. The loans that they offer are significantly cheaper, at just about 3 per cent and with longer and more favourable terms.