VZCZCXRO2632
RR RUEHGR
DE RUEHKG #0475/01 0672056
ZNR UUUUU ZZH
R 082056Z MAR 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC 2399
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0155
RHEFDIA/DIA WASHDC
RUEABND/DEA HQS WASHINGTON DC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 KINGSTON 000475 
 
SIPDIS 
 
STATE FOR WHA/CAR (BENT) AND WHA/PDA 
STATE ALSO FOR INL/LP (BOZZOLO), EB/TPP, AND EB/IFD 
STATE ALSO DOE CA/OCS/ACS/WHA (RUTH BRANSON) 
STATE PASS OPIC FOR TABERNAKI 
CUSTOMS MIAMI FOR LOWEN AND MAHABIR 
SANTO DOMINGO FOR FCS, FAS, AND LEGATT 
STATE PASS USTR FOR A. GASH-DURKIN 
DOJ FOR OPDAT/R LIPMAN 
TREASURY FOR LAMONICA 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EFIN ECON EINV PHUM ELAB KHIV JM
SUBJECT: KINGSTON POL/ECON ROUNDUP: FEBRUARY 18, 2006 - 
MARCH 6, 2006 
 
Ref: Kingston 00402 
 
KINGSTON 00000475  001.2 OF 002 
 
 
¶1.   This week's topics: 
 
--   New Prime Minister Chosen 
--   Rating Agency Maintains Jamaica's Rating 
--   Expansion of Oil Refinery Underway 
--   GOJ Seeking Consultation on Explosive Tax Proposal 
--   Crime Rates Down 
 
-------------------------- 
New Prime Minister Chosen 
-------------------------- 
 
¶2. On February 25, Portia Simpson Miller, currently the 
Minister of Local Government, Community and Sport, won an 
internal Peoples National Party election to succeed P.J. 
Patterson as party president and Prime Minister.  Simpson 
Miller will be the seventh Prime Minister of Jamaica since 
its independence and the first woman to hold the office. 
Patterson is due to retire and be replaced by Simpson Miller 
by month-end.  Further details reported Reftel. 
 
---------------------------------------- 
Rating Agency Maintains Jamaica's Rating 
---------------------------------------- 
 
¶3. International rating agency, Moody's, has reaffirmed 
Jamaica's 'B' (stable) rating, in its update on February 23, 
a week after Standard and Poor's (S&P) maintained its `B' 
rating of the country.  Moody's, like S&P, pointed to the 
GOJ'S commitment to fiscal discipline.  Moody's stated that 
"[t]hey remain supported by the government's commitment to 
return to a balanced budget position and by a constitutional 
provision mandating debt-service payments as the first 
expenditure priority."  Moody's also cited Jamaica's ability 
to face severe shocks and the comparatively low external 
government debt ratios as contributory factors for its 
stance.  However, Moody's stated that the country's exchange 
rate remained susceptible to recurrent pressures and the 
large public sector debt faced growing exposure to 
international capital markets.  The rating agency also noted 
that the macro-economy remained sensitive to external and 
domestic shocks. 
 
---------------------------------- 
Expansion of Oil Refinery Underway 
---------------------------------- 
 
¶4. The much-publicized USD 200 million modernization and 
expansion of Jamaica's Petrojam oil refinery, began last 
month with the engineering design.  The project evolved out 
of a memorandum signed in August 2005 between Prime Minister 
Patterson, and Venezuelan President Hugo Chavez.   The front- 
end engineering design (FEED), which will be undertaken by 
the Canadian firm SNC Lavalin, is projected to cost USD 4.7 
million and will last for ten months.  Once the FEED is 
completed, PDVSA, the Venezuelan state oil company, and 
Petrojam will carry forward the upgrade and expansion of the 
local refinery.  The project will expand the capacity of 
Petrojam from 35,000 barrels to 50,000 barrels per day. 
Additionally, the facilities will be modified to accommodate 
increased production of cleaner products and reduce the 
proportion of capacity dedicated to heavier fuel, thereby 
improving plant efficiency. 
 
--------------------------------------------- ----- 
GOJ Seeking Consultation on Explosive Tax Proposal 
--------------------------------------------- ----- 
 
¶5. Despite clear signs of vigorous resistance from the 
public and the opposition Jamaica Labor Party (JLP), the 
government has signaled its intention to commence 
consultations with stakeholders in the petroleum sector to 
determine the level of taxation to be applied to petroleum 
 
KINGSTON 00000475  002.2 OF 002 
 
 
products.  Prime Minister Patterson tabled the green paper 
in Parliament and said the tax regime was primarily geared 
at driving efficiency and conservation and to a lesser 
extent generating revenues to maintain roads and encourage 
energy conservation.  However, the proposal is already 
facing intense opposition from the JLP.  JLP leader Bruce 
Golding is arguing that Jamaican taxpayers are already 
overburdened and the plan will unnecessarily increase the 
burden.  Given the explosive public reaction to previous 
attempts to increase the tax on petroleum products, the JLP 
expects to gain much-needed political capital during this 
process.  The highly popular Prime Minister-elect, Portia 
Simpson Miller could burn social and political capital if 
she decides to support this proposal. 
 
---------------- 
Crime Rates Down 
---------------- 
 
¶6. As of March 5, Jamaica's homicide rate stood at 226, a 
24% reduction over the same time period in 2005.  The JCF 
reported a decline of 18% for overall crime.