VZCZCXYZ0003
OO RUEHWEB

DE RUEHKG #0230/01 0471203
ZNR UUUUU ZZH
O 161201Z FEB 10
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0698
INFO EC CARICOM COLLECTIVE IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
RUEHLO/AMEMBASSY LONDON IMMEDIATE 0171
RUEHOT/AMEMBASSY OTTAWA IMMEDIATE

UNCLAS KINGSTON 000230 
 
SIPDIS 
STATE FOR WHA/CAR (VDEPIRRO) (WSMITH) (JMACK-WILSON) 
WHA/EPSC (MROONEY) (FCORNEILLE) 
EEB/IFD/ODF (MSIEMER) 
EEB/ESC/IEC (GGRIFFIN) 
EEB/ESC/IEC/EPC (MMCMANUS) 
EEB/TRA (VLIMAYE-DAVIS) 
INR/RES (RWARNER) 
INR/I (SMCCORMICK) 
SANTO DOMINGO FOR FCS AND FAS 
TREASURY FOR ERIN NEPHEW AND RACHEL JARPE 
EXPORT IMPORT BANK FOR ANNETTE MARESH 
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA 
OPIC FOR ALISON GERMAK 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN EINV PREL IDB IBRD IMF JM XL
SUBJECT: JAMAICA: WORLD BANK REPRESENTATIVE DISCUSSES JAMAICAN 
ECONOMY 
 
REF: KINGSTON 194; KINGSTON 90 
 
Summary 
 
------------- 
 
 
 
¶1. (SBU) The World Bank will provide the Government of Jamaica 
(GOJ) with USD 400 million in concessionary loans over the next 27 
months of the International Monetary fund (IMF) program, according 
to World Bank Special Representative to Jamaica Badrul Haque, who 
met with CDA to discuss developments in the local economy on 
February 9.  In Haque's view, despite having a clear vision as to 
his objectives following the 2007 general elections, Prime Minister 
(PM) Bruce Golding has been unsuccessful in getting the public 
sector to implement his plans.  This failure, Haque believes, has 
been due in large part to a lack of political will, effective 
communication, and technical competence on the part of the ruling 
Jamaica Labour Party (JLP) and the GOJ.  However, Haque appears to 
think the GOJ finally has realized that it has no choice but to 
buck this trend and to face the difficult option of economic 
reforms.  End summary. 
 
 
 
Haque Discusses Engagement in Jamaica 
 
--------------------------------------------- --------- 
 
 
 
¶2. (SBU) Badrul Haque, World Bank Special Representative to 
Jamaica, visited Embassy Kingston on February 9 to discuss his 
organization's engagement in the country.  He began by informing 
the CDA that the World Bank had provided the GOJ with USD 100 
million during last fiscal year and that it was committing a 
further USD 400 million for the next 27 months.  While the World 
Bank's by-laws did not allow it to dictate an IMF program to a 
creditor, Haque noted that the loan funds were contingent on the 
country securing an IMF agreement.  Haque also said that USD 200 
million of the loan could be used for up-front budgetary support, 
providing it was not used for negative spending. 
 
 
 
¶3. (SBU) The World Bank loan, which attracts a rate of less than 
one percent and is payable over 30 years, is considered an 
exceptional allocation, as it is well above the limit for which 
Jamaica ordinarily would qualify.  Haque explained that Jamaica's 
case had been considered favorably due largely to the GOJ's 
apparent willingness to pursue economic reforms.  According to 
Haque, "the country is where it is, but it has been trying to do 
something to come out of it," despite the difficulties the JLP GOJ 
had faced in making difficult decisions amidst parliamentary 
opposition.  "That is why it is sometimes easier to work with 
dictators since they do not have to seek consensus," Haque opined. 
 
 
 
 
Opposition to New Government 
 
------------------------------------------ 
 
 
 
¶4. (SBU) Following the 2007 general elections that brought the JLP 
to power, Haque said that he felt that PM Bruce Golding had 
demonstrated a clear vision as to the economic policies he wanted 
to implement, but that he had been unable to get the public sector 
to share his views.  Haque suggested that, after eighteen years of 
 
 
 
 
 
 
 
People's National Party (PNP) leadership, the public sector had 
become highly politicized, making it difficult for the new 
administration to chart a different course.  However, he also 
blamed the JLP for creating some of its own problems, given its 
poor communications strategy.  He had raised this issue with the 
GOJ on many occasions, Haque noted, but said that the assumption of 
Golding and his associates was that once an issue had been aired it 
had been effectively communicated.  For example, Haque pointed out 
that the PM recently had set the date for the upcoming budget 
presentation in Parliament without first discussing it with his 
Finance Minister, Audley Shaw, who had preferred a later date. 
 
 
 
 
Forced to Seek IMF Assistance 
 
---------------------------------------- 
 
 
 
¶5. (SBU) Haque told Emboffs that, given Jamaica's rocky history 
with the IMF, the GOJ had been hesitant to return to a borrowing 
relationship (Ref A).  (Note: When the GOJ ended its borrowing 
relationship with the IMF in 1996, PM PJ Patterson had announced 
the decision with much fanfare.  End note.)  However, the onset of 
the global financial crisis in 2008 dried up of credit on the 
international market.  This financing gap had been initially filled 
by the Inter-American Development Bank (IDB) and, to a lesser 
extent, the World Bank, but the failure to raise sufficient funds 
on the domestic market forced the GOJ to reconsider an IMF program. 
Haque noted that the JLP position had been helped by the PNP's 
latent support due largely to the fact that they were not willing 
to face the alternatives: default, devaluation of the currency, or 
both.  Despite their criticism of the plan, Haque believes the PNP 
is in fact quietly happy with the GOJ's decision, since the 
politically painful reforms could well work in their favor by the 
time of the next general election, to be held no later than 2012. 
 
 
 
Debt Exchange Exceeds Expectations 
 
--------------------------------------------- ---- 
 
 
 
¶6. (SBU) Turning to the now successful Jamaica Debt Exchange (JDX) 
agreement (Ref B), Haque informed the CDA that Citigroup had been 
working on the operation for almost two years.  Initially, the deal 
had been expected to save the GOJ 0.5 percent of GDP, but had 
stalled after a consultant told the Banker's Association that he 
had been responsible for arranging 14 of the last 15 debt defaults. 
This had raised alarm in Jamaican banking circles, culminating in 
the head of the local arm of Bank of Nova Scotia informing ratings 
agencies that the GOJ was moving toward an imminent default.  The 
ratings agencies - which had been briefed earlier by the GOJ on the 
pending debt operation and had agreed to downgrade only on the 
announcement - instead had reneged on the deal and had preemptively 
downgraded Jamaica's credit ratings.  The debt operation then had 
been postponed and was only revived at the insistence of the IMF. 
Haque said that the revised operation, now expected to save three 
percent of GDP, was so coordinated that even the speeches 
associated with the exchange had been written by the Citigroup 
team. 
 
 
 
Comment and Analysis 
 
------------------------------ 
 
 
 
 
 
 
¶7. (SBU) Haque, who had initially been seen as a close ally of the 
GOJ, has lost some credibility with the JLP in recent months 
because he only has been able to provide Jamaica with USD 100 
million during the last fiscal year.  Shaw, who had based his 
electoral campaign on the acquisition of multilateral funding, has 
been disappointed in the limited loan flows offered by the World 
Bank, particularly in light of the fact that the IADB had been more 
forthcoming with significant funding.  Additionally, the GOJ has 
blamed Haque for the slow pace of the World Bank loan disbursement. 
The animosity recently spilled over into the public domain, with 
one of Jamaica's daily newspapers launching a scathing editorial 
attack on Haque.  He is also viewed with much skepticism, if not 
outright defiance, by many public sector workers.  Nevertheless, he 
is still sought out for technical advice by a number of public 
sector leaders, and the USD 400 million World Bank loan should help 
re-establish his good graces with the GOJ.  End comment and 
analysis. 
Parnell