EU grant to Jamaica goes sour - Government receives less than expected due to stalled sugar-industry divestment
Published: Tuesday | March 31, 2009
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Prime Minister Bruce Golding (centre) and Audley Shaw (right), minister of finance and the public sector, receive from Ambassador Marco Mazzocchi Alemanni (left), head of delegation of the European Commission, a grant of €18.625 million (J$2.03 billion) as budgetary support from the sugar programme to Jamaica. The ceremony was held at Jamaica House. - Ian Allen/Staff Photographer
The European Union (EU) has held on to €2 million (J$253 million), which it should have presented to Jamaica last Thursday, because of the Government's failure to complete its divestment of the sugar industry.
Instead, the EU presented the Government with about $700 million as part of its budgetary support for the sugar industry.
"This disbursement is a little less than what could have been expected. Roughly, €2 million is missing but there are hopes that by the end of the calendar year ,you would receive those funds if the divestment proceeds," Ambassador Marco Mazzocchi Alemanni, head of the European Commission delegation in Jamaica, told government officials during a handover ceremony at Jamaica House.
In a quick response, Prime Minister Bruce Golding argued that the Government's attempt to divest the sector was affected by the global financial meltdown and the depression that it has created in the capital market.
Not giving up
"But we haven't given up. As a matter of fact we are encouraged that in reopening the bidding process we have received 14 bids that are being evaluated," Golding said.
"The Government is very clear in its mind that the sugar assets must be privatised. We are not in a fire sale, we are not giving them away because we believe that they provide significant potential for investors," Golding added as he expressed confidence that the divestment will be completed in short order.
In the meantime, Agriculture Minister Dr Christopher Tufton has dismissed claims that delay in the full handover of funds by the EU was the main reason the Government has not set a timeline for sugar workers to receive their redundancy payments.
"The redundancy payment is about $2 billion, so that $200 million (which the EU has withheld) would contribute but it would not address the problem in its totality," Tufton told The Gleaner.
He argued that the law gives the Government six months after the workers were sent home to make the redundancy payments and that deadline will be met.
"There is no issue that the redundancy payments will be made. The issue is when, and clearly some would want it to be paid immediately, but the Govern-ment has to do the appropriate planning," Tufton added.
Last Wednesday, Tufton upset unions representing sugar workers when he told them that the Government was not yet ready to pay the redundancy amount and could not give them a date when it would be paid.
No set date for payment
The sugar workers were given their notice payments more than three months ago and were expecting the redundancy payments by the end of January.
However, with the Govern-ment's failure to arrive at a deal with the Brazilian firm Infinity Bio-Energy, which was slated to acquire the sugar assets, and a fresh divestment process now under way, there was no payment in January and no indication of when they would be paid.
The divestment of at least one sugar factory is one of the conditions set by the EU for the payment of the money, which is being disbursed to Jamaica on a phased basis which started in 2006.
The EU has allocated more than $8 billion to Jamaica for the sugar-support programme with the final payment scheduled for 2010.