Lavern Clarke, Business Editor
Dr. Omar Davies, Minister of Finance, is not against Bandes expanding to Jamaica, informed sources say. - File - File
Jamaica and the Banco de Desarrollo Economico y Social (Bandes) are exploring the possibility of a local operating base for the Venezuelan development bank, but the Foreign Ministry is disclaiming reports out of Caracas that the invitation came from Kingston.
"They expressed a desire to come to Jamaica," said Courtenay Rattray, director of bilateral relations in the Ministry of Foreign Affairs and Foreign Trade, several times stressing the origin of the request.
"We have said informally that we don't have a problem with it."
The Financial Gleaner understands that the proposal was first mooted with Finance Minister Dr Omar Davies at the 37th annual meeting of the Caribbean Development Bank Board of Governors held in Caracas May 30-31 and attended by Bandes chief executive Rafael Isea.
Bandes has much the same mandate as the local Development Bank of Jamaica, but its operations extend to business overseas as the entity through which Venezuela issues loans and development assistance to countries with which it has inked trade cooperation and/or oil deals.
Rattray said the two operations would not conflict, noting that Bandes' role here would be confined to administering the concessionary loan programmes agreed between Caracas and Kingston.
Other sources said however, that Bandes had "not decided the nature of its operation" here, yet.
Milverton Reynolds, the new head of DBJ, said he concurred with the foreign ministry official about the rivalry, but insisted that any other comment should come from the Finance Minister who would "give the final say" on whether Bandes is cleared to set up a base here.
Bandes too requires approval of Hugo Chavez's National Executive before finalizing its plans.
Up to press time, queries to the ministry were unanswered but informed Financial Gleaner sources say Davies, when the Bandes proposal was mooted, signaled he was not against the move but warned he would not favour a plan that conflicted with the DBJ's role.
Development assistance
Bandes, for example, is offering development assistance to farmers cooperatives in Nicaragua where it has just set up a branch operation, an area that falls within DBJ's portfolio here under its network of PC Banks and other special assistance projects.
Prior tothe PetroCaribe oil deal that superseded the San Jose Accord, Jamaica's dealings with the South American powerhouse were via the Venezuela Investment Fund, which financed the development of a number of cultural facilities across the island, including town halls in Montego Bay and Port Maria and sports complexes in several parishes.
Last year, the final US$1.86 million ($121.6 million) owed to the VIF was paid down. But under the new oil agreement, in force since 2005, Finance Ministry figures show US$13 million ($882.5 million) of outstanding debt to Bandes as at March 31, 2007.
Yet to be brought unto the ministry's books is the US$260 million of loan financing for the next leg of Highway 2000 negotiated between DBJ and Bandes. The funds, however, are reflected on the DBJ's balance sheet as a $9.2 billion loan to the National Road Operating and Construction Company (NROCC).
Also last year, Bandes provided US$2 million of financing via a mortgage bond issued by the Jamaica Mortgage Bank, which Reynolds ran just before taking up his new DBJ assignment late last year.
Other government officials have been in discussions with the Venezuelan agency on a number of projects, among them possible loan support for expansion of the rural electrification programme to install power distribution lines in remote communities.
Rattray said, however, that the latter deal may not proceed.
"Part of the requirement of Bandes is for about 50 per cent of the sourcing of material from Venezuela," he said, "so we're not sure the deal will go ahead."
Bandes bank has been spreading its wings to other countries, setting up operations in Nicaragua with an initial US$10 million under management, and in Ecuador, where the bank will oversee US$25 million of development assistance and social programmes.
It's understood that Jamaica has already signaled to Bandes it has available office space in New Kingston, either at DBJ's head offices on Oxford Road or on the 3M Building on Barbados Avenue.
The latter piece of real estate isalso owned by DBJ but is currently rented on a short term basis to Jamaica Cricket 2007 Limited. Those tenants are expected however to vacate the property by year-end.
lavern.clarke@gleanerjm.com
