Daraine Luton, Staff Reporter

FINANCE MINISTER Audley Shaw is remaining adamant that the financial crisis stirring panic in the United States is not likely to have any major impact on Jamaica.

Speaking in the House of Representatives yesterday, Shaw said domestic financial institutions have suffered only minimal setbacks from their relationships with foreign institutions.

He also said no major fallout was expected in earnings from tourism or remittances.

The finance minister grounded his optimism on his observation that there has not been any significant job loss in the US that would affect travel and remittances.

"Remittances this year have been up 11 per cent, so it is still relatively buoyant," Shaw said.

Investment News, a leading US financial magazine, has reported that the crisis in the financial services industry could cost New York up to an estimated 40,000 jobs in the securities industry this fiscal year.

Shaw, however, maintained that there were certain basic jobs, such as nursing, in which Jamaicans who send back funds are employed and that there were no signs these jobs were under threat.

Credit crisis

The US economy has been crippled by a credit crisis on Wall Street which has seen the collapse of several financial institutions. Legislation to support a proposed US$700-billion bailout was rejected by the US House of Representatives on Monday, leading to a nosedive on the US stock exchange. Today, that nation's Senate is expected to vote on the bailout bill before it is sent back to the House.

Yesterday, while Shaw continued to beam with confidence, Opposition Spokesman on Finance Dr Omar Davies said the minister was being more optimistic than the chairman of the US Federal Reserve, Ben Bernanke.

Shaw said the Government was watching every development and was ready to act if the need arises.

"The whole situation is being constantly and carefully monitored," Shaw told the House.

Commenting on the financial sector, the minister said systems were in place to cushion the effect of a possible US meltdown. The Bank of Jamaica (BOJ), he said, stood ready to lend liquidity support to financial institutions in order to settle maturing obligations with lenders.

"From all indications, the potential need for US-dollar liquidity by institutions over the next few months would be a small portion of the current NIR (net international reserves) of US$2.2 billion," Shaw said.

"Depositors, policyholders and pensioners can rest assured that our financial system remains well capitalised, well supervised and has the strong backing of the central bank and the Government."

Shaw noted that the Government has not been asked by any institution to give liquidity support.

daraine.luton@gleanerjm.com