( L - R ) Shaw, Davies

Parliament has given approval for Finance Minister Audley Shaw to use the Capital Development Fund (CDF) in order for Government to meet its financial obligations.

The House yesterday approved the withdrawal of $1.10 billion of the $1.174 billion in the CDF. The money will go into the Consolidated Fund, from which Government will take money to meet its demands.

The CDF represents the money earned from a levy on bauxite produced in Jamaica.

Yesterday was the third time this fiscal year that the Government withdrew money from the CDF for budgetary support during the worsening economic climate.

Production could be reduced

Finance Minister Audley Shaw told the House that the low demand for bauxite on the international market makes it a strong possibility that production in the sector could be reduced, which could mean less money for the fund.

"To the extent that there is a cut in production, then that would lead to a compromise for the Capital Development Fund," said Shaw.

The Government had projected $8.6 billion in revenue from the bauxite levy for the fiscal year, a target which now appears unlikely. Between April and October this year, $3.2 billion in revenue has gone into Government's coffers, but the CDF has recorded a shortfall of $1.55 billion based on its projections.

The Opposition People's National Party did not object to the withdrawal. Its Spokesman on Finance, Dr Omar Davies, said the need to dip into the CDF was understandable.

"The extent of the withdrawal from the Capital Development Fund, virtually taking everything out, is a signal that the minister is doing this simply because he needs to do this," said Davies.

Mined communities don't benefit

Meanwhile, opposition member and representative for South Manchester, Michael Peart, lamented that communities in which bauxite was mined often do not benefit enough from money in the CDF.

"The original concept of the Capital Development Fund was that the earnings from the bauxite/alumina industry were to be used to develop the communities but unfortunately, we have been using it consistently for budgetary support," Peart said.

He added that the amounts withdrawn for rebuilding such communities "have been token" and warned that a major collapse in the sector could cheat bauxite-producing communities of development.

"History will not be kind to us if we had a situation where we have a closing down of these bauxite/alumina plants and these communities are left desolate," said Peart.