A weekly round-up of the markets with Paula Brown.

On Tuesday, Finance Minister Audley Shaw, tabled the estimates for the supplementary budget which revealed plans to increase expenditure by $6.34b for 2009/2010. This resulted from a planned increase of $12.33b in recurrent expenditure which negated the $5.99b cut in capital expenditure.

The Ministry of Transport and Works saw the biggest cut in capital expenditure totalling $2.75b followed by the Office of the Prime Minister by $1.38b. The finance ministry had an overall increase in allocation of $8.09b while the Ministry of Education saw a significant increase in allocation of $3.91b as well. The cuts were not enough as they were nullified by increased allocation to meet public debt charges of $16.22b in the finance ministry.

It is expected that Minister Shaw will be shedding light in the coming week as to how the Government is expecting to finance the additional expenditure in the Budget.

New $5,000 Note in Circulation

The Bank of Jamaica issued the high-security $5,000 banknote on September 24. The new legal tender for all monetary transactions will complement existing banknotes and has the portrait of the late former prime minister, Hugh Shearer, on the front of the note dated January 15, 2009. It bears the signature of the governor of the Bank of Jamaica, Derick Latibeaudiere, and has a special security feature known as 'Optiks' which is a wide security thread which features the Jamaica coat of arms and when held up to the light, the complete thread with 'BOJ $5000' will become visible.

Local Money Market

The six-month Treasury bill auction last Wednesday continued to result in a downward trend in rates. The T-bill was oversubscribed by approximately 45 per cent and the average yield declined by 86 basis points to an average yield of 17.35 per cent when compared with August 2009. Bids were accepted as high as 18.12 per cent

The Government is offered a Variable Rate Investment Debenture Series 2012/2013 Cb for three years. The interest is fixed at 16.39 per cent per annum for three months (which is the same as the September 2009 90-day Treasury bill average result). Thereafter, interest will be calculated and paid quarterly at a per annum variable rate of 1.575 percentage points above the weighted average yield rate applicable to the Government of Jamaica three-month Treasury bill tender, held immediately prior to the commencement of each quarterly interest period until maturity on September 24, 2012.