Finance Minister denies euro allegations DR. OMAR Davies, Minister of Finance and Planning, has denied that the recent 10-year euro bond issue which raised US$400 million for budget support could have been obtained at a lower cost to the Government. He was answering questions in the House of Representatives on Tuesday from Ronald Thwaites, PNP backbencher (Kingston Central), after his statement on the success of the bond issue. Mr. Thwaites asked the Minister to indicate whether he was aware of the comments that despite an improvement on previous issues, this issue was reopened at a price higher than what the market might have been willing to pay. Also, the Minister was asked to indicate the likely impact on the usual difficult season, July-September, of the additional flow of funds which the issue has generated. Responding to the assertion that the bond could have been priced at a lower interest rate, Dr. Davies said: "I invite anybody with resources they are willing to lend to us at lower interest rates to make the announcement. I am here. If these sums are here and the origins can stand up to close scrutiny, we are here." He said there was a tendency to make comments without any substance. Also, Dr. Davies responded to a question from Mr. Thwaites on the likely impact on the difficult July-September period, of the bond issue. He said that as far as the "tamarind season" was concerned, the Government was protecting itself in terms of the auction. "We have a unique opportunity to either take or refuse that which is offered from the domestic capital market...It has to be on good terms", he said. Karl Samuda, Opposition spokesman on Industry and Commerce, asked the Minister to indicate the extent to which the impact would be positive or negative in terms of the reduction in interest rates impacting on fiscal deficit. Also he asked to what extent the domestic revenue inflow had matched the vigorous activities taking place in the bond market? Dr. Davies said that with only two months of the fiscal year completed, he did not want to be premature in anticipating what the additional benefits would be, given the earlier-than-projected inflow of the funds. "What we are now in a position to do, is to dictate to the market more than previously. Previously, the market could demand the interest rate it wanted, because we were going into the market when we needed funds and they knew that", he said. "I want the market to note that we have this US$125 million which we will not touch unless we need to. I would like to do business with the market, but more on our terms than before", he said. Regarding revenues, he said he had promised to provide the House with revenue data regularly and would do so at the next sitting, and said that April inflows were above projected levels. Mr. Samuda then asked whether the Government was approaching the point where it could place a ceiling on borrowing. Dr. Davies said it had placed a ceiling on overall borrowing and would be paying down debts this year. The mix was now at a delicate stage, in that there was a need to be borrowing as close to 10 per cent or single digit in the external market in order to drive the domestic rates further down. "The question we now face, is how much do we take from the domestic market and how much from the external market? The difference now is that we can accept whatever we wish from external market and it gives us options," he added.
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