EXECUTIVE DIRECTOR of the Tourism Enhancement Fund (TEF), Ian Neita, revealed yesterday that the fund had invested $3.2 billion on government paper.
This statement prompted Opposition Member of Parliament Ronald Thwaites to question whether the Bruce Golding administration was helping to push up interest rates.
"The capacity of the TEF is made the greater by the high interest rates that they, or through their broker, bid for this thing," Thwaites asserted during a meeting of the Public Adminis-tration and Appropria-tions Committee of Parliament.
"Is that the way the govern-ment Treasury management is going to be done, where surpluses in Government contri-bute to the very mischief of high interest rates, which we then fire central bank governors for?" Thwaites queried.
sharp response
His comment elicited a sharp response from St Aubyn Bartlett, who demanded a withdrawal of the statement.
"I think the member should withdraw that because it was never said that the central bank governor was fired for high interest rates," said Bartlett.
Thwaites did not retract his earlier comment but continued to suggest that former Bank of Jamaica Governor Derick Latibeaudiere's dismissal might have been linked to the high interest rates.
"It is thought that this might have been a contributory factor (high interest rates). It is quite clear that the reason given had something to do with his contract," he said.
Neita told the committee that the TEF's investment in government paper was approved by the Ministry of Finance.
safest environment
"We invite quotes from various financial institutions on interest rates and we take the highest rates in the safest environment," he added.
Neita reported that the fund was currently earning returns on its investment on government instruments at a rate of 17 per cent. However, he said, in the past, the fund earned interest at a rate of 24 per cent.
The TEF has committed more than $2.5 billion this financial year to fund projects in a number of agencies, including entities in the Ministry of Tourism.
Nearly $2 billion is pulled in by the fund annually from a US$10 fee paid by airline passengers entering the country.