Former finance minister Dr Omar Davies is resolutely standing behind his fiscal record and policies, despite aggressive questioning from attorney-at-law David Wong Ken at yesterday's sitting of the commission of enquiry into the Financial Sector Adjustment Company (FINSAC).

In what were at times sharp and pointed exchanges, Davies rejected Wong Ken's line of reasoning that his fiscal policy of tamping down the high inflation rates of the 1990s led to sharp increases in interest rates, which made it harder for businesses to survive, thus causing the crash of the financial sector by the mid-1990s.

A visibly irritated Davies, while agreeing that businesses would struggle under high interest rates, said it was not a major reason for the collapse of the financial sector.

The former minister, who was on his third day on the stand at The Jamaica Pegasus hotel, reiterated that there were other factors which contributed to the collapse, which he said included poor regulation and banking practices.

Cheap money

Wong Ken, who was representing the Association of Finsac'd Entrepreneurs, also argued that while the Bank of Jamaica during the period was issuing notes to mop up liquidity, Davies' ministry was issuing Treasury bills which meant both the Government and BOJ were competing for cheap money and, therefore, increasing interest rates. Davies again denied this by saying that the Government had bills to pay and, as a result, had to raise money.

The commission of enquiry had been set up to investigate the financial meltdown of the 1990s which led to FINSAC's creation and intervention in the operations of a number of banks and businesses.

An argument that FINSAC negatively impacted on entrepreneurs, therefore affecting thousands of productive Jamaicans, was also put to Davies by Wong Ken and the commissioners.

Davies was repeatedly asked: If FINSAC was created as a "healing" unit, why did so many debtors accuse the entity of ruining them?

Davies however went on the offensive, pointing out the positive effects of the intervention.

Correct decision

"Here we have a set of people who feel they have been wronged as debtors but, if you look at the more than one million deposit accounts saved, if you look at the 600,000 insurance policies, if you look at the pensioners who would have been wiped out, I still believe that it was the correct decision," he said.

Davies called for the commission to put individuals who were helped on the stand and lamented that only one point of view was apparently being aired at the enquiry.

Commissioner Warrick Bogle took issue with this, saying that while some individuals were saved, there was still another sector that needed healing.

During a series of short, testy exchanges between the com-missioners and Davies, he said there could not have been a general policy to direct FINSAC on how to deal with loans except for equity, transparency and courtesy. Any other policy, he said, would be to clear everyone's debts.

Davies is expected to retake the stand on Wednesday.