EU exploring bauxite rescue for Jamaica
Published:Wednesday | November 10, 2010 | 12:00 AM
The European Union has signalled willingness to help Jamaica fund its bauxite liabilities, after Prime Minister Bruce Golding said on the weekend that he was struggling to identify funds to pay Glencore AG.
Jamaica owes the bauxite company J$2.5 billion under a forward sale arrangement that was negotiated back in 2005, under which the country got funds upfront as a loan to be repaid in 10-year supply contracts at a fixed price.
The EU said it has already approved euro17 million of budgetary assistance for Jamaica this fiscal year, to replace some of the losses of export earnings that resulted from the fallout of the bauxite sector last year, but acknowledged that the challenges might be bigger than the grant funding provided.
"Based on the scale of this loss, and the importance of the bauxite sector for the country's economy, the Delegation is once again in the process of examining statistics to see if additional funding can be granted to the government for the losses incurred in 2009/2010 under the EU's special mechanism called FLEX," the Kingston office said Tuesday.
The FLEX agreement was established under the Cotonou Convention in 2000 to compensate developing countries that are heavily dependent on agricultural and/or mineral exports earnings for shocks causing sudden losses in export revenues.
The EU said it would communicate the decision on whether the progamme can be tapped to help Jamaica as soon as a decision is made.