Whither the ESF?

Finance Minister, Audley Shaw has made a revelation which has come as a shock to me. He has told a private sector grouping that money which the then Opposition – of which he is a member- earmarked for use in its One Point Five Million Dollar Tax Relief Plan is not available. He says the Energy Stabilization Fund which was pitched to Jamaica as the receptacle for a special gas tax did not exist or if it does exist there is no money in it.

The special gas tax money instead went into the consolidated fund! It is an open secret that the consolidated fund is like a black hole – everything that goes in is swallowed up – never to be seen again. What with the Education Tax which was meant for use in building the education system going into the consolidated Fund?

This is part of the reason for my shock – this is how the Jamaica Observer captured then Finance Minister’s (Dr. Peter Phillip) announcement about the Energy Stabilization Fund – this was published in that newspaper on the 25th March, 2015.

During the closing of the 2015/16 budget debate Wednesday, Minister of Finance and Planning Dr Peter Phillips announced that the Government will establish an Energy Stabilization Fund to receive and manage the resources generated from the oil hedge programme.

Resources will come from a portion of the additional J$7 per litre of specific Special Consumption Tax (SCT) on petrol – specifically J$5 per litre – as well as any future payment from the hedge contract, should future oil price movements lead to such payments. 

“These resources will flow into a dedicated sub-account in the Bank of Jamaica for the (Energy Stabilization) Fund, which will be administered by the Development Bank of Jamaica in conjunction with the Ministry of Finance,” Dr Phillips informed. 

Minister Phillips said that the resources will be made available to service the cost of implementing the initial hedge transaction, any future hedging, as well as other possible energy stabilisation initiatives, where the resources permit.

This is how RJR quoted then Minister Phillips on the 25th March, 2015 regarding the Energy Stabilization Fund.

“These resources include the proceeds from a portion of the additional seven dollars per litre – specifically five dollars per litre – as well as any future payments from the hedge contract, should future oil price movements lead to such payments,” he explained.

He said the resources targeted will be placed in “a dedicated sub-account,” in the Bank of Jamaica, and will be managed by the Development Bank of Jamaica, “in conjunction with the Ministry of Finance & Planning.”

Unless I am slow at interpreting the near mirror image sentiments expressed above, there should have been a dedicated Energy Stabilization Fund. Into that fund at least $5 out of every $7 per litre of petrol should have been deposited.

  • So where is the dedicated sub-account at the Bank of Jamaica?
  • Where is the dedicated sub-account that the Development Bank of Jamaica should have been managing?
  • How and why did the special gas tax get into the consolidated fund? Who authorized it and who knew of its authorization?
  • Were we told about the movement of the special gas tax into the consolidated fund and did I miss it?
  • Isn’t it the case that money that goes into the consolidated fund is used for recurrent and capital expenditure?
  • Was the special gas tax as placed in the consolidated fund used to shore up the current deal we have with the International Monetary Fund in any way?
  • Did it prop up the primary surplus?
  • Why is it that at no point at all when the JLP in Opposition stated that it would use the surplus in the Energy Stabilization Fund did the then government say there is no Energy Stabilization Fund – the money is in the consolidated Fund?
  • Why is that generally people who should know how the affairs of the country are run, don’t have information they are supposed to have about such important aspects of our financials?
  • How is that Audley Shaw who chaired a crucial committee of parliament looking into these and other matters did not know the seat of the special gas tax?
  • How is it that the then Opposition’s special economic team comprising among others Aubyn Hill and Fayval Williams did not know that there was no surplus and probably no Energy Stabilization Fund?
  • How come?

As to the current government and its promised One Point Million Dollar Tax Relief Plan – sleep not – perhaps death is near.

See:

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About emilyshields

Attorney-at-Law, Partner -Gifford Thompson & Shields; Broadcast Journalist; Host of RJR's Hotline - www.rjr94fm.com; Gunner Twitter- @emilymshields
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