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For several reasons, I feel it necessary to return to the matter of FINSAC. In the first place, it is apparent that we, in the Administration, have failed to properly communicate to the public, the need for the intervention, and furthermore, the fact that there is no alternative to the Government to assuming at some stage, through the Budget, responsibility for repaying the debt incurred. In terms of the intervention, there are very few who from the outset, publicly expressed the view that the Government should not "act" to `bail out' depositors, insurance policy holders and pensioners. Whilst, many now claim to have warned of the implications, I can only recall two persons who publicly took positions against intervention. One is a journalist, and the other is a businessman who writes frequently to the newspapers. Whilst I disagreed, and still disagree, with their position, respect is due in terms of the fact that they have been consistent in opposing intervention from the beginning. Others have simply taken positions as convenient when the full impact of the intervention became known. Let me turn to the issue of FINSAC being a 'bailout' for the big man. The reality is that almost all the shareholders in institutions have by now lost whatever investments they had in the companies . It may be argued that several had paid themselves so well, that they have more than recouped their initial input. It may also be argued that some had siphoned off funds over the years. However, that is a charge that cannot be made in an arbitrary way. There is a justice system and we must allow it to do its work. We must address the fundamental claim that FINSAC has primarily benefited the "big man". One can refute this in general terms by indicating the number of account holders who have been saved by the intervention. However, shortly after my opening Budget presentation, my long-standing friend and political mentor, former Minister O D Ramtallie, came to me and indicated that this claim needs to be strengthened by more facts. Example, the number of accounts below a certain size which have been protected. And so, I have gone back and researched these facts, indicating how many small account holders have been saved by FINSAC's intervention. The question is, how small is small, and we have decided to use saving accounts of J$5,000 and less. It makes interesting reading. Because of FINSAC's intervention, nearly 550,000 accounts of $5000 and under in NCB, have been protected. Over 380,000 account holders with $5000 or less in Victoria Mutual have been protected. Similarly, 170,000 in Workers Bank, 85,000 in Citizens Bank, and 23,000 in Citizens Building Society have been saved. Taking into account all the institutions in which we have intervened nearly one and a half million account holders with $5,000 or less, have been protected. Is that bailing out the "big man"? There is genuine misunderstanding of the need to put in the Budget an allocation for payment for FINSAC's debt resulting from the intervention. Many persons assume that once FINSAC was established and the banks and the other institutions kept their doors open, the problem was solved. There is no such easy solution, and to be clear, I will give a practical example of what has occurred. Consider the situation of depositors in the Century Finance Institutions. The agreement we worked out with them is that they would go to NCB and be credited to their new accounts in NCB, sums equivalent to that which was lost in Century. Hence NCB by that one action, created what they call "deposit liabilities" of over $6 billion which was the total of the deposits which were in the Century Financial Entities. In return, to cover these liabilities, FINSAC give NCB a piece of paper called a FINSAC Bond, worth an equivalent amount. For the Century depositor, the problem is solved because he or she now had access to funds at NCB, and that is what he or she had struggled for. But for FINSAC, the problem had just begun. Not only will that depositor seek to have cash from time to time, but the account totals are constantly increasing as there is an interest payment to be added as time goes by. Therefore, there must be periodic payments of cash to NCB by FINSAC. Whilst I have used NCB as an example, the same situation applies for all other institutions. One may then ask, what of the assets which FINSAC received from the various institutions. Of course, there are assets, but several had been used as collateral for so many different debts, that it is impossible to sell them either now or in the foreseeable future. Ciboney Hotel is one good example. But even in the situation where they can be sold, there is no example where any institution had assets with a value equal to their liabilities - not one. The difference between the value of the assets and amount of liabilities assumed, is what the Budget has to meet this year and for the foreseeable future. Regardless of how we look at it, that is the stark reality. The people at FINSAC are going to try their best to get the best value for each asset and to collect as much as possible on each outstanding loan, but regardless of how hard they work, there is still going to be a significant difference between the amount owed by the institutions to their clients and the volume of the assets which we have received in return. Let us put the obligations of FINSAC and the tax package into context. The obligations for FINSAC this fiscal year, amount to $8 billion, whilst the gas tax was for $2.8 billion. Simply put, if we did not have this obligation to meet, we could have avoided that tax and still have had funds left to increase capital spending and to pay down domestic debt. That relationship must be kept firmly in everyone's mind. I wish to take this opportunity to bring this House up-to-date on certain matters related to FINSAC's progress in discharging its mandate. First, with regard to the divestment process. This represents not only a priority item within the context of FINSAC's operations, but also is important in terms of funding the Budget. In particular, we need these proceeds to repay the debt assumed by FINSAC as a result of its intervention in the various institutions. Progress continues to be made and by mid June we will have concluded the divestment of three more hotels and to foreign interests, which will result in additional inflows of over US$30 million. In terms of the divestment of the insurance assets, those acquired through intervention in Crown Eagle, Dyoll and Mutual Life, bids have been received, analyzed and we will be in a position to announce the winning bids by the end of May. This is with respect to the health, individual life, pensions and group life portfolios. We have been pleasantly surprised at the number of eminently qualified institutions which have bid. When the divestments have been concluded, we will have a stronger, more vibrant life insurance sector with a firm base on which to grow given lower inflation, as well as some of the new initiatives to assist the sector. Finally, I wish to say a word to those persons with interest sensitive policies purchased through Mutual Life and Crown Eagle. I have met with various groups and I have listened to their concerns. We have sought to respond to these concerns, albeit within the context of limited resources. We continue to discuss with various institutions who suggest that they will be able to offer a better deal for the holders of these policies. However, in the interim, we have made three (3) important improvements to the initial offer. There are, namely:
This last change will cost us additional sums, but we feel that it is the just and right thing to do.
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