April 22. 2020
The Government notes the unprecedented collapse in world oil markets today where prices collapsed more than 99% before going negative.
Over the past few weeks, we have had a small team from the Ministry of Finance and the Public Service working with our bankers and multilateral partners on the possibility of hedging Jamaica’s future oil supplies.
The team has been supplied with daily prices of hedging instruments which, needless to say, reflect the significant uncertainty. That is, they have not been cheap.
Today’s dramatic fall in price where oil traded at $1 per barrel before moving into negative territory, as global storage capacity is exhausted, is another reminder of the profound uncertainty in the world at this time.
For that reason while we must make prudent decisions and we cannot rush. Had we transacted based on prices a few weeks ago we would have regretted it today.
I have tasked the Bank of Jamaica to work with the team at the Ministry of Finance to continue to review hedging options and prices and to advise the Government on next steps in a way that maximizes returns on taxpayer dollars.
Hon. Nigel Clarke, DPhil, MP
Minister of Finance and the Public Service
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