The Export-Import (EXIM) Bank has sourced US$20 million for on-lending to export oriented businesses at rates of 10 to 11per cent for J$ loans and 7.5 per cent to 9 per cent for US$ loans.
This was announced by Finance, Planning and the Public Service Minister, Hon. Dr. Peter Phillips, at the Jamaica Exporters’ Association (JEA) monthly luncheon, held at the Terra Nova Hotel in Kingston, on March 22.
Reiterating the Government’s commitment to a low interest rate policy, the Minister said that to address the high cost of financing, the EXIM Bank has sourced low cost funding through the PetroCaribe Fund amounting to US$20 million that became available in January 2012.
He advised that the EXIM Bank is also “continuing its approach” to access other low cost funding sources, including the Inter-American Development Bank (IDB), the EXIM Bank of China and the Caribbean Development Bank (CDB).
The Minister also informed that special loan programmes have been established in response to sector needs. These programmes include the provision of unsecured financing to exporters for working capital and for the purchase of equipment.
“Exporters can access up to $2 million and manufacturers may access up to $1.5 million,” the Minister explained.
In addition, through a “Co-Pack” loan facility, an unsecured loan programme (supported by the Export Trading House (ETH) and guaranteed jointly by the EXIM Bank and the ETH), agro-processors can access financial support for their operations.
The Minister pointed out that the cost of financing continues to create serious challenges for businesses, despite the reduction in interest rates post Jamaica Debt Exchange (JDX).
“Exporters, especially those in the Small and Medium Enterprise (SME) sector, continue to experience difficulty in accessing financing at affordable rates. Loan rates for this sector currently range from 16 per cent to 20 per cent at commercial banks,” he said.
The Minister argued that while financing is available, the financial services market appears more geared towards consumer lending.
With respect to the Government’s stated intention to revisit the issue of waivers from which several sectors currently benefit, the Minister said that the present system is in urgent need of reform.
“The present system of waivers is complex, complicated and inefficient and is in need of urgent reform. The Government is therefore committed to a re-examination of the present system in its efforts to create a more level playing field, and to more effectively stimulate growth and expansion,” the Minister declared.
As an example, Dr. Phillips observed that the waivers granted for the period April 2011 to December 2011 were more than the revenues collected by Customs for the same period. This situation, he emphasised, is “untenable.”