Jamaica Government Moving To Lower Interest Rates Within Banking Sector

KINGSTON, Jamaica, CMC – The Jamaica government says it is committed to creating an environment that will enable the further lowering of interest rates in the banking sector.

“Those interest rates are trending down and they are trending down for a variety of reasons, but a main one is that the Government has restrained itself from becoming the main client of the banking system,”  Finance and Planning Minister, Dr. Peter Phillips, said.

He said the government has centralised its accounts in the Bank of Jamaica through the Central Treasury Management System, “so we don’t end up borrowing our own money from the banks at rates that cause difficulties for the Consolidated Fund.”

Phillips, addressing members of the Small Business Association of Jamaica (SBAJ), reiterated that even though interest rates are trending downward, there is a need for the rates to go down further.

“(The) rates are coming down, but they will have to come down further. Just this past week and the week before, the Bank of Jamaica reduced its signal rates. That will eventually flow through the banking system as a whole,” he noted.

The finance minister said regarding funding for the micro, small and medium-size enterprise (MSME), the Development Bank of Jamaica (DBJ) has exceeded its lending targets.

He noted that the DBJ approved loans valued at J$3.3 billion (One Jamaica dollar = US$0.004 cents) to small and medium enterprises (SMEs) during the 2014/15 fiscal year, while for the micro sector, some J$911 million was approved for loans.

When he delivered the budget in March, Phillips said that for the current fiscal year of 2015/16, the DBJ has set a lending target to MSMEs of four billion dollars.