Efforts to Stem US Dollar Shortage Will Reduce Interest Rates – Wehby

Minister without Portfolio in the Ministry of Finance and the Public Service, Senator Don Wehby, is optimistic of a fall in interest rates, in light of Government’s efforts to stem the United States (US) dollar liquidity shortage affecting the local economy.
Speaking at a Jamaica Stock Exchange junior market workshop at the Terra Nova Hotel in Kingston on Tuesday (Jan. 13), Senator Wehby said that approximately US$500 million in funding has been secured, which should ease the US dollar shortage.
“We have secured funding from the World Bank, US$100 million at under three per cent. We have secured funding from the Inter-American Development Bank (IDB), a US$300 million facility, which will be signed on January 19, (and) we have secured funding from the Caribbean Development Bank at four per cent,” the Minister informed.
Noting that interest rates track inflation, precipitated, primarily, by US dollar liquidity, which, to some extent, impacts the level of confidence in the economy, Senator Wehby pointed out that earlier in the current fiscal year, inflation increased to approximately 17 percent, coinciding with the price of oil, which rose to US$147 per barrel.
He added, however, that with the price decreasing to under US$40 per barrel, the latest estimate for inflation for the year, as released by the Governor of the Central Bank, is 14 per cent.
Senator Wheby said that while the rate is meant to be temporary, “interest rates at this level cannot be sustainable for any economy that is seeking growth”.
He stressed however that with the US$500 million inflow in January, “this issue of confidence, and getting the wheels turning again, in terms of liquidity, by February, I think it will (be) normalised.”