House Approves Loan by DBJ for Tourism-Related Projects

The House of Representatives yesterday (Nov. 30) gave the go-ahead for government to guarantee a US$25 million loan to the Development Bank of Jamaica (DBJ) to provide financing for tourism and export-led projects. The loan will be sought from the Caribbean Development Bank.
State Minister for Finance and Planning, Fitz Jackson, who laid the request before the House on November 23, said the money would provide resources to the DBJ for on lending to approved financial institutions, which would in turn lend to companies that are mainly engaged in tourism-related or industrial activities and are net foreign exchange earners or savers. This is in keeping with the government’s strategy to strengthen foreign exchange earnings and facilitate long-term employment activities in Jamaica.
The principal of the loan is to be repaid in 60 consecutive quarterly installments, with loan term payment of 18 years inclusive of a three-year grace period and a 5.5 per cent interest rate, which is payable quarterly along with the principal installments.
Opposition Spokesman on Finance Audley Shaw, while conceding that the 5.5 per cent interest rate was commendable, requested that the Minister give an account of how the US$25 million would be expended. He noted that his appeal was made on the basis that approved loans often ended up in default, with the government having to assume the responsibility for its repayment.
Mr. Shaw said he was aware of the plans to expend $15 million of the $25 million on a hotel now being constructed on the South Coast and asked for an indication that the lease payment arrangements from the company leasing the hotel would be adequate to service the debt. He also requested that the details regarding the contractor be given to the House.
Mr. Jackson, in reply, confirmed the DBJ’s decision to allocate $15 million of the sum towards the hotel. He said the remaining $10 million would be used for other projects in the tourism and industrial development sector. He also advised that the audited reports of the DBJ was tabled annually and set out the loan portfolio of the bank.
The State Minister further pointed out that the DBJ was acting in its rights to source funds internationally at low interest rates to facilitate investment in targeted sectors.