Minister of Finance and the Public Service, Hon. Audley Shaw, is to meet with the Bankers Association of Jamaica (BAJ) on Wednesday (January 26), to discuss their role in Government’s efforts to grow the economy.
The discussions are expected to focus on securing the commercial banks’ support for the administration’s efforts to lower interest rates.
Speaking at Mayberry Investments Limited’s monthly Investors Forum at the Knutsford Court Hotel, New Kingston, last week, Mr. Shaw lamented the level of interest rates levied by some financial institutions, as one of the major structural issues militating against stimulating investments and enhancing Jamaica’s competitiveness, globally.
“The truth is that when you combine the high cost of money with the high cost of utilities, the high cost of security and other areas of high costs, you can understand why we remain in an uncompetitive position, and that is why I have had to deal with the interest rate issue with such missionary zeal,” Mr. Shaw explained.
Alluding to suggestions that the Bank of Jamaica (BoJ) will move to invoke Section 33 of the BoJ Act, which empowers it to set both lending and deposit rates, Mr. Shaw pointed out that the global market economy has moved away from dictating interest rates.
As such, it would be an option of last resort by the administration, he said, while adding that “it is not something that is on my radar at this time.” He pointed out that his efforts at securing compliance have spawned exhortation to active consultations.
“I believe there are sufficient mechanisms in place that will allow for banks to respond and, when I go to that meeting (with the BAJ), I’m not taking a mallet with me or anything like that; the truth is that the banks have actually been quietly beginning to respond,” he acknowledged.
The Minister referred to the competition among financial institutions to procure “good bankable projects,” adding that even the EXIM Bank has been tapping into some of them.
“On foreign exchange denominated loans for export-oriented businesses (in particular), the EXIM Bank has been offering, I think, seven and eight per cent money. And so, some of these commercial banks have been quietly offering differential interest rates…some offering 13 per cent, some 12 per cent,” he said.
“So they are going in the right direction, and I’m going to take the necessary initiatives to try and encourage them to be even more aggressive than they are right now,” Mr. Shaw committed.
CONTACT: DOUGLAS McINTOSH