US$20 million to be injected into SLB

Some US$20 million is to be injected into the Students Loan Bureau (SLB), through a loan from the Caribbean Development Bank (CDB).
The House of Representatives on (October 26) passed a resolution for a Government guarantee for the loan, which will help provide affordable and adequate financing for students from poor households to complete tertiary level programmes in approved local and regional institutions.
Minister of Finance and the Public Service, Hon. Audley Shaw, who brought the resolution to the House, explained that given the growing demands on the SLB over the years, and the Government’s inability to increase the level of support to tertiary institutions, the Bureau was seeking to replenish its capital through the CDB loan.
He told the House that in the interest of meeting the demand and to facilitate disbursements, the CDB has agreed to make available, retroactive financing in the amount of US$4 million or 20 per cent of the loan, in respect of sub-loans approved by the SLB between May 18, 2009 and May 17, 2010. “This is in keeping with the Bank’s policy on retroactive financing,” Mr. Shaw said.
The terms of the loan are: 52 equal and consecutive quarterly installments commencing five years after the date of the loan agreement; and interest payments payable quarterly at a rate of 2.5 per cent per annum on the portions sourced from the Bank’s special fund resources, and 4.8 per cent per annum sum sourced from its ordinary capital resources. There is a commitment charge of 0.52 per cent per annum on the unwithdrawn portion, which will begin accruing from the 60th day after the date of the loan agreement.
“In accordance with the terms of the agreement, sub-loans to students are to be approved only in respect of attendance at tertiary institutions that are approved by the UCJ (University Council of Jamaica) and should be a maximum of the equivalent of US$45,000 except in the case of programmes of study in law and medicine, where the maximum sub-loan shall be the equivalent of US$55,000,” the Finance Minister explained.
Additionally, the eligibility of sub-borrowers will be determined on the means test approved by the SLB at intervals.
Meanwhile, in recognition of SLB’s need for more capital to enable more students to access loans, the Government will be looking to the PetroCaribe Fund and reserves from the Bank of Jamaica (BoJ).
“Even with this amount from the CDB, it is not an adequate capitalisation of the SLB and we fully recognise that, and have therefore given the SLB the (go ahead) to have discussions with the PetroCaribe Fund with a view to seeking some low-cost funding from that window as well.the objective is to have it properly capitalised,” Mr. Shaw stated.
He said he has also asked the new SLB Board to reopen discussions with the Bankers Association “to see how some of the funds that are set aside in terms of the reserves that are held at the BoJ, and for which the bankers get a certain level of interest, to see how a small increment could be put on that in terms of lending some to the SLB”.
Applications for SLB loans have increased from 6,000 per annum to over 8,000 in 2009, and 8,653 in 2010, of which 7,063 were approved.