Business

JMA/JNBS open FX window for businesses

Wednesday, July 30, 2014    

Print this page Email A Friend!


The Jamaica Manufacturers' Association (JMA) has inked a US$50-million deal with Jamaica National Building Society (JNBS) that will grant JMA members easier access to foreign exchange.

Under the deal, a 'Special Member FX Window' will "set aside US$10 million per month... for small and medium-sized manufacturers", JMA President Brian Pengelley explained at a news conference at the association's Duke Street offices in downtown Kingston on Monday.

The facility will operate over a five-month period, spanning August 4 to December 31, 2014, and will grant preferential access of up to US$100,000 monthly per company.

Pengelley said the arrangement became necessary as "manufacturers have been experiencing difficulties sourcing foreign exchange since 2013, as a result of the rapid decline of the Jamaican dollar and conditions of the International Monetary Fund (IMF)".

The Government has been pursuing a tight fiscal policy since May 2013 when it entered into an agreement with IMF for funding to, among other things, improve the public sector deficit from 4.3 per cent of GDP in 2012-2013 to a surplus of above one per cent by the end of 2016-2017, and achieve a debt-to-GDP ratio of no more than 100 per cent by 2015-2016.

The deal allowed Jamaica to borrow nearly US$2 billion from both the World Bank and the Inter-American Development Bank.

But the austere conditions have had a negative effect on businesses and individuals, and have seen a rapid devaluation of the Jamaican dollar, which now hovers in the region of US$1 to J$112.

On Monday, Pengelley emphasised that access to foreign exchange was critical to businesses, as "it is needed to pay our international suppliers for raw material and packaging used in the production process and to service foreign currency liabilities".

He recommended that manufacturers make use of the window and encouraged those who are not members of the JMA to sign up. Equally, he urged members who are not fully paid up to settle their balances.

Pengelley explained that the JMA membership fees vary according to the tier within which the business falls, and are largely determined by the revenue generated by the company.

The annual membership fee for small and medium-sized enterprises and start-ups, classified as those with gross annual sales of no more than US$10 million, is $10,000.

Jamaica National General Manager Earl Jarrett said that, while the exchange rate will be determined by the market at the time of transaction, JNBS will be providing special discounts ranging from J$0.20 to J$0.50 per US$1.

These discounts, Jarrett explained, "will be dependent on the volume of purchase, the range of banking transactions and financial arrangements between JNBS and the eligible entities".

Businesses will also be required to open an account with JNBS and maintain a minimum balance of $50,000 during the period of the facility. In addition, they will have to complete a 'know your customer' form and submit their latest audited financials or bank statements before accessing the facility.

Deputy president of the JMA, Metry Seaga, said that this steady supply of foreign currency provided through the JMA/JNBS agreement will help local manufacturers to overcome the barriers associated with a US$500-a-day limit by some financial institutions.

"The inability to settle foreign currency liabilities on time, not only has a negative effect on the manufacturers, but it also has an adverse effect on the credit rating of the country," Seaga said.

The JMA estimates that there are approximately 1,300 manufacturers in Jamaica, of whom only 350 are members of the association.

ADVERTISEMENT

POST A COMMENT

HOUSE RULES

 

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper – email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT
ADVERTISEMENT

Poll

Do you think the current Enquiry will bring any benefit to residents of Tivoli Gardens?
Yes
No


View Results »


ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT