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Government to seek more multilateral funding for MSMEs

Sunday, September 17, 2017

The government is to secure more funding from its multilateral partners to assist small businesses.

Minister of Finance and the Public Service, Audley Shaw, told Thursday's press briefing at Jamaica House that an example of these efforts was the partial loan guarantee programme signed last week with the Inter-American Development Bank (IDB) for US$20 million ($2.5 billion).

The government signed the deal through the Credit Enhancement Fund (CEF) on September 6, to provide funds to Micro Small and Medium Entrepreneurs (MSME) through the Development Bank of Jamaica (DBJ).

Shaw reiterated then the Government's commitment to providing MSMEs with access to financing, given that micro entrepreneurs are a significant sector that commercial banks have often overlooked.

He said that the CEF is critical, as it provides an opportunity for MSMEs to be able to build their capacity, expand their business ventures and in so doing, create more jobs.

“If we are ever to achieve the 5 in 4 plan, or be able to sustain economic growth, we must provide a business environment in which the MSME sector can grow and develop. MSMEs are a critical lynchpin in the economic programme and we cannot continue to overlook the value added and contribution to the Gross Domestic Product that this sector provides,” he said.

Speaking at the press briefing at Jamaica House on Thursday, at which the IMF's staff team which had been reviewing the economy over the previous 10 days presented their findings, Shaw announced that the government would also be discussing financing of the MSMEs with the World Bank.

“We are working with the World Bank on a similar programme, as well as two special accesses to credit funds in conjunction with the Development Bank of Jamaica (DBJ), [which are] all aimed at the development of small and medium-sized enterprises,” he said.

Turning to the public sector transformation issues raised by the IMF team, which includes both reducing the GDP ratio for central government salaries to, at most, nine per cent of GDP in financial year 2018/19, and improving public sector efficiency, Shaw said that while they are difficult tasks to achieve, the government remains firmly committed to implementing them.

He said that regarding the modernisation of the Bank of Jamaica (BOJ), that reform will further strengthen the independence and accountability of the central bank, within the context of the formal adoption of inflation targeting, and achieving low rates of inflation.

“This will increase the purchasing power of the income and savings of Jamaicans, and will support our efforts to lower the cost of finance to business,” Shaw said.

He also confirmed that the macroeconomic programme remains ”firmly on track”, as demonstrated by Jamaica's performance in meeting the ambitious primary fiscal surplus targets and the country's debt.

He noted that macroeconomic stability is essential to achieving sustainable growth.

“We are, however, conscious that Jamaica's growth recovery needs to be faster and more broad-based. Accordingly, we are focused on measures to expand employment, increase productivity and reduce the informality in the economy, by encouraging access to credit through structural reforms and more financial inclusion,” he said.

“We are confident that the country has met the review targets under the SBA, and now looks forward to welcoming the Managing Direvtor of the IMF, who is expected to visit Jamaica later this year,” he added.