FINANCE Minister Audley Shaw has appealed to the country’s approved lending institutions to “start lending money to the productive sector” as one way of getting Jamaica out from under the rubble of the world financial meltdown.

“I am saying to the big banks in this country, it is time for you to step up to the plate and chart a course to assist us to direct money into the productive sector,” said Shaw, pointing to the Bank of Nova Scotia, the National Commercial Bank

and the Royal Bank of Trinidad and Tobago.

Addresssing the annual banquet of the Small Business Association of Jamaica at the Hilton Kingston Hotel last Friday, the minister said: “I challenge the big banks, don’t let us take all the money and target consumer loans for some more motor cars, don’t just target government paper and at the end of the day export the profit.”

He noted that with the exception of the National Commercial Bank – which is Jamaican-owned, with a significant retention of profit in the country – other banks ‘export’ their earnings, to the further downfall of the Jamaican dollar.

“That’s part of the pressure on the foreign exchange rate,” he said. “Let’s be blunt about it. We have repatriated the ownership of significant Jamaican institutions in the insurance, banking and other sectors. Even crackers have been exported to foreign ownership and the profit along with the ownership are also being exported. That is another area of pressure on the foreign exchange.”

Shaw advised commercial banks that lending to the productive sector was a condition of a US$300-million liquidity support loan that Prime Minister Bruce Golding would sign with the Inter-American Development Bank (IDB) next month.

“I’m warning the community of bankers that when we channel that low-interest money into the commercial banking system, it is for on-lending into the productive sectors of the economy and we are calling upon the commercial banking institutions to support the goal of the Government and the IDB. Stop talking about alleviating poverty; let us start talking about creating wealth in Jamaica.”

The IDB in October of this year announced plans to approve a record volume of loans in 2009 and its intention to set up a new fast-disbursing US$6-billion liquidity facility to help Latin American and Caribbean economies sustain growth in the face of the global financial crisis.

For his part, the president of the Small Business Association of Jamaica, Edward Chin-Mook said the December 1 increase in interest rates by the Bank of Jamaica continued to be a sore point with the association which called for “creative solutions”.

“The dollar is US$80 to J$1. When the interest strategy was employed, it was US$74.70 to J$1,” he said, adding that the association viewed the economic stimulus plan recently presented by the Government to combat the effects of the ongoing global financial crisis as the “first step to assist small businesses”.

Suggesting that the full extent of the global meltdown would be felt in 2009, Chin-Mook said small businesses should begin to structure their businesses to cushion the impact.

The so-called stimulus plan is a package of tax cuts, duty exemptions and hundreds of millions of dollars in loans to vulnerable sectors.