Minister of Finance and the Public Service Audley Shaw has reported that the interest rate on the special microloan disbursed by the Development Bank of Jamaica (DBJ) has been reduced to six per cent, from 10.5 per cent.

The more than $1-billion credit line, which is backed by the World Bank, is available for small and medium enterprises to undertake expansion projects.

Minister Shaw said it is unacceptable that the funds, provided by the World Bank at 0.5 per cent interest, end up at almost 11 per cent to businesses, due to various charges.

Shaw said he has given instructions to the ministry that the funds be made available to the DBJ at two per cent, and the DBJ must on-lend to the approved financial institutions at one per cent.

We are encouraging the approved lending institutions to put no more than three per cent on it,” he noted.

The minister was addressing a luncheon organised by JN Small Business Loans Limited at the Jamaica Conference Centre, downtown Kingston on Friday.

He urged financial institutions to move “progressively” towards lowering interest rates in order to facilitate small business development.

“We need to increase loans to the productive sector so that (it) can fuel the economic activity, which will lead to job creation, foreign exchange earnings, and the wealth that we all seek to achieve,” said Shaw.

President of the Small Business Association of Jamaica, Hugh Johnson said the move to reduce interest on the DBJ microloan is “a bold step by the Government”.

He noted that small farmers and others in the productive sector will benefit from the lowering of the loan rates.