KINGSTON, Jamaica (JIS) — The Bank of Jamaica (BOJ) is reporting that commercial bank credit to the private sector grew by 14.8 per cent as at December 2016.

BOJ Governor, Brian Wynter, said that this is higher than for the corresponding period in 2015, when credit to the sector went up by 9.5 per cent.

He said in real terms, loans grew by 12.8 per cent for 2016, compared to 5.7 per cent in 2015.

Wynter was speaking at Tuesday’s quarterly media briefing at the BOJ auditorium, downtown Kingston.

The BOJ Governor attributed the uptick in private-sector credit to a reduction in Government’s borrowing from the local market.

He said borrowing by the Government and its agencies diverted the flow of financial resources from the private sector, making investment harder and more costly, thus impeding growth.  This scenario is commonly referred to as ‘crowding out’.

“Now with several quarters of ‘crowding in’, we are witnessing a long-overdue correction, and we can now consider that the era of Government ‘crowding out’ has come to an end,” Wynter said.

The BOJ Governor further pointed to Government’s programme of fiscal discipline and smart debt management, which has resulted in a fall in the debt to gross domestic product (GDP) ratio from 143 per cent to 122 per cent as at March 2016.

He said this performance contributed to a boost in Jamaica’s global rankings by international rating agencies Moody’s and Fitch.

He reiterated that Moody’s upgraded Jamaica’s sovereign debt rating to B3 in November 2016. Fitch, he added, affirmed its single-B sovereign rating for the country, pointing out that “Jamaica’s sovereign risk premium has trended to all-time lows”.

“It is no surprise, then, that annual growth in commercial bank credit to the private sector grew,” the Governor said.

Wynter said the sustained increase in commercial bank credit has also supported Jamaica’s improved economic performance over eight consecutive quarters, with GDP growing between one and two per cent during the December 2016 quarter.

“Sustainable and equitable economic growth accelerates when macroeconomic conditions are stable,” he noted further.

These include a reduction in unemployment to 12.9 per cent as at October 2016 from 13.5 per cent the previous year, and lower inflation, which stood at 2.6 per cent for the 12-month period ending January 2016. The inflationary out-turn for January was 0.4 per cent.