Jamaica Watch: EXIM Bank lending, move towards inflation targeting

As part of its 2019/2020 fiscal year budget proposal, the Jamaican finance ministry has allocated J$9.3bn (US$75mn) for productive sector lending from National Export-Import Bank of Jamaica (EXIM Bank).

The planned lending forms part of the government's efforts to foster growth in micro, small and medium-sized enterprises (MSMEs).

As reported by Jamaican government news service JIS, agriculture minster Audley Shaw, who has portfolio responsibility for EXIM Bank, indicated that the institution's 2019/20 loan utilization projection is J$1.8bn more than the J$7.5bn on-lent to the productive sector during the 2017/18 fiscal year, 98% of which, he said, was for MSME financing.

He further pointed out that loans disbursed for 2018/19 totaled J$6.8bn up to the end of December 2018.

According to the JIS statement, the additional lending would be supported by increased marketing activities, brand building and market analysis for beneficiaries.

Jamaica's financial calendar begins the new year on April 1. With the date quickly approaching, lower house debate on the budget is set to close Thursday before heading to the senate Saturday.

According to the JIS statement, the legislation specifies that significant focus would be placed on MSMEs involved in "non-traditional exports such as tourism and its linkages, manufacturing, agro-processing, mining, the service industry, information and communication technology (ICT), and the creative industries."

As reported by the government news service, "The EXIM Bank's key strategic objectives over the forthcoming fiscal year will include facilitating export growth for new and existing customers; enhancing its marketing and brand-building program to grow and diversify the loan portfolio; designing effective financing solutions; improving service delivery and efficient processes through expanded use of technology; and strengthening the capacity and motivation of staff through training, recognition, rewards and talent management."

Call for cenbank reforms

Jamaican finance minister Nigel Clarke said the country is now embarking on the next phase of economic reforms, aimed at ensuring that monetary policy delivers low, stable and predictable inflation.

Speaking at an international finance and economics event at the Bank of Jamaica in Kingston, Clarke addressed the need for the country to enact inflation targeting as an effective monetary policy tool built around an explicit target inflation rate from the central bank.

According to a JIS report, Clarke pointed out that an inflation targeting regime is gradually being incorporated at the central bank "as the cornerstone of monetary policy."

"Full-fledged inflation targeting will only become a reality when we complete our next phase of central bank reforms or modernization to make the central bank independent and to upgrade its governance framework, putting inflation targeting as the centerpiece of its monetary policy objective," said Clarke.