The Heroes Circle offices of the Ministry of Finance.

A US$300 million (J$26.7 billion) Inter-American Development Bank (IDB) loan, which the Government unveiled with much fanfare earlier this year as a source of dedicated capital for the Jamaican private sector, has been opened to government entities, which have borrowed nearly 30 per cent of the US$90 million disbursed under the scheme.

At the same time, commercial banks suggest mixed results in the take-up by firms, although it remains unclear whether knowledge of the scheme is widely available and the range of issues that may be influencing private responses.

When the facility was announced in January, Finance Minister Audley Shaw hailed it as a critical cushion for the Jamaican private sector in the face of a global credit crisis that had dried up capital, making it difficult and expensive for emerging market firms to borrow.

But this week, finance ministry officialsconfirmed that the scheme was no longer geared solely to private-sector borrowers.

"The US$300 million was devoted solely to the private sector but after in-depth reviews and discussions about the desired impact on the economy as a whole, the GOJ (Government of Jamaica) and IDB made a decision to include public-sector companies which do not require a government guarantee to access the funds," Pamela McLean, the finance ministry's senior director for debt management, told the Financial Gleaner in emailed responses to questions.

"The public sector is limited to 20 per cent of the funds," she said.

Existing loans

From left: Luis Alberto Moreno, president of the IDB; Prime Minister Bruce Golding; Audley Shaw, minister of finance and the public service; and Don Wehby, former minister without portfolio in the Ministry of Finance, at the January signing for the IDB loan. - file photos

According to McLean, US$89.7 million, or approximately J$8 billion, has already been loaned, with 71 per cent going to the private sector.

It was not clear which government entities have already borrowed under the scheme and for what projects.

By the finance ministry's count, 70 projects have already been funded from the IDB cash, with 24 or 34 per cent of them being in manufacturing. Services was next with 13 projects, followed by tourism with 10.

There was no immediate breakdown of the outlay by sector.

But based on the available numbers, it appears that National Commercial Bank (NCB) is so far the major lender in the scheme. According to the bank, it has already disbursed US$43.93 million, or around 49 per cent of the loans reported by the finance ministry. NCB said it expects a further drawdowns this month, totalling US$4 million.

23 per cent to gov't

But NCB's spokesperson Sheree Martin indicated that US$10 million, 23 per cent of its loans, has already gone to government entities.

"The take-up of the funds has been very good," said Martin, explaining the adjustment of terms negotiated with the IDB, including longer tenor of the loans, expansion of the range of activities to be funded and the cover of government entities, had made the scheme more attractive,

"With these amendments, the line of credit provided, we believe, a more viable and lower-cost financing solution, especially due to the effect of the global economic downturn and Jamaica's access to the capital markets," she said.

huntley.medley@gleanerjm.com