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The data reveal that the unemployment rate declined by 0.2 percentage points to 15.5% with the rates being 10.2% for men and 22.3% for women. One can take no comfort in the relative stability in unemployment rate as the preponderance of unemployment amongst youth and particularly women has significant negative social implications. As the macro-economic indicators continue to respond to the policies of stabilization, greater attention must now be directed at unemployment.
MONETARY POLICY AND INTEREST RATES Monetary policy in fiscal year was conducted against the twin objectives of achieving inflation target as well as maintaining stability in the foreign exchange market. As a whole, there was an easing of monetary policy transmitted through successive reductions in the cash reserves requirement and the reduction of BOJ’s benchmark interest rate. As I have indicated earlier, the planned reduction in interest rates was temporarily reversed during the period September to November consequent on the instability in the foreign exchange market. However, since November there have been two successive reductions taking the rate to 15.5%, which is just marginally above the targeted rate of 14% set for the end of the fiscal year. During the year also, the cash reserve ratio for deposit-taking institutions was reduced from 15% to 12%. It should be recalled that this 12% should be compared to 25% which obtained up until August 1999. Private Sector credit increased by 7.3% for the period to end of February. On an average, commercial bank lending rates fell by 2.5 percentage points partially reflecting improvements in liquidity. The Opposition Spokesman has raised the issue of an extensive debate on interest rates. It is a debate which I would welcome, but as I have indicated to him it cannot take place in vacuum. Interest rate discussion must take cognisance of other factors such as the fiscal balance, the rate of inflation, the cash reserve ratio, the money supply and the exchange rate. Simply isolating interest rates and asserting the need for reduction not only takes you nowhere, but also has no credibility amongst those who own resources whether they be domestic or foreign. I will present the macro-economic framework within which the interest rate path for this fiscal year is being defined and hence, I invite the Opposition Spokesman, if he wishes to have a serious debate, to put forward a similar framework indicating his objectives for all the relevant complementary indicators.
EXIM Consistent with its mandate to provide financing and financial support for the export of goods and services, the Ex-Im Bank continued to work in close collaboration with various interest groups to devise programmes and strategies aimed at broadening the country's export thrust. During 2000/2001 the Bank reviewed its lending rates, loan limits, loan tenor and collateral requirements and made enhancements to some of its financing programmes, where feasible, to ensure greater accessibility for existing as well as potential clients. To this end the Bank further reduced the rate on the Small Business Facility by 6 percentage points from 18%to 12% bringing it in line with other local dollar facilities offered by the Bank. Stemming from the interest rate and other changes made, utilization of this loan programme was very encouraging as disbursements were recorded at $65 million at year end exceeding the budgeted amount of $60 million, by 8.3%. At year end 31 March 2001, the Bank made overall disbursement of loans totalling $2.77 billion (both local and foreign currencies combined), for all of its loan programmes. This performance represents an increase of 12% over the amount of $2.46 billion recorded in disbursements (local and foreign currencies combined) for the previous year, ended 31 March 2000. The Bank's loan disbursements were just marginally short of its budget of $3 billion for year ended 31 March 2001. The Bank achieved this level of disbursement whilst recording at the same time another year of profitable operation. Pre-tax profits of $137.398mn were recorded.
Product Innovation The Co-Pack facility, a new programme, was launched in December 2000 to meet the urgent need for working capital by Agro-Processors to generate export earnings The facility is a working capital loan scheme funded and administered by the Bank through which companies which manufacture products under a contractual arrangement with Export Trading Houses (ETH), can, with the recommendation of the ETH, obtain pre-shipment financing on a short term basis to assist in the production of goods for export. Up to 31 March 2001, the Bank recorded disbursements of J$11.83mn and expects that this programme of support will impact more fully in the new fiscal year.
Continued Collaboration with the Private Sector Under the Export Business Development Loan for Small Exporters Programme, launched by the Ex-Im Bank in November 1999 in collaboration with the Jamaica Exporters Association (JEA), the Bank continued its close collaboration with the Private Sector. The demand for utilization was such that the first tranche of funding of $20mn was fully disbursed in the year 2000-2001. Moreover a further $5 million from the budgeted amount of $20 million earmarked for 2001-2002 was also disbursed in the 2000/2001 fiscal year. This scheme is targeted at the small exporter who have difficulty getting Bank guarantees to access regular loan schemes offered by the Bank, and has performed to our satisfaction. At year end utilization was recorded at approximately $34mn with the expectation of even greater utilization in the current financial year. Eighteen exporters from the agro processing, food and beverage apparel, mining, other manufacturing (furniture, craft), tourism and the services sectors benefitted from this loan programme, fourteen of which were first time beneficiaries.
Development Bank of Jamaica Loan Funds During the financial year 2000/2001, J$150mn was received in loan funds from the Development Bank of Jamaica, resultant from the reduction in the Cash Reserve Ratio (CRR), and was on-lent through the Bank's short term discounting windows to exporters at a rate of 9.5%. To ensure as wide and diverse a usage as possible by qualified exporters a loan limit of $10 mn per company or group of companies was stipulated. Up to March 2001, twenty-four (24) companies had benefitted from the loan scheme. Due to the revolving nature of the fund, the Bank disbursed approximately $190mn as at 31 March 2001. Exporters have started to build up a reliance on the availability of these funds at the prevailing rate of interest, as a pivotal factor in their planning exercises. || Previous | Table of Contents | Next ||
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