EXIM plotting course to outperform its own target
Managing Director of EXIM Bank Jamaica Lisa Bell is looking to Government’s promise that funds from dormant accounts could find their way into the productive sector as low-interest loans.
Industry, Commerce, and Agriculture Minister Audley Shaw committed last September that the $45 billion of estimated dormant funds would be made available to micro and small businesses as financing.
Last fiscal year, EXIM Bank distributed a record $9.47 billion in loans, according to Bell, who is looking to top that performance this fiscal period, ending March 2020, even though the agency’s budget for disbursements falls below that.
“Our target stands at $9.36 billion. It may sound counter-intuitive, but we only can lend as much as we have. The only way around that is whether we are lending short term or medium term,” Bell told the Financial Gleaner.
That is why she is hoping for movement on the initiative around dormant funds, saying that those resources could buttress EXIM’s holdings, which would mean more funds to lend to the productive sector.
“Although we’ve cast a budget of $9.36 billion, we really are hopeful that once we get those funds, we’ll be able to project even higher levels of loan utilisation,” Bell said.
EXIM has already seen an uptick in loan utilisation in the last two quarters. Bell pins the take-up of funds to a sense of “positivity” about the economy, which is pushing businesses to invest and expand. Additionally, the environment around interest rates, which are still falling, has spurred SMEs to do projects like retooling, she added.
Loan utilisation, or take-up, at EXIM Bank moved from $7.3 billion in fiscal 2018 to $9.47 billion in 2019, a 239 per cent increase. Bell said that the bank experienced loan growth in tourism, especially in the linkages sector, but there was also an uptick in disbursements in the mining, coffee, and agro-processing sectors.
In July 2018, the bank launched a loan sale in addition to the special loan fund targeted at the tourism sector. In an update on the facility backed by the Tourism Enhancement Fund, Bell said that up to March this year, it had attracted $1.47 billion in proposals with $884 million in loans approved and $717 million disbursed.
EXIM loans are currently priced within a range of seven-13 per cent for debt denominated in Jamaican dollars, and six-eight per cent for USD loans, according to Bell. The delinquency rate on repayments is currently at 2.16 per cent, less than half the industry standard of five per cent.