'High interest rates impediment to development'

Sheena Gayle, Gleaner Writer

WESTERN BUREAU:

The banks have come in for another set of bashing for its high interest rates regime. A western Jamaica businessman is warning that if they are allowed to continue to thwart the ability of businesses to compete with the high rates then the country could head into another FINSAC-related system. And Minister of Industry, Investment and Commerce, Karl Samuda, said the rates were inpediments to the development of the economy.

"It is going to catch the country and we're going back into another FINSAC if what the banks are doing continues, it needs to come to a stop," an incensed Patrick Marzouca, a local car manufacturer, said at the Interactive Exporter's Forum organised by JAMPRO, at RIU Hotel and Resorts in Montego Bay last Thursday.

Marzouca, who is the owner of Island Cruisers, accused financial institutions of 'economic slavery' as they prevent businesses from accessing low interest loans that are needed to grow their enterprise.

"I see the Minister of Finance and the Prime Minister on television, and I saw an individual justifying why they must either lower the interest rate and fire people or keep the interest rates up now. That is foolishness!" the businessman expressed.

The Financial Sector Adjustment Company (FINSAC) was established by the Government of Jamaica in 1997 with a mandate to restore stability to Jamaica's financial institutions, at that time, a number of Jamaican banks and insurance companies were experiencing liquidity and solvency shortfalls.

Marzouca's solution to help alleviate businesses seeking financial assistance is direct lending by Government to enterprises over short periods and in less than a year.

Sympathising

Samuda in his address to exporters and business interests sympathised with the level of treatment being meted out to small businesses by the financial institutions.

"One of the greatest impediments of the development of our economy is the rate of interest that we have to pay the banks," Minister Samuda outlined.

"Who could deny that not only do we have to pay high interest rates to banks, but the manner in which some members of the business community are treated by banks, it is becoming an onerous task to get a simple service offered by the banks."

However, some relief was offered to businesses when a representative from the EXIM Bank revealed that they offered direct lending to businesses, provided that they meet their guidelines.