JMA Online News
JMA claims US$ rationing, Governor says no such directive given to banks
Written by: Observer
Date: 2009-02-19
The central bank has not asked banks to limit the foreign exchange they sell to businesses, Bank of Jamaica governor, Derick Latibeaudiere insisted last night, against claims that manufacturers could only get between US$1,500 and US$2,000 per day.
We have not issued any such directive to anybody and there are no such guidelines from the Bank of Jamaica, Latibeaudiere said when queried by the Observer.
Jamaica Manufacturers Association (JMA)
president, Omar Azan charged at a press conference yesterday that some local banks had introduced daily rationing to a maximum US$2,000 per customer, leaving businesses in a quandary.
Azan said the daily US dollar allocation to businesses had dropped drastically from two weeks ago even as manufacturers struggle to access foreign exchange for raw material purchases.
“Two weeks ago you could get US$5,000 per day. Today you can only get US$1,500 per day,” Azan declared to journalists at the JMA’s downtown Kingston offices.
He told the Observer afterwards that the JMA had canvassed all the banks and received figures between US$1,500 and US$2,000 per day that they were prepared to sell to a customer.
Azan said that triggered by the sliding dollar and its scarcity, a tightening of credit facilities and the BOJ’s high interest rate policy, local manufacturers were now finding it difficult to keep their businesses open.
But Latibeaudiere said he knew nothing of the foreign currency rationing and was adamant that the BOJ “has not been micro-managing the foreign exchange market”.
At the press conference earlier, Azan again hit out against the increase in interest rates, ostensibly designed to stabilise the Jamaican dollar, calling it counter-productive and against the global trend.
“We cannot expect to perform the same experiment and expect to get different results,” Azan declared in reference to past attempts by the BOJ to defend the stability of the Jamaican dollar.
“...Hiking interest rate is not the solution,” the JMA president charged. “We have to produce our way out of the crisis,” he said.
The JMA president argued that the IDB US$300 million line of credit and the recent US$100 million loan facility from China would not reach the manufacturing sector. The organisation was concerned that companies would not be able to meet collateral requirements to access these loans given their deteriorating cash flow and receivables.
He suggested that a mutual guarantee scheme to broaden access to financing for small businesses be implemented by Government. Under this scheme, he said, the Government would guarantee some of the risk by offsetting a portion of the collateral.
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