KINGSTON, Jamaica – Governor of the Bank of Jamaica Derick Latibeaudiere, is dismissing a recommendation from the Jamaica Manufacturers’ Association (JMA) that the central bank use $2 billion of its statutory cash reserves for lending to the manufacturing sector.
The JMA made the suggestion during a press conference yesterday at which it complained about the negative impact the central bank’s high interest rate policy, to stem the slide of the Jamaican dollar, has been having on its businesses.
However, Latibeaudiere scoffed at the suggestion which, he said, was not practical.
“That is nonsense because you do have the cash reserves because you are trying to mop up liquidity. So, to suggest that you put liquidity out there, that is nonsense!” he told The Gleaner yesterday in response to the JMA’s suggestion.
Latibeaudiere said the cash reserves, which now stand at J$29.1 billion, was not money belonging to the BOJ but being held on behalf of commercial banks.
Omar Azan, president of the JMA, insisted that in order to prevent further job cuts and company closures and to free up liquidity, the BOJ should release funds for lending to the sector at an interest rate of five to seven per cent.
“We are not saying to use all of it but maybe take $2 billion to stimulate something in the productive sector,” Azan argued. “And the banks would be happy because they would have been able to earn something on their money rather than having it sitting there without earning anything.”
Earlier in the day, Latibeaudiere announced that the central bank would be introducing another new measure in an attempt to stop the slide in the value of the Jamaican dollar, which yesterday traded at J$88.28 to US$1.
During the BOJ’s quarterly media briefing, he said the bank would directly supply foreign exchange to public sector entities and that “by providing foreign exchange on a timely basis for payments, such as oil imports, this measure should help to reduce some of the pressure in the market”.