EXIM Bank lends only to the productive sector, and according to a recent release from the bank, interest rates on loans accessed through the bank’s approved financial intermediaries (which includes major commercial banks, merchant banks, and money-market brokers across the island) have also dropped by one percentage point to 11% per annum.

Valerie Crawford, manager of trade financing and risk management at EXIM Bank, said “This rate reduction is in line with the Government’s objective of reducing interest rates to the productive sector.” She added that the reduction of the rates was in keeping with the bank’s mandate to enhance its clients’ capacity by creating easier access to loan facilities.

The EXIM Bank also recently launched a special loan window for Small & Micro Enterprise (SME) energy loans involving renewable energy projects, through which credit is available at 9.75%t interest for Jamaica dollar loans, and starting at 5.63% for US dollar loans.

Additionally, the Student’s Loan Bureau is to get a major capital injection in order to help it adequately meet the expected increase in the demand for loans during the next academic year. Minister Shaw said that additional funding for this capital injection has been identified, and negotiations are in progress with overseas financial institutions to provide the Student’s Loan Bureau will additional support. Additionally, the Government is also looking to the United States and the European Union to access additional funding for the Student’s Loan Bureau.

ScotiaBank’s loan rate reduction follows recent similar reductions by RBTT and FirstCaribbean. In a press release that was issued yesterday, ScotiaBank said that it will continue to review its rates to determine if opportunities exist for further adjustments over the short-term.

Jacqueline Sharp, Scotiabank Group’s chief financial officer said, “This second reduction in our lending rate is another demonstration of our keen commitment to stimulating recovery in all sectors. We are giving Jamaicans access to affordable financing, so that they can succeed in a very challenging economic environment.” She also added that this reduction “was evidence of Scotiabank’s confidence in Jamaica and the Bank’s commitment to playing a lead role in encouraging industry and providing support to retail customers.”

ScotiaBank also announced recently, a special 9.95% loan pool for the productive sector.

It’s the second of seven commercial banks to cut its lending rates, following Scotia-bank’s one-point adjustment of its base rate in August to 20.5%. Both have taken their cue from the Bank of Jamaica which has already cut signal rates five times this year (taking a cumulative 4.5% off benchmark rates since July).

FirstCaribbean said that the cut in its prime rate follows previous adjustments in June on interest rates applied to auto loans and general purpose loans “in line with the industry“.

Several other commercial banks are reportedly considering a cut in their lending rates as well. National Commercial Bank (NCB) says that its current base lending rate of 21.75% is negotiable, while First Global Bank says that its 20.75% rate is under review.

It is hoped that lower domestic interest rates will make borrowing relatively more attractive than savings in domestic instruments (i.e. deposit instruments etc.). In this context, households will increase expenditure, particularly on durables, while businesses would have a greater incentive to expand or retool, as financing costs will be lower. The increased expenditure would theoretically (and hopefully) provide some impetus to economic activity.

According to the Scotiabank Group President & CEO Bruce Bowen, the reduction in the bank’s lending rate reflects its commitment to stimulating recovery in all sectors of the Jamaican economy. He also says it is critical that senior decision makers in government, business and civil society work together to build confidence in the business community and the general public, and that Scotiabank will continue to review its rates to determine if there is an opportunity for further adjustments over the short-term.