The Government has signed an agreement with the Inter-American Development Bank, for a US$500 million liquidity support programme for commercial banks.

Minister without Portfolio in the finance ministry, Don Wehby, made the announcement in the Senate on Friday.

He said the agreement would allow for local financial institutions to access money to be offered in loans for the productive sector. According to Wehby, the opportunity to access money from international institutions had dried up because of the global financial crisis.

"It's going to be a huge, huge plus for the commercial banks, so we can get the wheels turning again," he said, adding that the first disbursement of US$300 million would be made very early in the new year.

Increased ceiling

Meanwhile, the Senate has approved a resolution to increase the loan ceiling from $700 billion to $920 billion. The House of Representatives had endorsed the request on October 7.

In supporting the resolution, Wehby said the increase in the loan ceiling would help the Government fulfil its programmed borrowing in the medium term.

Opposition Senator Mark Golding said the need to increase the loan ceiling indicated a serious concern with the debt problem in Jamaica.

Struggling with debt

"The country is definitely struggling with the debt that it's carrying," he said. "Jamaica is probably going to be more challenged than any of its Caribbean neighbours to deal with the economic times that we are facing," Golding added, referring to a recent report by the Caribbean Information and Credit Rating Services Limited - the Caribbean's first ratings agency.

International ratings agencies, Moodie's and Standard and Poors, have already revised their ratings downwards for Jamaica.

At present, 54 cents out of every public expenditure dollar goes towards servicing Jamaica's $1.034 trillion debt.