The Golding administration is trying to spark private-sector interest in a plan for a new lending agency that is meant to offer alternatives to the commercial banks and state-owned Development Bank of Jamaica (DBJ).

The intent is to help those businesses, moreso small and medium companies, get around the roadblocks they now face accessing high-cost credit under terms that they can actual hurdle to qualify for loans.

Government is to pursue discussions with private sector stakeholders, with a view to establishing a jointly-owned lending institution to assist businesses having difficulties securing loans from traditional banks.

"There is a clear need for a retail investment banking facility that can respond to the financing needs, especially of small and medium enterprises," Prime Minister Bruce Golding told lawmakers during a session of Parliament Tuesday.

"The Government cannot go back to retail lending - not on its own," Golding said.

How the institution is configured, its operations, financing and ownership structure are matters that would have to be ironed out.

Returns to private sector

Golding told the House of Representatives that Senator Don Wehby, the minister without portfolio in the Ministry of Finance and the Public Service, has been asked to lead the consultations.

Wehby will be giving up his job with the government in July but Golding said he would continue to lead the consultations even after he returns to the private sector.

The senator will assume the position of group chief operating officer in the GraceKennedy group when he returns to the company in October this year - a position that puts him second in command of the conglomerate run by Douglas Orane.

Explaining the rationale for the new lending agency Mr Golding said the wholesaling of loans by DBJ through approved financial institutions (AFIs) was not working as well as was hoped.

Higher interest rates

He said that, apart from their preference for Government paper, many of the traditional lending agencies opt to lend their own money at higher interest rates and bigger spreads, rather than lend DBJ money at controlled margins.

business@gleanerjm.com