Pamela McLean, managing director of Ex-Im Bank, says the agency needs Jamaican currency to lend. - File
Jamaican producers are in search of capital to invest in their businesses, but the National Export-Import Bank of Jamaica says it has run short on Jamaican funds.
So the lending agency has turned to the state for help, saying it needs about $1 billion to fill demand for loans that had already been approved.
"We could do well right now with J$1 billion," Ex-Im Managing Director Pamela McLean told the Financial Gleaner.
"As a matter fact, that is the figure that we are talking about that we are looking for right now," she told the Financial Gleaner.
Ex-Im lends largely to exporters in both Jamaican and foreign currency. The agency had for this fiscal year projected loans of US$27 million and J$2.7 billion.
To fund some of the loans, the bank was expecting inflows of $150 million from the National Insurance Fund and the PetroCaribe facility, according to the Finance Ministry's Public Sector Bodies Report.
"I do have enough quantities in US dollars to fund my budget, so that is not a problem," said McLean.
"Where I have a shortfall is in Jamaican dollars."
Last year, Ex-Im disbursed $7 billion, up from $5.5 billion the year before.
This year, the budget is $7.5 billion.
McLean first advised company bosses of the bank's lack of funds on Wednesday at the annual general meeting of the Jamaica Manufacturers' Association, saying while the applicants had qualified and the loans had been approved, her agency was having problems finding the cash to disburse.
"I can lend the US dollars. Where I have a challenge is with the demand for Jamaican dollars, which I don't have - the quantity in Jamaican dollars," McLean told the Financial Gleaner.
She said that the government agency was currently in discussion with Government to source new funds, describing the talks as positive.
"We are having active discussions now with our portfolio ministry, which is the Ministry of Finance," she said. "We do understand the constraints on the Budget because we all know that there has been a significant falling out in revenues to the Government."
McLean said that there has been an increase in demand from the sector for JMD over USD loans, saying the retreat to local currency debt was fuelled in part by fluctuation of the Jamaican dollar, which is trading at around $89 to the USD.
Last year, the currency lost 13 per cent of its value, compared to the four to five per cent depreciation in years prior.
"Because of the way that our currency has been unstable in terms of the exchange rate exposure, you find a lot of the manufacturers - do not have ready access to US dollars," she said.
"Therefore, you do not want to commit yourself to borrowing in US dollars with a commitment to pay me back in US dollars if you do not have a direct access to US dollars like somebody who is exporting."
Ex-Im offers Jamaican dollar loans at 12 per cent, compared to a 22 per cent base rate at the commercial banks.
dionne.rose@yahoo.com