sept-2017c

26 27 T he Inter-AmericanDevelopment Bank (IDB) and the government of Jamaica signed an agreement recently,for a US$20million loan that will facilitate increased access to credit for micro,small,andmediumenterprises (MSMEs) in Jamaica. This credit enhancement program for MSMEs will capitalize the credit enhancement facility (CEF) estab- lished in 2009 andmanaged by the Development Bank of Jamaica (DBJ),which provides partial credit guaran- tees to incentivize approved financial institutions to increase their lending toMSMEs in Jamaica. The loanwill allowthe CEF to guarantee larger loans –amaximumof J$50million (US$385,000),up from J$15million (US$115,000)–and guarantee a larger portion of the loans–80 percent,and 90 percent in special cases,up from50 percent,and 80 percent in special cases.These partial credit guarantees provided byCEF are expected to compensate for MSMEs’inability tomeet collateral requirements,therebyaddressing one of the keychallenges constraining their access to finance. Speaking at the signing ceremonyheld at theMinistry of Finance and the Public Service,Julie Katzman,Execu- tiveVice President of the IDB,noted that the challenges faced byMSMEs in Jamaica are not uncommon.MSMEs have difficulty in accessing qualityfinance that allows them to borrowfor multiple years,andMSMEs are chal- lenged to find rates that are both fair and affordable. Katzman commended the approach of the DBJ in es- tablishing the CEF in the first place,since partial credit guarantees have been shown to be away to bridge that divide.She expressed the hope that the provision of partial credit guarantees will not onlyencourage finan- cial institutions to take that riskof lending toMSMEs in the short term. OPENING LINES IDBAND JAMAICA GOVERNMENT SIGNUS$20MILLION LOANTO INCREASE ACCESS TO CREDIT FORMSMES