IMF points finger at banks for lack of growth

The International Monetary Fund (IMF) is placing some blame on the island’s banking sector for poor levels of growth within the island. At the same time, however, it is also saying that the government should look at reforming taxation of this sector which attracts a higher rate than unregulated companies.

Real GDP in the island is estimated to have expanded by only 0.8 per cent in financial year 2015/16. The Fund states in its 2016 Article IV Consultation on Jamaica that while fiscal discipline is critical for further reducing debt and inducing growth, reforms are necessary in other areas such as access to credit.

The country’s lending sector is dominated by dozens of microfinance companies which lend at rates upwards of 40 per cent per annum. A much smaller and formalised banking sector offers lower rates, but the IMF says they can do better.

The BOJ in its quarterly monetary policy report for December 2015 indicates that real growth in private sector credit recorded an annual expansion of 6.5 per cent relative to 6.0 per cent at the end of September 2015. Interest rates to the private sector averaged 17.19 per cent during the quarter.

http://www.jamaicaobserver.com/business/IMF-points-finger-at-banks-for-lack-of-growth_62122