Richard Deane, Business Writer

Minister of Finance Audley Shaw browses through the budget - Peta-Gaye Clachar/ Staff Photographer

The Government has received the first tranche of a US$90 million loan from the Inter-American Development Bank (IDB) that it will use to improve the competitiveness of local businesses.

Finance Minister, Audley Shaw on Sunday signed the agreement for the loan that provides US$30 million now, with the remainder to be disbursed on condition that the Government successfully execute the first tranche.

As the IDB's country representative Gerald Johnson explained, the funds fall under the bank's Policy-Based Loan (PBL) pro-gramme and the Government will have to demonstrate how the first allocation is spent before the remaining sum is disbursed. The loan is expected to be disbursed in three-tranches.

The Inter-American Development Bank provides financing for economic, social and institutional development in Latin America and the Caribbean.

This is the second loan that the bank has disbursed to Jamaica since the new government; the first being a US $10 million loan signed in March to facilitate road repairs. "It is a policy-based loan which is linked to the macro economic outlook of the country and this is a vote of confidence," Johnson declared.

But in explaining the rationale behind the measured disburse-ments, Johnson said the IDB had become more prudent in the way it lend money to the country, as it was forced to cancel some US$50 million in loan allocation due to mismanagement of the funds.

"We cancelled US$50 million, when you have a portfolio where you cancel US$50 million you do not go around approving new ones," the IDB representative said.

Johnson was unable to say what was the interest rate on the PBL, but said the rate ranged between 1.9 per cent and 5.4 per cent.

richard.deane@gleanerjm.com