Opposition pitches plan for $45b in unclaimed funds, Gov’t chops a third next year

OPPOSITION SPOKESMAN on Finance Mark Golding says the People’s National Party (PNP) has a more creative approach to using the more than $45 billion of unclaimed funds in bank accounts to help the medium, small and micro enterprise (MSMEs) sector.

He, however, acknowledged that the ruling Jamaica Labour Party Government has a similar idea on the use of funds from dormant accounts to drive the MSME sector.

Speaking at a recent party forum on the economy at its Old Hope Road headquarters in St Andrew, Golding said the PNP must be committed to empowering MSMEs with the view that the sector be used as a route to lift marginalised Jamaicans struggling under the pressures of a tough economy.

Golding noted that the lack of access to financing has been a long-standing problem retarding the growth of MSMEs in Jamaica, since persons starting a business often do not have collateral that can be pledged to secure loans.

The opposition spokesman said work has already started on a plan.

“The idea is to leverage that fund ($45 billion) to provide substantial additional financing to the MSME sector. If this is done through a system of credit insurance provided to lenders of MSME finance, then given the statistical default rates in the sector, the volume of loan finance that can be provided can actually be significantly greater than the pool of resources to back that insurance,” he contended.

TAX CHANGES

Golding said the proposed framework would be supported by carefully aligned adjustments to the formal requirements that are currently imposed on MSMEs.

According to Golding, this adjustment would include the requirement of mandatory general consumption tax registration at $3 million of annual sales.

But with the Government expected to access $15 billion of the $45 billion at the start of the next financial year, this could leave the PNP’s plan in stillbirth.

Audley Shaw, the industry, commerce, agriculture and fisheries minister, has recommended that the first drawdown be used to create a special fund targeted at MSMEs to deliver loans at less than five per cent interest rates.

Shaw had earlier said that discussions are under way with the Development Bank of Jamaica on how to make the funds available to the sector.