Gov't tables 3rd Supplementary Estimates, debates Microcredit Bill tomorrow

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Gov't tables 3rd Supplementary Estimates, debates Microcredit Bill tomorrow

Monday, January 18, 2021

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KINGSTON, Jamaica — Minister of Finance and the Public Service, Dr Nigel Clarke, is expected to table the third supplementary estimates for 2020/21 tomorrow, when the House of Representatives resumes sitting.

The 2020/21 Budget (estimates of expenditure) was approved in February 2020, with expenditures set at $853.5 billion. However, by May, the Government was forced to table its first supplementary budget, which slashed spending to $838.1 billion.

The capital budget was slashed by 38 per cent, from $76.2 billion to $46.1 billion, amid a projected 5.1 per cent decline in GDP, and an 18 per cent decline in revenues. The primary surplus target was revised down to 3.5 per cent and the debt ratio projected to increase to 98 of GDP.

A secondary supplementary budget was passed in October, proposing an overall additional expenditure of $15.7 billion to generate total expenditure of $853.7 billion.

Dr Clarke explained that the continued impact of the coronavirus (COVID-19) pandemic had created the need for additional expenditure, in areas such as health, social welfare, education and the economy.

On another matter, the House is also likely to take the newly tabled Microcredit Bill through all its stages tomorrow, ensuring that it goes to the Senate this week to meet a deadline for passage by the end of March.

The proposals for legislative control of the micro financing sector dates back to 2012, preceding the tabling of the first Bill, the Micro Credit Act 2013. The Bill, which seeks to impose new regulations on micro finance institutions (MFIs), has straddled three consecutive administrations as both the 2013 and 2019 versions were eventually withdrawn.

The 2019 version, which was tabled by the minister, was also severely criticised by the sector, leading to lengthy discussions between the finance minister and the stakeholders and resulted in the 2020 version of the Bill being readied to be tabled today.

The Bill notes that over the last two decades, there has been a proliferation of privately-owned money lending institutions which have sought to satisfy the demand for funding of micro, small and medium-sized enterprises.

“The Government appreciates the importance of these institutions, as having access to financing is critical to alleviating poverty and facilitating growth in the economy. However, the significant increase in these institutions has presented new challenges to conventional regulation especially due to their lending modalities which do not easily fit into existing legal and company structures,” the Bill noted.

It says that there has also been a steady increase in requests from these institutions for exemption from the provisions of the Moneylending Act, which provides some protection and recourse for borrowers.

“Therefore, over time, issues have emerged which have led to the recognition that there is a need for the introduction of a regime to regulate privately-owned money lending institutions (“microcredit institutions”) which provide funding for micro, small and medium sized enterprises,” it added.

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