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Access to finance an impediment to '5 in 4' — Clarke

Finance minister says removal of supply-side constraints will strengthen growth

Observer business reporter

Sunday, September 22, 2019

The challenges of access to finance seem to not only be an issue for small and medium- sized enterprises (SMEs) but one that even Minister of Finance and the Public Service Nigel Clarke dubs an infringement on the prospects for higher growth, especially in the country's objective of attaining its five per cent growth in gross domestic product (GDP) in four years.

Addressing members of the media in a round table talk on Friday at his ministry, Clarke cited access to finance as one of the chief bottlenecks that currently act as an impediment to growth.

He noted that in 2018/ 19 the growth rate was 1.9 per cent, a figure which was higher than the average growth rate in Latin America and the Caribbean. He deems this as commendable as the country for the first time in a very long time was in the top half of growth within the region.

“We all wanted growth to be higher than it has been and we continue to work on the structural bottlenecks that inhibit growth, chief of which is access to finance”.

“The removal of distortionary taxes in the last budget and the removal of the taxes involved in the perfection of security for loans was one step in improving access to finance. There is more that we need to do and we're committed to do what needs to be done in order to improve access to finance,” the minster stated.

He said that an improvement of this will amount to ensuring that SMEs and businesses can get the finance that they need to pursue their entrepreneurial ambitions.

The minister also pointed out that it was important that public bureaucracy be dealth with, as it is another constraint that also disproportionately affects SMEs, taking up a lot of time and unnecessary procedures to secure business approvals.

“We also need to improve the bottlenecks in public administration that make it difficult to obtain licences, permits and approvals and we also need to strengthen the resilience in our agricultural sector,” he argued.

“We have unfortunately been affected by exogenous shocks in that area and those shocks have led to growth outcomes that are less than we would have desired. We are straddled between drought and too much rain and each time that happens it has a negative impact on growth,” the minister outlined.

He offered that though the country is not on a clear-cut path to achieving the growth was projected, fiscal management and growth aspirations remain admirable.

“Over the medium term what we have put forward in this year's budget is that we expect growth of the medium term in the region of two per cent or slightly above that,” Clarke noted.

He said that the country has had a long period of disinvestment; hence the renewed economic activity that it is now seeing, a sign that the economy is once again elevated.

“There is a lot of work to be done and we are focusing on doing that work to enhance the prospects that we have for further growth.

“As we reduce our debt, our growth prospects improve and increase. When our debt was at 145 per cent we had negative growth; we weren't growing at all. As our prospects improve, our credit rating improves; we develop institutions and strengthen institutions that give people confidence in the future. We can then expect to see an even greater acceleration of investment that will lead to further growth,” the minister said.