Social Development

An overhead view of a section of New Kingston in Jamaica (File photo)

Jamaica improves financial inclusion ranking; DomRep and T&T decline

An overhead view of a section of New Kingston in Jamaica (File photo)

Jamaica improved its ranking to 24th in the Global Microscope 2020 — a report that assesses the enabling environment for financial inclusion across five categories and 55 countries — when compared to last year’s index.

At the same time, the Dominican Republic (31st) and Trinidad and Tobago (34th) fell six places and three places, respectively, in this year’s index; while Haiti’s rank (51st) remained unchanged.

With the theme ‘The role of financial inclusion in the Covid-19 response’, the 2020 installation of the Global Microscope report assessed countries based on five categories: Government and Policy Support, Stability and Integrity, Products and Outlets, Consumer Protection, and Infrastructure.

At the top of the index were Colombia, Peru and Uruguay while Venezuela, Sierra Leone and the Democratic Republic of Congo completed the list.

Highlights by country

  • How did the country’s financial authorities respond to the COVID-19 crisis?

The central bank led a liquidity injection to ensure uninterrupted liquidity across the system, and removed overnight borrowing limits for deposit-taking institutions. The Government has also encouraged banks to postpone dividend payments and to reschedule loans and mortgages, in addition to the cuts to mortgage rates announced by the National Housing Trust. The Development Bank of Jamaica announced a six-month moratorium on loan principal repayment for MFIs in its portfolio. Finally, the Bank of Jamaica has sold a limited amount of reserves via the B-FXITT auction mechanism, issued US dollar–linked notes, and repos of FX-denominated Government of Jamaica bonds with banks and securities dealers.

The National Housing Trust in Jamaica (File photo)
  • Financial inclusion measures

Jamaica’s social and economic support programme, the CARE programme, has provided targeted relief. The programme provides cash transfers to those who were either unemployed or informally employed before the pandemic, provides temporary unemployment benefits to those who have
been laid off or terminated since the pandemic, and provides grants to self-employed individuals.

Cash transfers are paid directly to a beneficiary’s bank account or to a remittance firm of their choice through the programme’s digital platform. The Government of Jamaica is also hoping to fast-track national digital ID adoption, which will increase financial inclusion and ensure direct access to benefits under the CARE programme. The CARE programme provides cash transfers to businesses in
targeted sectors, based on the number of employees; and grants to the most vulnerable segments of society.

Dominican Republic
  • How did the country’s financial authorities respond to the COVID-19 crisis?

The Banco Central de la Republica Dominicana (BCRD) has responded to the COVID-19 crisis by passing a set of measures to reduce interest rates and provide liquidity for financial institutions, with the aim of easing the burden on SMEs. These measures were accompanied by tax breaks for key
sectors such as tourism, as well as extensions on tax declarations and payments for businesses and individuals. The Government has also launched several emergency cash transfer programmes for suspended workers and households, and has subsidised utility payments for vulnerable populations.

Banco Central de la Republica Dominicana (File photo)
  • Financial inclusion measures

Measures passed by the Direccion General de Impuestos Internos (DGII, the tax office) include extensions on tax declarations and payments for businesses and individuals, as well as a simplified tax regime for SMEs. This incorporates waivers on upfront tax payments, which are especially burdensome for SMEs. Liquidity facilities provided by the BCRD are targeted to SMEs, and targeted lending programmes for SMEs have been offered via commercial banks. The BCRD is also constituting a mutual guarantee fund to benefit SMEs, but it is not yet operative. Financial measures introduced in response to the pandemic are available to smaller credit and savings banks, which are financial providers for the poor. However, they exclude credit co-operatives, which serve the bulk of
the poor population.

Trinidad and Tobago
  • How did the country’s financial authorities respond to the COVID-19 crisis?

Trinidad and Tobago’s Government announced various macroeconomic stabilisation policy measures as part of its pandemic response. On March 17 the central bank reduced the reserve requirement for commercial banks from 5.0% to 3.5% to increase banking system liquidity. Commercial banks
have reduced the lending rate by 1.5 percentage points and have agreed to provide a one-month moratorium on mortgages and instalment loan payments.

  • Financial measures

At the end of March 2020, Trinidad and Tobago’s Government unveiled a stimulus package to mitigate the pandemic’s fiscal effects. The package includes measures such as the Salary Relief Grant, which provides access to $1,500 per month over three months to citizens who have lost income due to the pandemic. The government also announced a programme to provide $100 million to credit unions to offer loans with low interest rates and extended repayment periods, and to provide liquidity support to individuals and small businesses in need of loan assistance.

Prime Minister of Trinidad and Tobago Dr Keith Rowley (File photo)
  • How did the country’s financial authorities respond to the COVID-19 crisis?

Since March 2020 financial authorities in Haiti have implemented measures in response to the COVID-19 pandemic. The central bank lowered refinance and reference rates, increased access to credit, lowered reserve requirements on domestic currency deposits, and eased loan repayment
obligations for banks for an initial three-month period. From March 23 to June 30 the central bank also suspended fees for the country’s interbank payment system. The Banque Nationale de Crédit, the largest financial institution in Haiti, has approved loan facilities for at least one MFI, FINCA Haiti.

FINCA Haiti (File photo)

Other noteworthy mentions

The Global Microscope 2020 praised the Dominican Republic, among other countries for implementing comprehensive legal to investigate and prosecute cybercrime. In addition, the Spanish-speaking country was among those highlighted for investment in digital infrastructure.

Jamaica, too, received commendations for strengthening the digital financial services ecosystem. In particular, the island-nation’s Government approved a new Data Protection Act that provides a comprehensive legal framework and guidelines on how personal data should be collected, used, processed, stored, and disclosed.