Senator Don Wehby says the system will now be flush with foreign exchange. - File

Government officials sent strong signals to the market this week that there was an adequate level of foreign exchange available in the foreign exchange market, enough to satisfy demand and ease pressures on the local currency according to Senator Don Wehby.

His assurance on Wednesday night came on the same day that the dollar rose as high as $85.50 in in intra-day spot trading, to settle at $84.15 at market close.

"When I add the numbers the amount of US currency that is going to be in the system very shortly, there will be more than enough to satisfy the needs of all concerned," said Wehby, minister without portfolio in the Finance Ministry, at the monthly Mayberry Investor Forum.

"I really feel that despite the crisis, this amount will actually help to stabilise the foreign exchange market and I would not be surprised if I see a revaluation of the Jamaican dollar."

Wehby also told the forum thatthe Government has secured the funds to repay the euro200 million loan due on February 9, 2009, and that the US$600 million of external funding that was needed to finance the budget is now fully secured.

The money was sourced as follows:

US$350 million raised in June 2008 on the international capital markets.

US$100 million from the World Bank;

US$33 million from the Caribbean Development Bank; and

US$60 million available out of the US$120 million that was disbursed by the Inter-American Development Bank (IDB) in three policy-based loans signed late last year.

The government is also to conclude negotiations next week for a US$100 million loan facility with the Bank of Nova Scotia.

Webhy has indicated that the interest rate on the World Bank loan is under three per cent, while the rates on the CDB and IDB loans are around five per cent.

The details of the Scotiabank loan are still being finalised.

In terms of the US$300 million liquidity support facility which was signed on Monday by Prime Minister Bruce Golding and IDB president Luis Alberto Moreno, those funds are already in the island and in the possession of the IDB's Country Office. IDB Country Representative Gerard Johnson, tells the Financial Gleaner that he is awaiting the actual request from the GOJ for the funds to be disbursed, along with the schedule for disbursement to the Development Bank of Jamaica for onlending to the commercial banks.

The government and the banks are still haggling over the spread at which the loans will reach the productive sector.

The liquidity support facility is a special loan window that was created in November 2008 by the IDB to assist private sector entities throughout Latin America and the Caribbean who have had their lines of credit with their overseas suppliers and banks cut as a result of the international financial crisis.

Jamaica is one of the first countries in the region, along with Costa Rica and El Salvador, to access this facility.

The funds are being channelled through the Government in order to make the IDB lending rate available to the Jamaica financial system.

There is no GOJ guarantee involved, and so the funds do not represent a net increase in Jamaica's public debt position.

The banks will be required to offer up collateral to the DBJ, hence their insistence on negotiating a wider spread in loans to end users than the three per cent cap that the DBJ policy now allows.

"Commercial banks are going to have to fully collateralise their borrowings of these funds by pledging US dollar GOJ securities to the DBJ," said Senator Mark Golding, opposition spokesman on industry and commerce, who raised the issue as a red flag

"This is most unusual, as DBJ customarily provides funding to commercial banks on an unsecured