PARLIAMENT HAS approved a Government guarantee on a US$75 million loan to the National Road Operating and Construction Company Limited (NROCC) from the United States-based Wachovia Bank.
The loan will be used to help in financing phase I of the Highway 2000 project.
"In support of the loan from Wachovia, NROCC, which obviously does not have the balance sheet to justify such a loan on its own, needs a Government of Jamaica (GOJ) guarantee as security," Dr. Omar Davies, Minister of Finance and Planning, said while tabling the accompanying ministry paper in the House of Representatives on Tuesday.
Despite supporting the move, Audley Shaw, the Opposition spokesman on finance, said that the 6.2 per cent interest rate on the loan was "not a good deal."
"I want to make the point, it is customary that on major infrastructure projects like the Highway 2000 project, that the objective has to be that we get loans at the lowest possible rate of interest," Mr. Shaw said.
"If I had seen an interest rate of between three and four per cent, I think that would be a rate that is more in keeping with what is usually applicable to long term projects of this nature."
But the Finance Minister suggested that the initial loan proposal had included a higher interest rate.
"Whilst we too would prefer lower interest rates domestically and internationally, the Wachovia proposal still remains an attractive instrument," he added.
The House had previously issued another guarantee in January of last year, for a US$40 million loan for interim financing from ABN AMRO Bank, NV, to NROCC.
