JAMAICA | Opposition Takes Aim at Banking Monopoly, Promises Shake-up of Government Deposits

KINGSTON, Jamaica, March 14, 2025 - In a bold challenge to Jamaica's banking establishment, Opposition Spokesman on Finance Julian Robinson has declared war on high interest rates, vowing to end the stranglehold that two major banks have on government funds. 

The People's National Party (PNP) plans to redistribute an estimated $150 billion in public sector deposits currently held by Scotiabank and National Commercial Bank (NCB) to smaller financial institutions.

"We are going to open up government deposits to all banks using a competitive system," Robinson declared during his contribution to the Budget Debate in Parliament on Thursday, taking direct aim at what he described as a "duopoly" that controls approximately 70% of the consumer banking market.

The shadow finance minister painted a picture of a broken monetary transmission system, where the Bank of Jamaica's recent policy rate reductions have fallen on deaf ears in the commercial banking sector. 

Despite the central bank lowering its key policy rate by 100 basis points since August 2024, bringing it to 6%, commercial banks have stubbornly refused to pass these savings on to consumers and businesses.

"Despite this clear signal from the central bank, we have seen virtually no movement from commercial banks in reducing lending rates where they can," Robinson said, highlighting what he termed "a serious problem with Jamaica's monetary transmission mechanism."

According to data presented by Robinson, Jamaica's eight commercial banks collectively hold $1.83 trillion in deposits as of December 31 last year. 

Of this vast sum, approximately $149.28 billion belongs to various government entities—$78.16 billion from central government, $2.87 billion from local government, and $68.25 billion from other government bodies.

This concentration of public funds represents roughly 10% of all deposits across deposit-taking institutions, money that Robinson argues two banks "hold effortlessly, using it to fund their lending activities, without needing to compete for these deposits."

The opposition's three-pronged strategy aims to fundamentally reshape banking competition in Jamaica. By allowing smaller banks access to government deposits, Robinson contends they will have "more lower cost funds" to expand lending and compete more aggressively on rates.

But the PNP's banking reform agenda doesn't stop there. In a surprising pivot, Robinson also committed to phasing out the asset tax on banks over five years—a tax originally introduced by the PNP under former Finance Minister Dr. Peter Phillips.

"It was never meant to be permanent," Robinson explained. "It was a temporary measure, implemented to increase government revenues so that Jamaica could meet the strict conditions of the IMF programme."

This olive branch to the banking sector comes with strings attached, however. Robinson made it clear that banks would need to "meet us halfway" by addressing what he called "exorbitant bank fees." 

The opposition plans to resurrect Fitz Jackson's private member's bill to regulate banking fees, which was previously voted down by the government.

"Every single one of them voted against it," Robinson reminded Parliament, drawing a clear battle line between the parties on consumer banking issues.

Beyond banking reform, Robinson's vision extended to transforming Jamaica's economic model itself, shifting focus toward export-led growth. "Jamaica will never become wealthy by selling to three million people," he argued, calling for greater emphasis on value-added exports that capitalize on the country's creativity, intellectual capital, and natural resources.

"We must actively work towards being known for excellence in products that are 'Made in Jamaica' and command premium prices on the international market, not just for offering cheap labour," 

Robinson concluded, challenging the government's celebration of achieving a 60% debt-to-GDP ratio as insufficient for creating a truly competitive economy.

With these proposals, the opposition has thrown down the gauntlet on economic policy, presenting voters with a clear alternative vision for Jamaica's financial future—one that promises to challenge entrenched banking interests while pushing toward a more export-oriented, high-value economy.

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