BOM supports SME planters in sugar sector with special line of credit
In order to alleviate the burden of high cost of bank borrowing imposed on small and medium planters, in line with the advice of BOM, the Mauritius Sugar Syndicate took recourse to banks and obtained the required funds at a rate of interest similar to what it paid to the BOM, at 3.5%.(Image:ipsnews.net)
In 2010, the Bank of Mauritius (BOM) made available a special line of credit to the Mauritius Sugar Syndicate (MSS) for upfront payment of 80% of the sugar proceeds of small and medium planters for crop year 2010.
This special line of credit was put in place to alleviate the burden of high cost of bank borrowing that is imposed on small and medium planters.
An amount of Rs 1.5 billion was made available to banks at 3.00% for on-lending to small and medium planters at 3.5%.
The line of credit was subsequently renewed, under the same terms and conditions, except that the amounts for 2012, 2013 and 2014 were reduced to Rs 1.3 billion, Rs 1.2 billion and Rs 1.0 billion, respectively.
The Ministry of Finance and Economic Development made a request to the BOM on 1 June 2015 to renew the line of credit to small and medium planters in the sugar sector.
The BOM then advised the Ministry that it would be in the best interests of small and medium planters to borrow from banks since interest rates have declined significantly.
In fact, following the BOM’s advice, the MSS has had recourse to banks and obtained required funds at a rate of interest similar to what it paid to the BOM in previous years.
Finally, the BOM want also wishes to point out that an amount of Rs 3.5 billion was provided as ‘bridge finance’ to the National Property Fund Ltd at a relatively higher rate of 3.75%.