Financial Institutions (Amendment) Bill 2018 passed

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Opposition Member of Parliament, Irfaan Ali

Despite Opposition highlights issues in the economy

During their contribution to the debate regarding the Financial Institutions (Amendment) Bill 2018 in the National Assembly on Thursday evening, the Parliamentary Opposition bluntly criticised Government for what they deem as its maladministration of Guyana’s economy.

People’s Progressive Party Member, Irfaan Ali provided the House with an outline of significant threats faced locally, and offered a comparison of financial statistics to highlight how poorly the current Government has performed compared to the years when the Opposition was in office.

“The economy if not going in the right direction, and figures show from the Bank of Guyana (BoG). We need to strike the balance, and if we don’t, then no law would be able to help us through the crisis we are going through now,” the MP said, noting that things can get much worse than they are now.

Ali, an economist by profession, explained that the BoG profit declined from $5.1 billion in 2014 to $3.7 billion in 2018. In the meantime, gold reserves declined from $27 billion in 2014 to $3.2 billion in June 2018. Market securities, on the other hand, moved from $96.8 billion to $85 billion as of May, 2018. International reserves were US$652 million in 2015, and they now stand at US$485 million.

At this point, Speaker of the National Assembly, Dr Barton Scotland, asked the MP to focus his debate on the bill itself, and not to stray away too much from it.

However, an adamant Ali maintained that it would not make any sense to the general public if he doesn’t take the time to explain the state of the economy, when the bill itself has a lot to do with what is taking place in the financial sector.

The former Government minister also argued that the economy is heading into bankruptcy, and people will likely suffer from this.

His colleague, Joseph Hamilton, also raised several concerns with the amended bill, stating that Government should explain the cost that comes with implementation of the provisions within the bill.

He said this would be equally important to banks, financial institutions and citizens.

In response, Finance Minister Winston Jordan asserted that amended bill is a continuation of work which was started by the Opposition when they were in Government.

“I don’t know why they have gone down the path they have gone through. As far back as 1995, this was a development credit agreement that was signed on January 1995…US$4 million. I don’t know where the $35 million came from—I didn’t speak of it,” he said.

The Minister also stated that, since 1995, there have been talks about strengthening the banking sector. He told the National Assembly also, “Strengthening of BoG through regulations, directives to carry out supervisory activities…the trend continued through the 1990s.”

He continued, “They are called credits, but they are loans, soft pay back, 1 per cent and so on. Another development credit, private sector, June 21, 1995 about US$13 million. The argument is being made, ‘where did these bills come from? These bills didn’t fall out of the sky, they have a history.

“Recommendations were made to improve the resolution and potential oversight of the bank. Fourteen years passed and nothing was done. We come today having to do the work that should have been done 14 years ago. Now, Mr. Speaker, if you catch a cold, and you do nothing about it, 6 months after, when it turns pneumonia, you can’t drink apneic.”

The Financial Institutions (Amendment) Bill 2018 seeks to amend four sections of the Act while repealing another four sections.

It notes that the inadequacies of the existing bank insolvency regime do not distinguish between corporate failures and banking failures, as both are subject to a form of commercial insolvency law, and in a number of respects, the commercial insolvency law model is ill-suited to deal with the failure of banks.

It states that the corporate insolvency model uses judicial instead of administrative proceedings, with all the attendant delays.

Despite the Opposition’s arguments, the bill was unanimously passed in Parliament.

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