The PPP/C Administration is re-examining the granting of new licences to several commercial banks, as part of a menu of reforms to widen the local financial sector.
Vice President, Dr. Bharrat Jagdeo made this statement while engaging members of the business community at a Private Sector Commission (PSC) event.
According to a report from the Department of Public Information (DPI), Dr. Jagdeo said the Region is losing corresponding banking relations, as large financial institutions pull out from the market. Government has taken note of this trend and has begun to take steps to bolster the local financial sector.
The Administration is examining ways of capitalising on the opportunities that are currently available through the petroleum sector and the presence of large companies such as ExxonMobil.
Dr. Jagdeo said one option is using “their presence to at least stem the haemorrhage of our institutions of corresponding banking relations.”
Part of the Local Content Policy hopefully, will deal with having more of the payments flowing through our banking system from the large companies that are here.”
The Vice President expressed hope that this approach would also attract the larger financial institutions to maintain relations with local banks and increase their presence in Guyana.
The Government is working on rolling out a strategy aimed at meeting this objective. VP Jagdeo referenced the PPP/C Administration’s efforts prior to 2015 to restrict the number of commercial banks operating here. That conservative approach to financial sector liberalisation, Dr. Jagdeo said, was due to the bankrupting of eight state-owned financial institutions.
“We did not want to go down the route of Jamaica…because they did not sequence financial reforms carefully and they Balkanised their banking system, that eventually you had massive bank failures and it caused their treasury something like US$3 billion.”
However, Dr. Jagdeo believes the market has since grown and stabilised, hence the move to grant more licences to commercial banks, several of which are showing increased interest in operations here.
“Financial sector reform is crucial to underpin the growth and to get the local private sector having to get their projects financed at a competitive rate,” the Vice President said.
The Government would also be licensing non-deposit-taking institutions, which will bring in additional capital, without putting local savings at risk.