Guyana is on the cusp of seeing an influx of non-depository financial institutions entering the local market, with Vice President Bharrat Jagdeo saying that the Government is currently reviewing applications from several merchant banks.
During the Guyana Manufacturing and Services Association (GMSA) dinner on Tuesday evening, Jagdeo, who was the feature speaker, said more and more merchant banks are stepping up to seek approval for their applications, considering the aggressive need for financing.
“How do we get a greater flow of financing to people who already have contracts to the oil and gas companies or the first-tier contracts? We’re looking at (meeting) with the bankers. We may need to even change the bank supervision rules. But if the current commercial banks are not fit for purpose or are not aggressive enough.”
“We’ve already licensed one new commercial bank. And we have applications for several merchant banks now, that will specialise in discounted invoices and even providing some limited financing based on contracts signed with the multilateral companies here,” he said.
Jagdeo made no bones about the Government’s intentions to be very liberal with financing non-depository institutions. As such, he noted that Guyana would be seeing several new institutions of that nature in the next few years.
It had been reported earlier this year that Finance Professor Floyd Haynes, who was a contributor to the Local Content Panel that came up with the Local Content Policy, would be launching a merchant bank of his own… subject to regulatory approvals.
With the growth of the economy, there has been an increase in the demand for financing.
In fact, this very thing was alluded to by GMSA President Rafeek Khan during the GMSA dinner. According to Khan, he has been informed that there has been an eight per cent increase in lending from commercial banks.
The World Bank had estimated earlier this year that Guyana’s 2023 economic growth rate would be over 34 per cent. According to their semi-annual report for the LAC called “Consolidating the Recovery; Seizing Green Growth Opportunities”, which was released in April, the World Bank projects that Guyana will register a Gross Domestic Product (GDP) growth rate of 34.3 per cent in 2023.
This rate of growth is actually the most in the LAC region and the only one in double figures. The second highest growth rate projected for next year is St Vincent and the Grenadines, at 7.3 per cent.
When it comes to the forecast for 2022, the World Bank in its report had projected an economic growth rate of 47.9 per cent for Guyana. In this case, only Barbados, with a projected growth rate of 11.2 per cent for 2022, crosses over into double figures.
In the World Bank’s “Global Economic Prospects” report from January 2022, it was projected that Guyana will register growth of some 25 per cent for 2023. This was an improvement on the previously predicted 23 per cent.
The World Bank’s economic growth projection for Guyana marks it as the only country within the LAC with growth figures to cross into double figures, once again highlighting the importance of oil exploration to the economy.
Since these projections, however, the Government through the Senior Minister with responsibility for Finance in the Office of the President, Dr Ashni Singh, has actually upped the growth projections.
While addressing the Guyana-Saudi Arabia Investment Engagement that was held in the dome of the Arthur Chung Conference Centre (ACCC) on Saturday, Singh had revealed that the projected growth for Guyana is now at 57.8 per cent. According to him, Guyana’s economic growth will outperform both regional and global averages.