…billions of dollars worth of offshore securities purchased
Some big names in the local banking sector have been increasing their offshore investments over the past year, partly through their purchase of debt instruments— a trend one economist said is a potential indicator of the lack of confidence in the local economy.
In the case of one particular bank, its investment in securities, including Government of Guyana treasury bills, increased by over $1 billion. According to data gleaned from the bank’s financials, its investments in the other’s category jumped by over 50 per cent.
The bank’s total assets showed billions of dollars in increases. Its investments in securities were cited as one reason for the increase. Another bank, however, saw its investment securities jump by over a billion between 2017 and 2018, associated with the very same reason.
Factors cited by the banks in their report include political instability— which one bank noted has affected the economic activity that was being generated. According to the bank, this has led many of its debtors to miss installments.
The state of the economy has been cited by some for the Bank of Baroda to sell its operations. They made that announcement last year, weeks after Scotiabank itself announced it was pulling out its operations in Guyana and several other Caribbean countries.
At the time it made its announcement, the Bank of Baroda had said that it wanted to focus on its key countries, such as the United States and the United Kingdom. However, the bank has since reversed its decision to pull out.
There has also been a general economic downturn among the major sectors, evidenced in the Bank of Guyana’s first quarter statistical bulletin. In the bulletin, it showed that sugar experienced a major decline of 34.3 per cent, owing to the restructuring process the Guyana Sugar Corporation (GuySuCo) is undergoing.
On the other hand, the decline of rice output by 9.3 per cent was attributed to rice bug infestation and the increased costs of production. The mining and quarrying sectors exhibited lower production. According to the bulletin, there was a 4.9 per cent decline in gold declarations.
Since the No-Confidence Motion was passed against the Government last year, the political climate has not improved attributable to the fact that the elections that were supposed to have been held never occurred. Instead, the Government went through several levels of court, unsuccessfully arguing that the No-Confidence Motion was not validly passed.
Article 106 (6) of the Constitution states: “The Cabinet including the President shall resign if the Government is defeated by the vote of a majority of all the elected members of the National Assembly on a vote of confidence”.
Meanwhile, Article 106 (7) goes on to say: “Notwithstanding its defeat, the Government shall remain in office and shall hold an election within three months, or such longer period as the National Assembly shall by resolution supported by not less than two-thirds of the votes of all the elected members of the National Assembly determine, and shall resign after the President takes the oath of office following the election”.
After the announcement that elections in March 2020 was being considered by GECOM, Private Sector Commission (PSC) Chairman retired Captain Gerry Gouveia had warned that a prolonged caretaker government was not in the best interest of business.
Since then, the Guyana Elections Commission, complete with Chairperson retired Justice Claudette Singh and the six Commissioners, met with the two main political parties. At these meetings, assurances were given that GECOM would seek to hold elections this year.