Gov’t crafting modern, stable financial system – President Ali

President, Dr Mohamed Irfaan Ali on Thursday outlined several elements of the government’s transformational plan for the cultivation of a modern, competitive economy.

The president was at the time speaking at a press engagement at State House.

The president said that a key facet of this commitment is the stability of the financial system, and the improvement of its ability to align with global standards and regulations.

“There are a number of areas that are critical to the development of this modern infrastructure that we want to build here in Guyana…[the] digitisation of our economy, the speed and efficiency of which we can process transactions, the efficiency of the public service, the openness and transparency of the system, developing a system that is rule-based, [and] systemic in nature, one that removes human biases, and one that ensures there’s predictability in everything we do. That is what modernisation is about,” the president said.

The president acknowledged the litany of legislative reforms that the government is spearheading, and on Thursday, he sought to flesh out the impact that these reforms have on the country’s economy.

Detailing several indicators that depict the stability and wellness of Guyana’s financial system, President Ali disclosed that credit to the private sector grew from $259.9 billion in 2020 to $376 billion in 2023, representing a 44.7 per cent increase.

“What that tells us is that there is expansion in the private sector, that there is trust in the policy framework of the country, and that there is confidence in the private sector and by the private sector in investing in Guyana,” the president pointed out.

He further explained that, in addition to strengthening domestic systems, the government has been keen on fostering international partnerships. As an example, he pointed to the significant contributions of IDB-Invest, the private sector arm of the Inter-American Development Bank, to Guyana’s private sector growth.

Since 2020, IDB-Invest has authorised 14 transactions in Guyana, reflecting a $173 million investment, and targeting a range of sectors, including hospitality, education, and oil and gas.

“Now this is important because one may say that the investment might be totally around oil and gas, but what we are seeing is the diversified nature of the investment from IDB Invest,” he pointed out.

The president later said, “This confidence comes when people have, when investors and institutions have confidence in the system you’re building, in the way in which you’re approaching the development of your economy.”

Capitalising on this momentum, the government will implement a series of measures to modernize its legislative, regulatory, and policy infrastructure, fostering a more competitive environment.

Along this vein, the Financial Institutions Act (FIA) will be updated to modernise the banking sector and align it with international banking standards.

Building on its successful support for micro, small, and medium-sized enterprises (MSMEs), the government plans further investments to strengthen this crucial demographic. Additionally, they aim to generate wealth at the community level through initiatives like housing developments and increased employment opportunities.

“What we have seen since the re-energising of the housing program here from 2020 is the low-income mortgage ceiling has increased from $8 million to $20 million, which means that the same special conditions that were attached to $8 million loans are those special conditions that are attached to $20 million loans now,” he said.

This commitment to increasing the spending power of Guyanese has prompted notable reductions in non-performing loans.

“Non-performing loans, which peaked at 32.9 billion in 2020, reduced by 59 percent to 13.4 billion at the end of 2023. That is as a result of some financial planning…the strength of our financial system, the viability of our financial system, and the results of the targeted policies we are introducing,” the president underscored.

Other interventions, such as the operationalisation of the National Payment System and the establishment of a revolving fund for the forestry sector have been part and parcel of the government’s plan to ensure that Guyana’s financial system is on solid footing.