The Guyana Bank for Trade and Industry (GBTI) will soon unveil a US$5 million credit facility that will allow local businesses to import commodities from almost anywhere in the world with backing from the World Bank’s private sector arm, the International Finance Corporation (IFC). CEO John Tracey made the disclosure on Wednesday at the commissioning of the bank’s Diamond branch on the East Bank Demerara saying a trade finance facility will be launched on January 24. He said the facility was extended to the bank after months of rigorous scrutiny of its systems and balance sheet this year by the IFC.
“[They] informed us earlier this month that they would guarantee a line of credit for us … for the establishment of letters of credit through over 200 banks in over 100 countries. The launching of this facility is to be followed by a seminar conducted by trade experts of the IFC on how full advantage could be taken by Guyanese businesses of this facility,” he said.
Speaking to reporters after the ceremony, Tracey explained that local banks usually have to put up cash for lines of credit on behalf of their customers because they do no have credit ratings with the large US banks and this causes constraints for locals. “With this line of credit it broadens the scope for us; this is a US$5 million revolving line of credit at very cheap rates charged by the IFC. All letters of credit established by GBTI through this line will be backed by the IFC so we don’t have to put up cash collateral; the IFC is guaranteeing payment to the extent of US$5 million.” The revolving fund will run for two years and Tracey said that there is a promise that the amount could be increased. “It’s a question of usage, they didn’t want to commit $10 million and then we don’t use it so they’re committing an amount which if we use up and it goes well it will be increased,” Tracey stated.
He added that the facility is open to all businesses and individuals looking to import items with no collateral necessary. Tracey noted that commissions will be paid on the credit instead of interest with the rate being about .25 of a percent compared the current to 1% and 1.5% being charged.
The CEO said that while the bank has not met all of the IFC’s benchmarks for the facility they believe this could be achieved with a little more work and they have agreed to go ahead. Meanwhile, Private Sector Chairman Ramesh Dookhoo told Stabroek News he believes the facility is an excellent move and he hopes that it is successful. He pointed out that the IFC had approached the private sector directly before but the minimum limit of funds being offered was too large for the local businesses to take on.
With the involvement of GBTI he said it would give local companies working capital and could be very useful. He added that the facility would allow the bank to make a decent profit and hopefully offer attractive rates to the business community. Dookhoo referred specifically to the value-added sector saying they should be able to capitalise on the preferential rates.
