If re-elected, President Donald Ramotar says that more commercial banking licences will be awarded as his government will begin its search for reputable banks to open operations here.
“My intention is to issue more commercial banking licences in the future once I am re-elected again,” Ramotar told attendees at the Guyana Manufacturing and Services Association (GMSA) business luncheon yesterday. The event, held at the newly-opened Marriott Hotel in Kingston, saw attendees from the business community and diplomatic corps among others.
Ramotar explained that since the 1990s, his government has not awarded any commercial banking licences because of the small economy. “The size of our economy was very small at that time and it was a conscious decision at that time not to balkanize the small market we had and that is why we didn’t give any more banking licence since the 1990s,” he posited.
Explaining his new stance, Ramotar said: “I think that is important because I feel that even though the banking sector has done extremely well and they work very closely with us on many projects, I still detect some amount of conservatism in them and I think this giving more licences to more reputable banks…will help greatly the private sector because by stimulating more competition in this area I expect that the interest rate trends will come down considerably to the benefit of the private sector, in that regard.”
This in turn, he believes, will filter down positively to the populace especially those seeking loans and small business investments.
He said that his government will also try to catalyze development-type finances and will be using more fiscal measures as he believes that this is more purposeful and would have a greater positive impact for “the small man.” Ramotar ruled out, in the immediate future, government establishing specialized types of lending institutions as he lamented that the bureaucratic processes to get one such institution up and running can be overwhelming.
“We will be using more fiscal measures that we…believe can serve the same purpose until we are able to establish the specialized type of institutions,” he said.
Ramotar cited examples of such fiscal measures pointing to the arrangement with local banks to offer low interest financing for first time home owners. In addition, he cited the Women of Worth (WOW) small loans entrepreneurial programme where women, especially single mothers, can borrow monies at minimal interest rates and invest in an entrepreneurial venture of their choice.
“We would like to expand that experience into other sectors and we hope that we can do that with other sectors to stimulate small and medium-sized enterprises to grow…that will help to stimulate more business and help to sustain the growth,” the president said.
Questioned by an attendee on why he does not envisage partnering with institutions such as the Institute of Private Enterprise Development (IPED) to expand their programme as they already have a far reach instead of having new financial institutions established, Ramotar said that he believed IPED’s interest rates are still too high.
The businessman also recommended that much more be done by government to reduce risk as that is the main factor that drives the rate of interest in lending so that the “poorest of the poor” can access needed revenue.
The president reiterated that plans are on stream to pull from the experience garnered through the banks’ housing loans and WOW programmes, channeling them to other areas. “I will use the experience to spread it into other sectors…to help them have cheaper financing to develop their products” around the country and hinterland areas, he said.
“IPED doing a good job but I still think their interest rates are far too high. The government has been responsible for lending and giving money in the early days.
They have considerable reach but the main thing is to make the finance to micro and small businesses small and affordable,” he added.
Ramotar also discussed the importance of alternative energy and his commitment to having the Amaila Falls Hydropower Project back on stream by year end, tourism development, building a deep water harbour in Berbice and maintaining stable inflation and exchange rates among other plans.
