Even as businesses here lament poor access to funding from local commercial banks, the United Kingdom yesterday announced that it has increased its credit agency lending purse from £750m to £2.1 billion through the UK Export Finance (UKEF), and these sums could be tapped by both government and the private sector.
However, the caveat is that it cannot be used for investments in the oil sector.
“This access to funds that they have here now will assist these companies now to go to them. The good news with this fund is that you can borrow up to a minimum of £1 million,” UK’s Minister for the Americas, David Rutley, yesterday said during the announcement, following meetings with government and the private sector.
He expressed the hope that with the increased risk appetite, it would provide an opportunity to identify and finance future projects vital to Guyana’s development.
Rutley explained that borrowers would also have to satisfy 20% UK local content. “It allows you the flexibility to develop even the resources that aren’t available in the UK. So you can now go outside of the UK and benefit from that fund.”
The UK Minister said that the nearly three-fold increase in funds was demonstrative of the confidence that his country had in government’s management of Guyana’s economy. “It’s also reflective of the confidence that the UK has in the stewardship of the economy of Guyana by the government.”
UKEF’s Regional Head, Camilo Neira, explained that interest rates were not across the board and it would depend on the transaction, sector, borrowing company and the lender bank that would be provided with a UK Treasury Guarantee. “At the end of the day, what we do is that the banks are more able to lower their interest rates and extend the terms of the loan just based on the fact that there is collateral in place; it’s a UK Treasury Guarantee.”
Speaking on behalf of government, Senior Minister in the Office of the President with responsibility for Finance, Dr Ashni Singh, stated that this country was grateful for the increase and that “we certainly intend, at the sovereign level, to explore and pursue every available opportunity to make use of this facility.”
Singh too agreed that the increase “represents a very clear signal of the UK’s confidence in Guyana as a destination for British companies to invest in and a place for British companies to do business with.”
Head of the Private Sector Commission, Komal Singh, who was present yesterday also remarked that it was good news for business owners as the local banks here have a credit risk limit that sometimes is not enough for the investments that are sought.
As such, Singh welcomed the increase while expressing optimism that the private sector will take advantage of the opportunity afforded them.
