-Citizens Bank branch commissioned on Aubrey Barker Road
Speaking at the opening of a new branch of the Citizens Bank at Aubrey Barker Road in the city, President Irfaan Ali yesterday disclosed that the Ministry of Finance has completed the 2024 half year report which shows that Guyana’s GDP has grown an estimated 49.7%.
This year’s budget had projected an annual growth rate of 34.3%.
In delivering the feature address at the bank’s newest location, the President stated, “In the first half of this year, our overall real GDP grew by an estimated 49.7% in 2024. This is a real GDP growth for the first half of this year, a growth of 49.7%. What is impressive is that the non-oil economy continues to grow, and the non-oil economy grew by an estimated 12.6%.”
According to him, the revised full year forecasts for real GDP growth in 2024 is 42.3% and the non-oil economy 11.8%. “Pushing this growth and supporting this growth heavily for almost all the sectors, the sectors that face difficulties early in this year because of the drought conditions and other circumstances, are expected to rebound in the second half of this year and tomorrow morning, I’ll be outlining the strategy that will demonstrate how these sectors will rebound but the construction sector grew by an estimated 43.7%.”
He said that the historical transformation of the banking sector and the growth and development of the banking sector in Guyana is one that needs to be appreciated. “You recall that prior to 1992 Guyana’s financial system was characterized by selective credit allocation and interest rate control. During that period, credit was directed mainly to specific industries and public sector corporations. Financial institutions and markets had deteriorated and, in some cases, failed to develop.”
According to him, a lax accounting system was in place, coupled with poor disclosures and weak surveillance resulting in an unstable financial system with a defective regulatory framework making lending risky, as banks were burdened with unproductive and underperforming or non-performing assets.
Stating that the banking system was essentially used to finance government operations at the expense of the private sector, he said “and this is important, because when one speaks about private sector growth and lending to the private sector, and expansion of the private sector and the realization of that term we always use ‘private sector is the engine of growth’ we must understand where the private sector came from.”
He said that in 1992 when the PPP/Civic assumed office, there was a modest number of financial institutions with a few commercial banks with branches mainly concentrated in Georgetown. “However, after several waves of financial sector reform, the government created the conditions for the growth and expansion of the financial services sector.”
The first wave of reforms he said included the implementation of policies to improve the efficiency and competition of the financial services sector, policies to strengthen the prudential framework and bank supervision, policies to develop and deepen the financial markets and the modernization of the payment system.
Ali said “we also appreciate that the growth of the economy, brings its own challenges, and not only the growth of our economy, we have to understand what is happening with the economy around us.
“Earlier this year we had an exponential growth in demand for foreign currency, exponential, and when we examine the disaggregated demand for that foreign currency, it is unbelievable to see where the growth was coming from and where the demand was coming from.”
To address this, he said that more than US$100 million was released into the banking system from the Central Bank, “and in just a couple of months today, the aggregated demand on the banking system, again, is about more than US$80 million in demand from the banking system as I speak to you right now.”
Adverting again to reforms under the PPP/C , he said “We saw the rapid expansion in deposits of commercial banks, supported by the exponential growth in their loan portfolios, the establishment of two indigenous banks, Citizens Bank and Demerara Bank. And I must say that these two indigenous banks have played an enormous role in the development, transformation and integration of our economy, and I want to applaud Citizens Bank for the role you would have played.”
Further, he stated that the establishment of a stock exchange was noticeable and along with the expansion of bank branches throughout the country there were notable improvements in the payment system.
“We saw tremendous improvement in access to credit for the regular man, and this is demonstrated by the number of homes we see being constructed, small businesses, commercial activity and if you look at the concentration of the loan portfolio of these indigenous banks, you will see that a high degree of resources is allocated to the smaller borrowers.”
To the private sector, he said that it has been able to open up this opportunity to say to Citizens Bank, “that the time is right now for us to have investment bankers and project developers within the banking system to work with the private sector on some of the major projects that require financing, and go to the IDB Invest window, where the opportunities are real and enormous. This is important as we position our banking sector, and as we position our financial sector to participate more fully in the international markets and international opportunities.”
Very soon, he said the Financial Institutions Act will be amended to allow representative offices of international banks to showcase their financial products, which will stimulate foreign direct investment and increase access to credit by local corporate borrowers.
In order to support small businesses, he explained that government signed a $100 million agreement with the Small Business Development Fund (SBDF) incorporated in 2023. Under the agreement, the government will be providing financing at the concessional rate through the SBDF for lending to local, small and micro enterprises in various sectors such as agriculture, retail, trade and manufacturing.
“I want to pause by highlighting the fact that when I was Minister of Housing, Citizens Bank was one of our greatest partners in the low-income housing market. For a matter of fact, when we launched the One Stop Shop, and the one window process of allocation, lending and building Citizens Bank was an integral part of that partnership, and I want to recognize that great partnership that we continue to have but that was brilliant when I was there as Minister of Housing”, he said.
