Guyana mulls development bank, deep-water port

Last Updated on Friday, 6 December 2024, 21:21 by Writer

Vice President Bharrat Jagdeo addressing the Guyana Manufacturing and Services Association’s 2024 awards ceremony.

The Guyana government might re-establish a development bank between 2025 and 2030 and co-invest in the construction of a deep-water port, Vice President Bharrat Jagdeo announced Thursday.

He told the Guyana Manufacturing and Services Association’s (GMSA) annual awards ceremony that the planned financial institution would offer financing for small- and medium-sized businesses. “At some point in time, we may return to provide some sort of financing for small- and medium-scale businesses at competitive rates. Possibly in the next PPP (People’s Progressive Party) term in office, we may get to that,” he said.

The state-owned Guyana Cooperative Agricultural and Industrial Development Bank (GAIBANK), the country’s lone development bank, was closed in 1995 because it was rendered bankrupt even after it was merged by the Guyana National Cooperative Bank (GNCB).

Mr Jagdeo said Guyana’s experience with public sector intermediated financing has been a “bad one”.

When the PPP came to office in 1992, the state was either a shareholder or controlling interests in eight financial institutions. “They were all tottering on the verge of bankruptcy and we had to exit all of them without recourse to the Treasury,” said Mr Jagdeo, a former Junior and Senior Finance Minister in the 1990s.

Against that background, he said the Guyana government was “very cautious” about investing in financial institutions “but at some stage we may have to do it particularly to support small- and medium-scale businesses.

In 2019, the then A Partnership for National Unity+Alliance For Change (APNU+AFC) administration had also said it would have reestablished a development bank, a move that had been welcomed by the then Chairman of the Private Sector Commission (PSC) Retired Major General Norman McLean.

Meanwhile, he said major international banks were not interested in setting up retail operations in Guyana and so the law would be amended to allow them to establish representative offices here to have access to their services instead of retail banking. For instance, he said Citibank informed the Guyana government that it had already sold out its operations in the Caribbean and Latin America and was planning to do likewise in Mexico. “This is part of the big institutions’ move to de-risk,” he said.

Still on access to finance, he said the relevant legislation would be amended to allow commercial banks to use moveable collateral to make loans and so make way for more people to have access to financing.

Deep-water Port

The Vice President also told the GMSA Awards ceremony that government would be co-investing in the construction of a US$1 billion deep-water port. He said the private sector alone might not want to invest in such a facility, but when completed that would reduce the cost of imports and exports because of the movement of larger volumes.

“In future, if the investment can’t stand on its own, that’s the internal rate of return does not justify it, there will have to be government co-investment to make this a feasible project because the long-term future of Guyana demands, not just requires, but demands a deep-water port,” he said.

Mr Jagdeo attributed the delay in getting that project off the ground to the need to get a “solid stream” of revenue instead of Guyana’s “routine” exports and imports to repay the debts associated with its construction. In that regard, he said government hoped that revenue would come from cargo to and from northern Brazil when the Lethem-Georgetown road is completed. Other revenue streams, he said, would be making Guyana a hub to transship back to the Caribbean and increased hydrocarbon activities especially in the area of natural gas.

He also said Guyana would not have to rely on the transiting of goods through Trinidad or Jamaica. The GMSA recently expressed concern about the delay in the arrival of supplies to Guyana because of industrial unrest by Port Authority workers in Trinidad and Tobago. “The solution would be the deep-water port,” Mr Jagdeo said.