Amid difficulties encountered by the private sector in accessing much-needed finances, Finance Minister Dr. Ashni Singh on Thursday said the government will soon amend the laws and/or regulations that are hindering local banks from issuing more loans.
The banks, he acknowledged, continue to demand more traditional forms of collateral, such as real estate. But with the increased demand for finances, this dependence brings concerns.
“They are looking for traditional collateral before they lend you…and even then, (they have) a very conservative, risk-averse posture.
“This is not a sector that has not managed to keep [up] with the pace at which things are changing,” Dr. Singh said at the closing panel discussion of the 2023 International Energy Conference and Expo- Guyana held at the Marriott Hotel in Kingston, Georgetown.
With this obvious challenge hindering the ability of locals to invest in their businesses and increase their participation in the growing economy, Dr. Singh said changes are necessary.
In fact, he believes that “iron clad” contracts with companies, such as major international corporations like ExxonMobil, and companies’ receivables should be enough to put up as collateral when seeking a loan.
Because of this belief, the government is working with the local banking sector to dismantle the laws or regulations that prevent them from accepting different forms of collateral.
Talks centered on getting this done have commenced, Dr. Singh said.
“…Once you identify the specific legal or regulatory impediments that constrain this line of business, we will amend the law,” he highlighted.
The banks are focusing on the classification and categorisation of collateral, so that different forms of collateral can be accepted.
President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker is among those private sector players to consistently speak out against the challenges in accessing finance locally.
At the GCCI’s Business Development Forum last November, Tucker said the local private sector needs to access finance readily in order to play a more significant role in the nascent oil and gas sector.
In January, President Dr. Irfaan Ali convened a forum with private sectors at the State House, Georgetown, focused on generating fresh ideas for Guyana’s long-term success.
There again, many private sector players lamented the challenges in accessing much-needed finances from local commercial banks. The President acknowledged this.
“We have gone out and given quarry licences but then a lot of projects are held up at the bank and there is a clear demand for quarry material that now we have to push to get importation,” the Head of State had said.
And so, there has been a focus on improving access to finance.
Dr. Singh reasoned that the local banks alone must not be blamed for challenges in the local business sector.
He said partnerships and securing finances outside of loans should be among the local private sector’s considerations.