After several hours of debate, the National Assembly, a few moments ago, passed the Financial Institutions (Amendment) Bill 2018. Moving the motion for the second reading of the Bill was Finance Minister, Winston Jordan.
The economist explained that the Bill addresses the inadequacies of the existing bank regime which does do not distinguish between corporate and banking failures, among other issues.
The Finance Minister explained that the Bill was a necessary recommendation of the International Monetary Fund (IMF) and the World Bank which conducted a Financial Sector Assessment Programme (FSAP) two years ago.
FSAP is done to help countries analyze the resilience of their financial sector, the quality of its regulatory and supervisory framework, and to understand and strengthen its capacity to manage and resolve financial crises.
According to the 2016 FSAP report, Guyana’s crisis management framework needs improving along with its deposit scheme. It also stressed the need for the Banks to engage in proactive responses to sectoral issues. Jordan said that these are significant observations. To underscore the importance of the Bill, Jordan reminded of the Globe Trust and Investments Company fiasco.
Globe Trust began operating in April 1991. However, in 2000 and again in 2001, a series of inspections by the Bank of Guyana found the institution to be in breach of the Financial Institutions Act.
Central Bank, with the intention to liquidate, seized the institution in September 2001. The Finance Minister noted however that the process to close Globe Trust was a lengthy one. The economist noted that the Financial Institutions Act, which was amended with the help of the IMF and the World Bank, would remove such problems in the future.
While members of the political Opposition are in favour of the modernization of the financial sector, they did not lend support for the Bill. Former Attorney General, Anil Nandlall said he is convinced that the Bill would only seek to impose political will on those in the banking sector. He reminded of the issue where cambios were “threatened” to use government imposed rates of buying and selling, failure of which would lead to the revocation of their licences.
Nandlall said, “This is the political control we are talking about because if they didn’t do it then their licences would be revoked. This Bill is toxic, filled with political control and interference…”
The Opposition Members also criticized the fact that the government was cutting and pasting the IMF’s and World Bank’s recommendations without giving careful thought to the effects it will have on the banking sector.
But the Finance Minister disagreed. He said that there is no shame in accepting help since the Chambers of the Attorney General is drowning in work. He also emphasized that the amendments to the Act are suited for the modern times and anything less would not be in Guyana’s interest.
The economist said, “When you get a cold and you wait until it turns into pneumonia, you can’t say that you will go and use a Theraflu for it. That is light medication. You need something stronger. Now that the financial sector is weak, the Opposition wants us to use slap on the wrist legislation but never! There is no shame in getting help and we are determined to fortify our banking sector.”