With Guyana still feeling the effects of the bank de-risking phenomenon, Finance Minister Winston Jordan said yesterday that in the new year, government will continue to work with its international partners to find ways to alleviate the effects here.
At the time he was making his 2018 National Budget presentation to the National Assembly.
He told the House that the de-risking phenomenon, which has resulted in foreign-owned banks terminating correspondent banking relationships with locally-owned banks, continues to affect Guyana’s economy.
“At the end of October, 2017, more than two-thirds of the locally owned banks were unable to facilitate third-party foreign currency cheques, and only one bank has been executing wire transfers. This has led to increased cost of financial transactions which has the potential to reduce trade and investments, as well as remittances from abroad”, he informed.
International banks have given up ties with many jurisdictions in the Caribbean and elsewhere because of heavy penalties they face in their home countries for laundering and other illicit activities in their correspondent banking relationships.
Jordan stated that government will continue to work with its Caribbean neighbours and international institutions to develop a methodology to facilitate analysis of the impacts of these lost relationships, as well as to inform measures that can be put in place to mitigate against future losses.
Meanwhile, the Minister said too that government will seek to promote stability in the local financial sector in 2018.
He said that throughout the year, the Bank of Guyana (BOG) continued to develop systems to improve Guyana’s ability to monitor and maintain the stability of the financial sector. Central to this, he said, has been the drafting of amendments to the Financial Institutions Act (1995), which address the findings of the 2016 International Monetary Fund (IMF) and World Bank Financial Sector Assessment Programme (FSAP) of Guyana. These amendments, he explained aim to address risks by enhancing the supervisory capacity of the BOG and enforcing monitoring, prevention, and correction measures.
This exercise, Jordan said benefited from technical assistance, which also enabled the drafting of Consumer Protection legislation, for which consultations are expected to be held during 2018. “When enacted, it will provide for a grievance mechanism to be established to receive and investigate civil complaints against financial institutions”, he said.