Strengthened framework enables financial sector growth, says Guyana finance minister
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| Published on Saturday, November 14, 2009 |
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GEORGETOWN,Guyana (GINA) -- The strengthening and modernization of the financial system with the formulation and enactment of relevant legislature has over the years enabled sustained economic growth and development.
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| Dr Ashni Singh |
Minister of Finance Ashni Singh, during his presentation on the Credit Reporting Bill 2009, in the National Assembly Thursday, highlighted growth within the sector during the past few years noting that a succession of legislation has been taken to the National Assembly.
“We have recognised as a Government that a strong stable sound financial system, one that is responsibly managed and well regulated is critical if we are as a country to realise sustained economic development. Such a system is indeed a prerequisite to the mobilizing of savings and private investments by the private sector and we have sought over the years to ensure the establishment of a legal and institutional framework that would facilitate the growth and development of such a strong and stable financial system,” he said.
The Minister referred to the Bank of Guyana Act of 1995 and 1998 and subsequent amendments which replaced a Central Banking ordinance that predated independence and which had become outmoded and irrelevant to the current times.
“Through the Bank of Guyana Act we put in place the framework for strong central banking at the same time we enacted other legislation, one of the principal pieces of which was the Financial Institutions Act. This 1995 act which continues to be in force and has been subjected to some amendments, was passed by this parliament in 1995, and gave the Bank of Guyana the responsibility for regulating and supervising licensed financial institutions. It provided the framework within which such institutions would operate, would secure their licensing from the Central Bank and the conditions under which such licenses would be granted. That legislation imposed restrictions on their activities aimed at protecting the integrity of the system and its users, the people of this country,” the Minister said.
He also noted that the Anti-Money Laundering and the Countering the Financing of Terrorism legislation has recently come into operation along with the Money Transfer Agencies Licensing Act.
“The result of all of these legislative interventions is that a very robust framework now exists within which and under which our financial system operates and with the benefit of this framework, we have witnessed, what would by any standard be described as striking growth, but growth without compromising stability and integrity,” the Finance Minister stated.
At the end of December 1998 gross assets of the banking system were recorded at $100.5 B and at the end of December 2008 this figure was increased to $232.6 B representing an increase of 131 percent, a doubling of the total assets of the banking system.
Total deposits at the end of December 1998 was recorded at $76.6 B while at the end of December 2008 this figure was increased to $196 B representing a 155 percent increase.
Over that period, total loans increased from $51.6 B to $86 B, an increase of 67 percent while investments more than tripled, increasing from $18.3 B in 1998 to $87.7 B in 2008. Capital and reserves increased from $10.6 B to $20.7 B and profitability ratios likewise improved with returns on assets moving from 1.6 to 2.4 percent and return on equity moving from 14.1 percent to 27.2 percent.
The Minister said, “At the same time, the access of our people to the formal financial system has increased markedly, between January 1999 and December 2008, 11 new bank branches were established and at the end of September 2009, the number of branches stood at 27, spanning the entire coast and going all the way south as far as Lethem and this expansion continues apace…all aimed at improving access to the financial system and facilitating growth.”
Singh said that there has been a steady trend of growth and modernisation taking place in the financial system and this trend has not been without real economic benefits.
“The growth that we have observed in our financial sector came with steady and sustained growth in our economy. Over the past 10 years our economy has recorded what again can by any standards be described as steady real growth, indeed negative growth was recorded in only three of the past 10 years and our nominal gross domestic product increased from $124 B in 1999 to $236 B in 2008,” Singh said. | | | | Reads : 376 | | | |
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