The National Assembly yesterday passed the Fiscal Enactments (Amendment) Bill ,which, when assented to, will bring into effect a tax waiver on the income of a designated small business lending company so that they could lend small loans to female single parents, as Government today unveils a $500 million lending programme for single mothers. The legislation, which had the support of the Peoples National Congress Reform (PNCR) and the Alliance for Change (AFC) is being passed to allow for the Government to set up a programme which will be launched today, to facilitate the lending of small loans to vulnerable women whose names are on the register of single parents at the Minister of Human Services and Social Security. Minister of Human Services and Social Security Priya Manickchand will launch the initiative today.
Speaking on the bill, Minister of Finance Dr. Ashni Singh, who piloted the piece of legislation through all its stages, told the National Assembly that the Bill is one that seeks to establish the framework within which – as specified by an agreement – lending companies will be able to offer the loans without the usual requirements for collateral being met. The Minister said that the aim of the programme that the passage of the legislation will facilitate is easier access to credit and at a cheaper cost to the borrower.
“This Bill seeks to permit the Government to establish small business lending programmes with designated lending companies,” he said. “If [the] institution will enjoy the [benefits of the tax waiver], then it is expected that this reduction is passed on to [the consumers],” the Minister said.
He said that the Bill can be viewed from many perspectives, one of which is that it will increase access to financing for the persons hitherto deemed ‘unlendable’. The Minister said that many people have sound business ideas and are dedicated and committed to running a successful venture, but are impeded by not being able to access credit through the established financial architecture. He said too that the Bill could be viewed as one that is promoting small business.
Dr. Singh noted also that the economy feels it when the opportunities for job creation and income generation – however modest – are lost because of not being able to access credit. The Minister said that the Government is engaged with one financial institution – later revealed to be the Guyana Bank of Trade and Industry (GBTI) – which has indicated that it is ready to drop $500 million into the programme for lending to single parents – in this case single mothers.
“We are speaking of 5,000 small businesses potentially being established when otherwise this would not have been,” the Minister said.
Turning to the enabling environment being created for a programme of the nature being launched, the Minister said that the financial system in Guyana is awash with liquidity that goes well beyond all of the well-established prudential norms. He said that the Government, with the passage of the Bill and the launch of the credit programme, is trying to marry two ideas: that access to financing is not an impediment, and that the financial sector has good lending opportunities.
The Minister said that the Bill can be looked upon as a demonstration of inclusive banking, since it seeks to bring the unbanked into the formal financial system. This system, the minister said, has a role in the intermediation of funds. “We believe that the establishment of a formal relationship with the banking system creates incentives and opportunities. It encourages saving and leads to the empowerment of people,” Minister Singh said.
Speaking on the Bill, Leader of the Opposition Robert Corbin said that the party could not in principle be unsupportive of any legislation meant to reduce the cost of borrowing. “We have no difficulty in supporting this tax measure because it is worthy of support,” he said, while calling for the Government to bring to the National Assembly legislation in support of an overall review of taxes in the country.
The Opposition Leader also had a concern that the Bill does not specify what a small business is and this he said may open the door for discretionary interpretations.
Khemraj Ramjattan, while speaking of the AFC’s support of the legislation, said that the lenders in the new framework should come under the supervision of the Bank of Guyana and the new money laundering legislation passed last year.