BOARD Chairman of the Guyana Bank for Trade and Industry (GBTI) Ltd, Senior Counsel Mr. Robin Stoby, has pegged the current state of political gridlock as a constraint on economic progress. GBTI, with a capital base of nearly $88B, is the largest Guyanese-owned bank.
In his half-yearly report to shareholders, Mr. Stoby cited the parliamentary imbroglios, particularly over the National Budget estimates and the anti-money laundering legislation, as being among a number of factors responsible for a recent “noticeable slowdown in our economy.”
Along with a delayed signing of a new contract with Venezuela to supply them with rice and paddy, low production of sugar in the first crop of 2013, and a decline in gold prices in the face of an upswing in the US economy, he says that “a National Budget that was cut by $31B…has put some pressure on exchange rate stability.”
Reports indicate that the exchange rate has fallen as low as GYD$209 Guyana dollars to one US dollar.
Locked horns
Earlier this year, the Opposition, which holds a one-seat majority in the legislature, piloted cuts to a number of budgetary allocations, with the most high profile of these being to the government’s flagship projects, the Low Carbon Development Strategy, under which the embattled Amaila Falls Hydroelectric Project falls, the Cheddi Jagan International Airport upgrade, and the Specialty Hospital at Liliendaal.
The opposition parties and the government have locked horns repeatedly in the legislature over these projects, with the former charging the government of not being transparent enough with the details of these projects, and the government accusing its political rivals as being obstructionist.
In his address at the opening of the recently concluded Fourth International Building Expo, the Chairman of the Private Sector Commission had said that the cuts to the allocations for these projects had placed a damper on the construction sector, the country’s fourth largest contributor to the Gross Domestic Product (GDP).
Money Laundering
Stoby also bemoaned the lack of parliamentary consensus on passing the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Act. Passage of the bills is mandatory to meeting the requirements set us by the regional regulatory body, the Caribbean Financial Action Task Force (CFATF).
“This [not passing the bills] has very serious implications for our banks and, by extension, our customers who make and receive international payments,” he warned.
The government had tabled the bill on April 22nd of this year, just over a month before a May 27th deadline set by the CFATF for Guyana to meet its international financial obligations.
The opposition parties chose to refer the bills to a select committee for further scrutiny. The smaller of the two opposition parties, the Alliance For Change (AFC), also insisted on the government establishing the Public Procurement Commission as well as its reversing the presidential veto on two opposition-piloted bills.
Guyana missed the deadline and has been given until November of this year to pass the AML-CFT Act.
Meanwhile, the government has accused the opposition parties of holding the nation “hostage”.
Work in the select committee has been proceeding sporadically, after the opposition parties staged two walkouts, the first after the government allegedly withheld documentation relevant to the examination of the Act, and recently after President Donald Ramotar purportedly accused the opposition of “terrorism”.
Despite the headwinds, the Chairman reported positive results.
“We are nevertheless pleased to report a net profit after tax of $1.02B for the period January to June 2013,” he said, adding: “This represents a 35% increase over the corresponding period of 2012.”
According to Stoby, the Board has approved an interim dividend payment to shareholders of $5.00 per share.