…despite claims of slowing down of economy
…credit growth recorded in mining, quarrying, manufacturing

Despite it claims of a slowdown in the economy the private sector here has increased its credit by 5.7 percent to a total of $238.8B for the first half of this year, Minister of Finance, Winston Jordan said in his Mid-Year report on Wednesday.

The Private Sector Commission and its other surrogates organisations such as Georgetown Chamber of Commerce have been painting a picture of slow spending and a decline in the economy since the Coalition Government took office. Many persons have criticized these organisations for allegedly parroting the positions of the opposition. Minister Jordan said the evidence in the report tells a different story from what the private sector has been saying.

Domestic Credit
According to the Mid-Year Report at the end of the first half of 2019, net domestic credit of the banking system grew by 14.1 percent over the same period last year, to $33.4 billion, supported by an expansion in both private and public sector credit. Total credit to the private sector increased by 5.7 percent to $238.8 billion over the review period, faster than the past three years. “This was supported by an expansion in loans and advances to individuals and businesses, except for businesses in the agriculture sector. The decline in this sector, of 2.1 percent, to $13.1 billion resulted mainly from a contraction in lending for sugarcane and livestock production of 35.4 percent and 19.8 percent, to $0.9 billion and $1.4 billion, respectively,” the Mid-Year report stated.

Growth in credit in mining, quarrying
In contrast, credit to all other sectors recorded growth, the report added noting that credit to the mining and quarrying, manufacturing, and services sectors increased by 6 percent, 0.5 percent, and 7.2 percent, to $5.2 billion, $26.1 billion, and $70.5 billion, respectively.

“The increase in the mining and quarry sector was attributed solely to growth in lending to industries outside of the bauxite subsector, whereas the expansion in the manufacturing sector resulted from mixed outturns in the subcategories. There was a sizeable increase of $1.4 billion and $0.5 billion in the beverages, food and tobacco, and other construction and engineering subcategories, which was partially offset by a notable decline of $1.2 billion and $0.5 billion in lending to the other manufacturing and rice milling industries, respectively. The outturn in lending to the services subcategories, on the other hand, was mostly positive, with major contributors such as the “other services”, distribution, entertainment and catering, and education subcategories increasing by $2.2 billion, $1.7 billion, $0.8 billion and $0.7 billion, respectively.”

Additionally, according to the report lending to households recorded robust growth of 13.5 percent, to reach $32 billion; this was stronger than the past two years, and was supported by an increase in loans and advances for all purposes, with the exception of other durable goods and travel. Moreover, lending for housing, motor cars and other purposes expanded by $1.4 billion, $1.3 billion and $1.1 billion, respectively.

Of the other major categories of credit, which include real estate mortgages, credit instruments and “other credit”, only the former two increased, by 5.7 percent and 2.8 percent, to $84.5 billion and $3.1 billion, respectively. The expansion in real estate mortgages, which surpassed the half-year growth rate in each of the past three years, resulted from an increase in lending of 5 percent and 14.7 percent for private dwellings, and industrial and commercial properties, respectively.

Further, growth in credit instruments was solely supported by increased lending for credit cards, while the decline in the “other credit” category of 8.5 percent to $4.1 billion, resulted from a contraction of 8.4 percent and 10.7 percent in securities, and shares and other equity, respectively.

Public sector credit (net), increased by 48.7 percent to $66.6 billion, mainly due to an expansion in Central Government credit by 17.1 percent to $115.6 billion.

Conversely, net deposits of the “Other Public Sector,” which includes Local Government and the National Insurance Scheme (NIS), contracted by 34.3 percent to $19.3 billion, whilst the net deposits of the Public Enterprises (PEs) increased by 20.8 percent, or $29.7 billion, on account of higher deposits by Guyana Oil Company (GuyOil) Limited and Guyana Power and Light (GPL) Inc. at local commercial banks.

Total liquid assets of the commercial banks expanded by 6.2 percent t0 $127.7 billion. Total reserves deposited with the Bank of Guyana were $75.3 billion, 0.7 percent higher than the level at the end of June 2018. The required statutory reserves of the commercial banks were $48.2 billion at the end of June 2019, creating an excess over the minimum requirement of $27.1 billion.