BoG should help to foster economic growth

Dear Editor,

November rains are here already with widespread flooding again, same old, same old!  As a teenager in the 70’s I always admired the big blue and tallest building in Georgetown off Water Street, the Bank of Guyana. Back then their air conditioning served as a quick respite from our humidity, Guyana had limited A/C then, so the experience was memorable.

The Bank of Guyana has failed this nation over the decades and now. I will not attempt to recreate history but deal with the current deficiencies. They have had some good accomplishments, but in sum the leadership of the Bank of Guyana is substantially responsible for the level of unemployment and poverty in our Nation.  No one speaks about it because Economics and Finance are not glorious subjects here!

The Bank of Guyana is responsible for the monetary policy of our nation, inflation management, banking and insurance regulations, money supply, interest rates and several tools. Yes, the rate you pay to buy a house, and car is driven by the BoG. And the prices you pay at our markets “La Penitence”, “Bourda”,  “Stabroek”, “Mon Repos”, etc.  unknown to you are driven by the actions of the Bank of Guyana, since we all react to a theory called rational expectations. As we come upon the holiday season you will see the annual rise in prices and shortage of currency. The Bank of Guyana reacts versus being proactive.

These are things that should be done:

1. Create a Guyanese intermediary Bank managed by the Bank of Guyana to collateralize (buy and guarantee) mortgages from our local banks and sell to international investors and banks as pools. Mr. Vice President this is your solution, no need to go looking for investors.  This will replenish the money supply. Mortgages become cheaper and widely available for the 50k planned house lots (houses) more importantly build homes and employ a substantial part of the unemployed. Why wait for a Government rebate! Yes, it will require some automated system improvements!
2. Recognize we have an artificial exchange rate – where seepage is occurring, and most Guyanese will go to the Cambios or street vendor and get $225  or more while you are offering $209. There is a vast underground economy in Guyana and the Bank of Guyana really has no clue of the total money supply, other than the notes they print. Get international help! Induce and force the adoption of bank accounts nationally, to get a grasp of the true money supply, especially in underserved regions.
3. Aggressively create systems, international intermediaries, correspondent banks,  and relationships that facilitate the swift and legal transit of funds to Guyana. It should not have taken you 16 months to disclose that the prior administration received a US$18 Million bonus and parked it in account. Your secrecy was benign. A substantial part of US, UK, Canadian dollars sent via wire transfer to Guyana ends up in the Trinidad Central Bank, we get Guyanese dollars. I tested your process and your systems do not work.
4. Manage interest rates against global standards not CARICOM neighbours. In a high unemployment, Covid-19 environment too much rigidity is placed on fighting inflation, to the detriment of job creation. Flexibility to actively raise and lower interest rates in an aggressive fashion will benefit our nation. Do your homework BoG!
5. Get back to the basics of why the Bank of Guyana exists. It’s not to make money as your income statement depicts, it’s to foster economic growth, be the engine for high employment and the reduction of poverty vis a via lending practices. Encourage micro lending versus the predatory practices with high interest rate and poor regulatory governance.
6. In the insurance marketplace there are a few bright spots with the entry of newcomers. However, the Bank of Guyana must do more to avert price collusion, my research over the past year suggests there is not much competition on price and coverage, something is wrong. Why do our insurance companies always make a substantial profit from Guyanese citizens with minimal reduction in prices?
7. There is an impending dilemma as our growth rate accelerates in the coming years, the Bank of Guyana will have the enviable challenge of trying to slow the rate of appreciation of the Guyanese dollars. An exchange rate of $150 or less is inevitable, so Guyanese if you want to beat the BoG at what they do, hold Guyanese dollars (not US$) now for the next 10 years and you should be well off. Yes, I know some like the US$ and keep them at home, but if the Guyanese economy grows as projected you will lose money.
8. Why did the Bank of Baroda and Scotiabank want to leave recently? How many new Banks has the BoG brought to Guyana in the past 10 years? Why no banking services on the weekend, limited ATMs throughout the country? It’s a failure of Bank policy to incentivize and force the adoption of automation. There is a ’80, ‘90 mindset of its leadership, while the rest of the Caribbean and world eat our dinner.

I can go on and on, but in sum we Guyanese should recognize the BoG of Guyana has the biggest impact on our daily lives than we suspect. Let’s hold them accountable, including our Parliament, they work for us the citizens of Guyana not for the Ministry of Finance.

Yours faithfully,

Everton  Morris

(Technology and Management Executive)