Guyana gets US$35M loan to prepare finance sector for oil and gas

The Guyana Government today signed an Agreement for a Policy-Based Loan from the World Bank to the tune of US$35M. The money will help to develop the Finance sector in preparation for the developing oil and gas industry.

At a signing ceremony held at the Ministry of Finance’s boardroom Friday, Finance Minister, Winston Jordan disclosed that the World Bank has made available approximately US$90 million to the Government over the next 2-3 years.

He explained that while the Government is constantly working to upgrade legislation to prepare for the higher income from oil and gas, there is a need to modernize infrastructure to accommodate the policy changes.

Jordan alluded to the National Payment System which is expected to be on stream in two years with the passage of the updated laws.

“In a country like ours where liquid cash is used for most transaction exchange, this particular bill will see over a period of five years or so, the gradual introduction and less dependence on cash as the sole means of transaction in the country,” the Finance Minister said.

According to a Bank of Guyana report, 77 percent of adults in Guyana have access to the use of a debit card.

Yet, the use of debit cards by adults to conduct transactions (as opposed to withdrawing cash) is less than one per year for every 20 adults.

According to the World Bank, the loan which was approved on June 25^th will support banking reforms and depositor protection, the establishment of a deposit insurance scheme, implementation of a new insurance law, and the country’s anti-money laundering efforts.

The Minister also pointed to the Deposit Insurance Act which will soon be passed and amendments to the Bank of Guyana Act and the Financial Institutions Act.

According to World Bank Senior Country Director, Pierre Nadji, the loan is the first of two programmatic financial and fiscal development policy credits financed by the International Development Association (IDA).

“We’re very pleased and looking forward to continuing doing more of these and help the Guyanese people address the many challenges to reduce poverty,” Nadji said.

The World Bank in a statement on June 25, said nearly one in four people in Guyana live in poverty.

However, this is expected to change when GDP surge from commercial production of newly-discovered oil and gas begins.