Govt to remove $60B in funds from commercial banks

Finance Minister Winston Jordan

Amid economic downturn

…PSC up in arms, concerned this will sink economy

The Private Sector Commission (PSC) has warned the David Granger-led A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition Government against its stated intention to withdraw some $60 billion of state funds from commercial banks across the country, which was deposited by the previous People’s Progressive Party/Civic (PPP/C) Administration.

The warning came on the heels of a meeting held between the PSC and members of the business community, where discussions were held on the evident downturn in business.

The discussion, the PSC said, dealt with matters ranging from employee retrenchment to the sudden increase in crime, spending on Government projects and matters related to how the clearing of goods and the processing of investment agreements are affecting the business community.

“Business representatives mentioned that they have noticed a drop in consumer spending and expectations. Projects are being delayed / suspended due to the cessation of payments on some projects. Foreign and local business partners have put a hold on some investments,” the PSC said in its release.

The organisation reported that the business community is concerned about the persistent “bottle necks” when conducting business with the Guyana Revenue Authority (GRA), pointing out that the Revenue Authority needed to expand its taxpayers’ base and “focus on the individuals who have been evading taxes for too long”. To this end, it said the Finance Minister Winston Jordan was written to and meetings were held with the top brass of the GRA and the PSC.

PSC Chairman Norman Mc Lean

“The PSC is concerned that the current situation can lead to a high level of non-performing loans and is extremely concerned about the intended removal of over $60 billion in Government funds that are deposited at the commercial banks.”

It said a decline in consumer expectations and spending can create a drop in sales and profits. According to the PSC, the situation would force businesses to freeze on hiring and inevitably the retrenchment of employees. Some businesses have already started laying-off.

Meanwhile, the PSC said while it commended the actions taken by Government and the Guyana Police Force in making some arrests and the taking of action on some recent crimes, it believed that more should be done to prevent and detect crimes and restore confidence in law enforcement.

“There has been a call for stronger Police presence in and around the city; businesses are concerned about their employees and customers being robbed in the streets and at their homes,” the PSC said.

It said while the economy has taken a downturn since last year, the current Administration has an opportunity to restore confidence, by releasing a budget that would stimulate spending. This recommendation was already communicated to Government through the Finance Minister.

“We are of the opinion that this will cause businesses to re-invest in projects, which may allow commercial banks to increase their loan portfolio; thus injecting needed funds into the economy. Additionally, the Government needs to ensure the efficiency of GRA and to restart spending through issuance on contracts,” the PSC said.

The removal of funds from the commercial banks could derail any economic revival.