World Bank, IMF to test Guyana’s Financial Sector – Finance Minister
In an effort to assess the resilience of the country’s financial sector and its ability to deal with crises, Government has requested the International Monetary Fund (IMF) and the World Bank to conduct a Financial Sector Assessment Program (FSAP). This is according to Finance Minister, Winston Jordan. He said that this is likely to be done in 2016. The FSAP is a comprehensive and in-depth assessment of a country’s Financial Sector. It analyzes the sector, the quality of the regulatory and supervisory framework, and the capacity to manage and resolve financial problems. Jordan explained that the goal of FSAP is twofold: to gauge the stability of the Financial Sector and to assess its potential contribution to growth and development. He said that Government certainly looks forward to this independent review and will consider the ensuing recommendations to strengthen the Financial Sector and hence promote the development of Guyana. The Finance Minister said that consideration would also be given to bringing the Credit Unions under the supervision and regulation of the Bank of Guyana and to having a Deposit Insurance Scheme established. He said that work has already commenced on the development of a legal and institutional framework for market conduct and financial consumer protection.
Finance Minister, Winston Jordan
As for the Credit Bureau, the Finance Minister noted that it is making measured progress towards having credit information from the Credit Information Providers and subsequently making credit reports accessible. As it relates to the Foreign Account Tax Compliance Act (FATCA), which is a measure instituted by the United States of America to combat tax evasion by US persons holding investments in foreign accounts, Jordan said that the Government has indicated its intention to sign the Model 1 Reciprocal Intergovernmental Agreement (IGA). The Finance Minister said that the Guyana Revenue Authority (GRA) has been identified as the competent authority to receive and submit the financial information of customers identified as US persons by the reporting institutions. He said that this information will be sent by the GRA to the United States Inland Revenue Service (USIRS). He said, too, that the reporting institutions, particularly the commercial banks, have already begun the process of registering with the USIRS as compliant Foreign Financial Institutions and are putting measures in place to ensure compliance with all reporting requirements. As far as financial sectoral developments go, the Minister said that throughout last year and the first half of 2015, the licensed financial sector, including the insurance sector, remained strong; it was adequately capitalized, profitable and with high excess holdings of liquid assets. By the end of December 2014, he revealed, total assets of the licensed financial institutions stood at $508.9 billion, which is 3.6 percent above the level at the end of 2013, with the commercial banks accounting for $413.8 billion or 81.3 percent of total assets. As at June 30, 2015, the Finance Minister said that total assets for the Licensed Financial Institutions (LFIs) amounted to $525.6 billion, 3.3 percent above December 2014. Overall, he said that the level of assets in the system is indicative of an environment that is stimulating and promoting growth. With regard to the insurance industry, the Finance Minister noted that it has rebounded somewhat since the calamitous collapse of CLICO in 2008. He said that that event had a significantly negative impact on the industry’s financial strength in that year. He said that the recovery, notwithstanding net premiums reported by the long-term insurance sector, were only 42.3 percent of the amount prior to the CLICO debacle. Jordan said that this is an indication that many policyholders might have lost confidence in the long-term insurance sector. He said that the systemic failures by CLICO have reinforced the need for enhanced regulation in the insurance sector. In this respect, Jordan said that the drafting of the new Insurance Act and attendant Regulations was finalised and they are being examined with a view of bringing them to the National Assembly for passage. In the meanwhile, Jordan noted that efforts will be made to build supervisory capacity in the insurance sector while a risk-based supervisory framework will be developed to supervise and regulate the sector.