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Lending to private enterprises declined in 2016

Apr 01, 2017 News

According to the Monthly Economic Bulletin for November 2016, lending of finances to private business enterprises accounts for three-quarters of all lending in Guyana. When compared with a year ago, lending to private businesses is down in every sector except the services sector, with a growth rate of 6.2 per cent.
The report which is prepared by the Economic Policy Analysis Unit (EPAU) of the Office of the Budget, Ministry of Finance, gives a monthly update on some of the important developments in Guyana’s economy.
Based on information provided by the Ministry, in 2016, private credit to private business in sectors such as Mining and Quarrying, Agriculture and Manufacturing had declined each month as the year progressed. However, loans to the services sector had started at a low but grew over the year, totalling more than $120B at the end of the year.
The services sector includes areas such as transportation, storage, communication, information, distribution, health, education, electricity, water and real estate; most of which largely comes under the purview of government.
This reduction throughout 2016 may be seen as an indicator of the country’s private sector performance. For the greater part of last year it was said on many occasions, by businesses and members of the Political Opposition, that business is either slow or declining.
Earlier this year, Chairman of the Board of Directors for Citizens Bank, Clifford Reis had said at the Bank’s Annual General Meeting that the lacklustre performance of the entity was due to the sluggish performance of the economy.
The bank had recorded a profit of $0.8B before taxation and after taxation, a profit of $0.5B. Reis said that the bank’s performance reflects a slowdown in the economy due to underperformance by many major productive sectors, with many borrowers encountering difficulties in meeting their obligations to financial institutions with a resultant increase in non-performing assets.
He said, “The bank’s loan portfolio remains relatively sound. However, the difficulties experienced by our customers because of a decline in business activities during the review period, has impacted the performance of our overall portfolio.”
The report produced by the Finance Ministry said domestic lending grew moderately in November, rising by 1.9 per cent to $137B in November from $134B in October 2016.
Credit which would have been given to the government had decreased to $137M in November from $161M in October. Also, credit to public enterprises fell slightly by 1.1 per cent, moving from $1.9B in October to $1.8B in November.
Placing attention on lending to households, the report said that lending was up in every sector except loans for motor cars which declined by 3.7 per cent. However, lending generally grew 3.2 per cent at the end of November compared with October and 8.0 per cent higher than November 2015.
It said that lending to households for educational purposes remained especially strong at 46.9 per cent above its level a year ago. Within the manufacturing sector, lending to the beverages, food and tobacco industry had experienced a slight growth in November, rising 23.9 per cent when compared to growth as of October of that year.

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