Rejection of the No Confidence Motion can cause economic sanctions

Feb 27, 2019 Letters

Dear Editor,

The non-acceptance of the No Confidence Motion (NCM) particularly after March 21, 2019 can cultivate economic sanctions for Guyana along with elevated risk levels of compliance, sovereign risk ratings and further de risking. Hence, the first level of impact will be on the banking sector, which is the core segment of the financial system.
The Banking sector can articulate a country’s economic progress as banks play an important role in the mobilization and allocation of financial resources within an economy. Further, given the current outlook for Guyana given the government’s myopic vision, global risk management teams attached to our local banking sector corresponding relationships will critically place more emphasis on enhance due diligence to rating scenarios correlated to “country risk rating”. Additionally, this key rating consists of an examination of political factors and socio economic conditions that prevail within the country inclusive of adherence to the constitutional laws of the country.
It therefore means that factoring this potential high risk at hand, corresponding banks can place a “freeze or stop “strategy on commercial banks in Guyana as they seek to mitigate their exposures. We must understand that these corresponding banks have a certain degree of limit tolerance for economies like Guyana where we have not made sustainable improvements on the corruption index, revamping of our legislation geared towards safer financial operational mode required in modern day business activities and most importantly, weak political governance.
Worse case, if a stop approach is determined then the implications will be significant as beyond what was experienced by some our local commercial banks in December 2016. This scenario can penetrate a “systematic risk “as banks and other financial money agents within Guyana would not be able to send or receive foreign currencies.
As financial cross border transactions cease our financial system, industries and our people will feel the negative impact such as rising foreign exchange rates, deterioration of banks assets base, food and fuel shortages, limited assistance from donor agencies, pharmaceutical shortages and nonpayment for tuition fees to foreign universities, etc. The fact is that this will be “hard times” as our people will say. More so, the international community and global regulators will look at us without any regard and empathy.
Do we want this for ourselves, our country and an after effect, which will require significant resources to turnaround? Can we afford this set back to our economy given that we have a seismic emerging oil industry too at hand?
It is time! Yes, a time to act responsibly and respectfully by abiding with the constitution coupled with taking a step back to fully understand the long-term detrimental effects this current action will have on international financial relationships, our economic activities and our people at most. To further highlight, Compliance and international regulators has no infinite boundaries or alliances, thus no government of the day in any country in a modern financial world is their boss.

Yours sincerely,
Concerned Banker

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News