Guyana’s costly misnomer

Jun 09, 2026 Features / Columnists, Peeping Tom

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(Kaieteur News) – What is a bank? At its core, a bank intermediates between savers and borrowers. It takes deposits from the public—households, businesses, pension funds—and lends those funds out, subject to market discipline and prudential regulation. A bank that does not take deposits is not a bank. It is something else entirely.

And that is precisely what the proposed Guyana Development Bank Bill 2026 creates: not a bank, but a government spending vehicle disguised in banking clothing. Calling this institution, a “bank” confuses the public, masks fiscal risks, and invites the very governance failures that have plagued development finance for decades.

The Bill authorises $40 billion in capital. This is nearly US$200 million to be provided entirely by the Treasury. Section 6 of the Bill creating the Development Bank explicitly prohibits the Bank from accepting deposits.

So where does the money come from? Taxpayers. Where do the losses go? Taxpayers. The Bank faces no market discipline whatsoever. A commercial bank that makes bad loans loses depositor confidence and fails. This Bank makes bad loans, and the Minister simply writes another cheque from the Consolidated Fund.

This is not banking. It is direct government lending through a statutory corporation. The name “Development Bank” gives it a technocratic gloss, but the underlying reality is that Parliament appropriates money, political appointees oversee those who will decide who receives below-market, collateral-free loans. And the taxpayer bears all the risk.

The governance structure compounds the problem. Under Section 7, the Minister appoints every single director—five to nine individuals, including the Chairperson and Deputy Chairperson. No parliamentary confirmation. No private-sector or civil society representation. Whatever happened to self-professed government policy of inclusion? There are no fixed terms that insulate directors from political pressure. The Minister can remove a director for broadly defined “misconduct.” This is not independence; it is a patronage machine waiting to happen.

Section 9(c) tasks the Board with safeguarding “the independence of credit decisions.” But how can credit decisions be independent when every director serves at the pleasure of the same political authority?

In developing countries, the lesson has been that political lending destroys development banks. The only institutions that survive and thrive are those with genuine operational independence, diverse board representation, and transparent, non-discretionary credit criteria. We have had our own lessons here. GAIBANK and GNCB, were sent into financial insolvency and privatisation respectively because of excessive bad loans.

The Bill also permits loans “without collateral” and “without charging interest” under Section 5(2)(a). In principle, this addresses a real market failure.  Many small entrepreneurs cannot access commercial credit precisely because they lack land titles, equipment, buildings or other acceptable collateral. But removing collateral without building underwriting capacity, recovery mechanisms, and portfolio monitoring is a recipe for massive non-performing loans. Section 26 allows write-offs with only “approved policies” and “appropriate Bank oversight”— phrases so vague they invite abuse.

And then there is the $3 million loan cap. That is not enough to buy a small delivery truck, let alone establish a manufacturing workshop or agricultural processing facility. Either the cap is meaninglessly low, or the Government intends to keep the Bank in micro-lending while pretending to support serious SME development.

None of this is to say that Guyana should not have an SME lending facility. It should. But call it what it is: a government grant and loan programme, administered transparently, subject to annual appropriation, and overseen by an independent board with parliamentary confirmation of its chair. Remove the “bank” illusion. Banks take deposits, face market discipline, and operate under banking law. This institution does none of those things.

The most urgent immediate step, however, concerns leadership. Whoever is appointed Chief Executive Officer must undergo unprecedented vetting. Too many development institutions destroyed by CEOs with hidden histories. Because the Bank has no deposit discipline and no board independence, the CEO is the only real check on political lending and fiscal waste. And that person is appointed by the Board.

This is all the more reason why the person selected as CEO must be beyond reproach. Former employers of applicants must be interviewed. Banks have a habit of asking recalcitrant to resign rather than firming them and risking a fallout of public trust.

Guyana’s oil wealth offers a chance to build diversified, sustainable prosperity. But that requires honest institutions, not expensive misnomers. A spending vehicle called a bank is still a spending vehicle. And a risky one at that.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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• GNCB, Guyana, Guyana Development Bank, Peeping Tom

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