Guyana records improved quality of lending in 2023 – IDB

Guyana has improved the quality of lending this year when compared to the same period under review last year and this has contributed to improved access to financing and financial services.

This is according to a report “Global and Regional Economies at a Crossroads” of the Inter-American Development Bank (IDB). It reported that, in addition, to a decline in unemployment rates and moderated inflation rates, private-sector lending or credit has improved significantly over the last three years.

This is against a backdrop of rapid economic growth propelled by the growing oil production sector.

“Private sector credit growth picked up significantly in 2022, by growing by more than 15 per cent in December 2022 year over year, reached 17 per cent in February and March 2023, before moderating slightly to almost 14 per cent in May 2023,” the report said.

These reflect expanding household credit, at 8.8 per cent in 2022 and increasing to 18.5 per cent in May 2023, as well as mortgage credit with an average of 7.3 per cent in 2022 and reaching 14 per cent in May 2023, representing robust economic activity.  

“Businesses make up most of the private sector lending portfolio making up 54 per cent of total loans, followed by mortgages 32 per cent and households 12 per cent. The ratio of non-performing loans to gross loans of commercial banks dropped from 10.8 per cent in 2020 to 4.7 per cent in 2022,” the IDB stated.

An increase in access to finance for the private sector commonly fosters economic expansion and job creation.

It is also instrumental in encouraging small and medium enterprises to become involved in the country’s oil and gas sectors.   

According to the report, Guyana’s financial system remains stable and well-capitalised, with an improved quality of lending.

The report also estimates that Guyana’s Gross Domestic Product (GDP) growth will grow by an additional 37.2 per cent in 2023, an indication of the impact of the government’s policies on promoting expansion. 

The government continues to create the enabling environment for private sector growth, through a myriad of initiatives and measures.