Dear Editor,
It was recently announced that the Government of Guyana opened the Guyana Development Bank (GDB). What was abnormal with this opening was that only Members of the Board of Directors were identified, but no mention was made of a General Manager, nor was there an organization chart identifying the various bank departments. In fact, no project appraisal, loan supervision, credit, and accounting departments, among others, were identified. As a result, will these critical departments be managed on a daily basis by the Board of Directors? Are the Board Members full-time staff members of the GDB? This must be clarified as trained credit analysts, capable of evaluating, supervising, and recovering development loans in a decentralized system across Guyana’s ten administrative regions, are required to professionally manage the GDB. No other arrangement will be efficient.
Equally strange is the fact that the loan applications are expected to be submitted using an online address: (gdb.gov.gy](https://gdb.gov.gy/). Really? Can you imagine a farmer in a rural community in Region 8 having access to the technology to engage in this loan application process? Just a reminder, GAIBANK had branch offices in the regions, since being close to the economic activity reduces transaction costs for applicants and borrowers; and it enhances project supervision, and strengthens cooperation and coordination with the regional administration, along with the supporting services organized in the community. Furthermore, when consideration is given to the fact that the supply of fish and other crops are decreasing (Bank of Guyana 2026 Half Year Report: https://bankofguyana.org.gy/bog3/images/research/Reports/HalfYear2026.pdf); that the demand for food is increasing (immigrants entering Guyana, among others); that none of the Board Members have any qualifications in agriculture; and that the Minister of Agriculture was excluded from the opening of the GDB, these deficiencies are indeed clear signals that serious policy considerations are not being undertaken.
One other interesting observation of the GDB is that loan disbursements for approved loans to borrowers will be paid into the commercial bank accounts of approved GDB clients. This is a very worrisome event, because the project disbursements of funds must be paid directly to the suppliers of the inputs, the equipment, or project services financed with the GDB loans. Regrettably, paying the money into the borrower’s account at the commercial bank will increase the probability for misuse, due to the GDB’s lack of oversight and the obvious setbacks due to asymmetric information concerns. Additionally, without a defined credit policy, this will add further complications to the GDB operations.
It has also been reported that successful clients who would have repaid their loans and advanced their business can then move their economic activities to the commercial banks, where they can obtain larger loans. This development cannot be a serious expectation, simply because commercial banks will require collateral that have market valuations that are no less than the value of the disbursed loan plus interest. Can the GDB borrowers meet these requirements? This would be an important event to monitor; and the data collected should be examined to determine the success or failure of this credit operation.
It was reported also that no interest will be collected on the loans provided by the GDB; and therefore, the question is: where will the money come from to pay the Board of Directors and the other expenses of the GDB? Will it be a proportion of the money approved for the Bank? How will the financial viability of the GDB be measured, given that there will not be available the traditional financial statements? Moreover, will the financial sustainability of the GDB be a line item in the National Budget in a manner no different than that of a Ministry? This issues must be clarified.
In view of all these operational concerns raised about the GDB, it is extremely important to have the Auditor General be immediately involved in auditing the GDB transactions; for the Auditor General must not wait until “de boat gaan ah falls” to step in. That will be too late for Guyana. Consequently, the time is now for the Auditor General to move into audit action. Wake up Guyana!
Yours truly,
Dr. C. Kenrick Hunte
Professor and Former Ambassador
