Category: Speeches

02 Jun
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Hon. Winston Jordan Speaking on the occasion of the Launch of the 2016 Caribbean Human Development Report

Speech of the Honourable Winston Jordan, Minister of Finance, on the occasion of the  Launch of the 2016 Caribbean Human Development Report  (HDR), Education Lecture Theatre, University of Guyana, October 19, 2016  

Ms. Mikiko Tanaka, Resident Coordinator of the United Nations System and Resident Representative of the United Nations Development Programme; representatives of UN and Other International agencies in Guyana; Ministers of Government; Deputy Vice Chancellor, Dr Barbara Reynolds and Other Staff of the University of Guyana; Members of the Diplomatic Corp; Members of Parliament; Senior Government Officials; Other Invited Guests; Ladies and Gentlemen:

It is my distinct pleasure to deliver these remarks, on the occasion of the launch of the 2016 Caribbean Human Development Report in familiar surroundings. It is on these hallowed grounds that I spent four memorable years pursuing a Bachelor’s degree in Economics. It is on these grounds that I learnt the value of hard work, tenacity and resilience; of cooperation and selflessness; that the value of higher education was not measured by how much you earn but by your service to community and humanity. Later in life, I would go on to learn the values of professionalism and integrity in public life–values which seem to be at a premium these days, but which would be needed if we are to embark upon the multidimensional approach to tackling poverty.

Madam Chairperson, before I embark upon my brief presentation, permit me to make two observations. First, this launch is taking place on the campus of the University of Guyana. I therefore, expected to see the in the audience many University students, especially the young people who are our future. They are the ones who would have to take up from where we leave to ensure that progress to improve human development continues. Their valued presence here today, to listen to the presentations and to interact during the ‘questions and answers’ session, would have been both educational and enriching.

Second, while pursuing my undergraduate degree at this University, I did a course in Development Economics. Part of the required reading was Persistent Poverty by noted Jamaican Professor, George Beckford. The story is told that he was about to give a lecture on poverty at one of the upscale hotels in downtown Kingston, Jamaica. He was so struck by the surroundings that he was moved to question: how can poverty be discussed in such opulence? Now, I am not saying that the University of Guyana is an opulent environment. Far from it! What I am noting however, is that this launch is taking place away from the environs of the people who we are talking about: those in poverty and extreme poverty. So, I would like to urge UNDP to go to the villages, hamlets and remote areas to conduct such launches in future.

Madam Chairperson, as you are  aware,  this very Report was launched in the Caribbean island of Barbados, last month. In September 2015, in New York, the President of the Cooperative Republic of Guyana, His Excellency Brigadier David Granger pledged Guyana’s support for this initiative, during his statement to the United Nations Sustainable Development Summit for the adoption of the 2030 Agenda for Sustainable Development, It is, therefore, now appropriate, for Guyana to further endorse this commitment with the launch of this report.   It is appropriate, too, for us to take this opportunity to discuss the findings of this Report, to ensure that we begin to make the necessary adjustments to both catalyse social and economic development of the region and  consolidate the gains which we have already made under the Millennium Development Goals. These decisive actions must be pursued to make our country and the wider Caribbean region  a better place for us and  future generations. As we strive to build a more inclusive environment for all, we must take into account the multidimensional challenges we face – social, economic and environmental, especially those that are being brought about as a result of the climate change phenomena. In this regard, we recall the recent havoc caused by Hurricane Matthew, which decimated Haiti, a small impoverished country that is, still, recovering from the Earthquake of 2010. Cuba, St Lucia and the Bahamas also were not spared the Hurricane’s fury.  The economic, financial and, most important, human losses suffered by these countries are still being calculated, as I speak.

Madam Chairperson, it must be noted that this current report is the first of its kind with a regional perspective, where governments in the Caribbean are being summoned to work together, to arrive at a workable timetable of activities  for achieving  the 2030 Agenda. The Report rightly points to  the continuous challenges which the region faces. These include, but are not limited to our:

“economic fragility caused by vulnerabilities of the Caribbean states which are prone to natural disasters and have limited scope for economic diversification”. Added to this, is the constant migration of skills from the region. Poverty and unemployment among youth pose serious security risks and threaten the social and economic stability of member states. Further, the lack of adequate social safety nets, inequalities and discrimination also hinders modest achievement of progress.”

All of these obstacles that  hinder growth and development in the region will have to be removed and be replaced by opportunities. The Report offers some solutions  for addressing these problems, including  (a) Protecting the achievements of the last decade, as a result of the foundation laid by the MDG framework,  so as to prevent millions from falling back into poverty; and (b) Comprehensive policies must be  developed and institutionalised to protect populations suffering from discrimination and historical exclusions. In the final analysis, a sustainable economic base is needed, if development is to take place.

Madam Chairperson, as  set forth in the 2030 Agenda, a new collective vision is required to address the region’s overarching priorities, including reducing inequality in all its dimensions, promoting inclusive economic growth through decent work for all, creating sustainable cities, and addressing climate change matters. This approach seeks to reduce transaction costs and provide a common space in the 14 Caricom member states can meet  to plan, discuss issues, share lessons learned, and create synergies.

Above all, the 2030 Agenda is a people-centred approach that places dignity and equality at the centre of its core. Its implementation will require the engagement of all sectors of the State.  This will include all stakeholders, irrespective of whether they are representatives of government, civil society, academic institutions or the private sector. All must be invited to take a seat at the round table and provide leadership and take ownership of this ambitious agenda.

Madam Chairperson, going forward, due to the uniqueness of the Caribbean, some challenges will have to be addressed in a country–specific manner.  For example, Guyana is not affected by hurricanes like its Caribbean neighbours, but is prone to flooding. Other nations, with the exception of Suriname, can collectively establish a Caribbean framework to address Disaster Risk Management/Disaster Risk Reduction (DRM/DRR) to cope with natural disasters which plague them, annually, during the hurricane season.

To build resilience, regional governments should develop Think Tank mechanisms to devise feasible strategies to contain the continuous loss of invaluable human capital. They should discuss ways and means of tackling the housing problem as a means of addressing the SDG 11, which speaks to sustainable cities and communities. In this context, for example, our own  Ministry of Communities is, currently, holding consultations to develop apartment buildings and to facilitate the high demand for housing. Coupled with these measures, the region must establish a food security framework for implementation.

Achieving suvelopment will require significant investment from international private actors. “A significant share of the investments necessary to achieve sustainable development will have to come from private sources, which nonetheless, will depend on the availability of public funds to match those investments, through the provision of guarantees and/or regulations to assure future revenue streams.”

Madam Chairperson, in concluding, I wish to establish that the achievement of the 2030 Agenda would require extensive planning to mainstream the SDGs into local budgets. The exercise would also see the need for a more structured approach to the mobilisation of resources to fund the Agenda.  Given the limited fiscal space in all of our countries,  we will have to redouble efforts to identify and access substantial public and private funds for financing the prescribed development intervention.

Continuous monitoring and evaluation of the programmes and projects within the region that will be inextricably linked to the SDGs should be integrated into the planning horizon. More importantly, the design of the M&E system should take into consideration the various stages of development of the Caribbean nations with a view to providing support where necessary.  This is of primary significance if the slogan, “No one should be left behind”, is to be given real meaning.

Thank you!

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02 Jun
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Hon. Winston Jordan’s Remarks at Welcome Cocktail for Islamic Development Bank Visiting Delegation

Remarks at the Welcoming Cocktail for Visiting Delegation from the Islamic Development Bank, Marriott Hotel, October 12, 2016

Honorable Prime Minister and First Vice President, Moses Nagamootoo; Honourable Vice Presidents and Ministers of the Government; Vice President – Cooperation and Country Programming Complex, Islamic Development Bank’ Mr. Sayed Aqa; Other Members of the Delegation of the Islamic Development Bank; Permanent Secretaries and Other Senior Officials; Other Distinguished Guests:

The Government of the Cooperative Republic of Guyana, and in particular, the Ministry of Finance, is pleased to welcome the Vice President and other members of the Delegation of the Islamic Development Bank,  on their inaugural visit to the Land of El Dorado; Land of Many Waters; Land of 6 Peoples, of different backgrounds, sharing a common space and living in harmony. Welcome to Guyana! Over the next two days, we will be engaging you in what we envisage to be constructive and fruitful deliberations, at both the political and technical levels, as we strive to mutually advance the development agenda of our country.

The Ministry of Finance is the principal interlocutor between the CRG and all our multi-lateral development partners, especially with regards to the mobilization of resources for financing our development. We are, therefore excited, to add the Islamic Development Bank to our financial window of opportunities. We believe that there is much to be gained and  mutual benefits  to be derived from our fledgling, but very important, relationship.

Within the last few months, Guyana acceded to Membership of the Bank, having becoming a member of the Organization of Islamic Conference (OIC), in 1998, a prerequisite for joining the Bank. I was proud to be my country’s first accredited Governor to the Board of the Bank and being able to attend the Bank’s 41st Annual General Meeting, in Jakarta, Indonesia, in May this year, to witness and participate in the induction ceremony, as Guyana became the 57th member and second South American country, after Suriname, to be admitted to membership of the Bank.

Guyana’s full-fledged membership to the Islamic Development Bank is a clear signal of our endeavors to forge new partnerships with non-traditional development financial institutions. We look forward to the Bank becoming a fundamental partner in supporting Guyana’s development agenda.

Since gaining membership to the Bank, Guyana has acceded to the Articles of Agreement by participating in the capital stock of the Bank. To date, we have made two monetary installments of subscription. The Government expresses its gratitude to the Bank for allowing us to complete the payments of our subscription over twenty (20) years, instead of the traditional five (5) years.

Attaining membership of the Bank has come at a time when Guyana has been graduated to upper middle income status, making access to concessionary resources increasingly difficult. We, therefore, see our opportune membership to the Bank as affording Guyana an alternative source of concessional resources, including grants and interest free loans, which would further propel Guyana’s strategic development trajectory through to 2020 and beyond.

This will greatly assist in the financing of major catalytic projects in Guyana, which will to attain the ‘good life’ and redound to the benefit of all our citizens. We note that the areas of interest of the Bank include human development, rural development and food safety, infrastructural development, trade among member countries and private sector development. These are consistent with the priorities we have set for ourselves and are contained in a document specially prepared for the delegation. Over the next two days, we hope to explore these and other areas with the Bank. We also anticipate learning more of the Bank’s activities, programmes, operating protocols and rules of engagement.

And, jointly, we expect to discuss and review ways and means for a strong and robust economic development cooperation programme, and for identifying country and sectoral development priorities that are mutually re-enforcing for both parties.

Before closing, I would like to thank the staff of the Ministry of Finance and other co-operating entities for the hard work that has gone into making this trip a reality. I trust that our friends will enjoy our well-known hospitality during their brief visit.

With these remarks, I extend the warm embrace of Guyana to our distinguished visiting brothers, and look towards successful outcomes in the days, weeks months and years ahead.

Thank you!

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02 Jun
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Hon. Winston Jordan’s speech at opening session of the National Workshop on Debt Management Self Assessment and Improvement

National Workshop on Debt Management Self-Assessment and Improvement
Cara Lodge Georgetown, Guyana September 19-23, 2016
19th September, 2016, Speech by Hon. Winston D. Jordan, Minister of Finance, Guyana for the Opening Session of the National Workshop on Debt Management Self-Assessment and Improvement

Salutations

Hon. Jaipaul Sharma, Minister within the Ministry of Finance, Dr. Hector Butts, Finance Secretary, Ms. Sonya Roopnauth, Director of Budget, Bank of Guyana Representatives, Mr. Jaime Coronado Quintanilla, Coordinator of CEMLA’S Public Debt Management Capacity Building Programme (PDP), Mr. Juan Carlos Villanova and other PDP experts, Senior Government Officials, Special Invitees and Participants.

I am always pleased to be able to address issues pertaining to debt. The opening of this very important National Workshop on Debt Management Self-Assessment and Improvement is just another opportunity to do so. The robust and judicious management of our country’s Public Expenditure, Financial Resources and Fiscal Framework has been given a deserved and prominent place in the APNU+AFC Government’s strategic agenda for the development of Guyana, which aims to improve the lives of our people.

On behalf of the Government, I also wish to express gratitude to Mr. Coronado and his team for the long-standing support that CEMLA has given to Guyana in the areas of Debt Management, New Financing and Public Finance. Since 1999, CEMLA has played a pivotal role in helping Guyana to achieve a sustainable public debt, improve institutional arrangements and enhance the technical skills and capacities of local officials in effectively managing public debt operations, performing debt sustainability analyses (DSA) and developing public debt strategies, among other areas of assistance. I am sure that the current partnership with Jaime and CEMLA under the Government of Guyana-CEMLA Country Strategic Plan will enable us to reach even greater heights. The Government in its efforts to monitor debt sustainability and maximise its external assistance, looks forward to the continued cooperation and support from CEMLA, through the Public Debt Management Capacity Building Programme (PDP) and its donors, in particular Switzerland’s State Secretariat for Economic Affairs, Economic Cooperation and Development (SECO).

Back in 2007, at the start of the World Bank Debt Management Performance Assessment (DeMPA) pilot phase, Guyana was among the first countries to be assessed, using the methodology developed at that time. Guyana scored mostly C’s and D’s on the various dimensions, which left much room for improvement. However, it was not until six (6) years later, in 2013, that a second assessment was done with the assistance of CEMLA, which showed a worsening of the performance under most of the indicators of the DeMPA. I do not intend to have a similar situation under my watch. This Workshop is timely, therefore, occurring just over one (1) year into the tenure of our Government.

The DeMPA tool provides a set of indicators for comprehensively assessing debt management performance in developing countries. It is firmly grounded in Public Expenditure and Financial Accountability (PEFA) methodology and it offers a “drill down” on debt management. I firmly believe that a modern debt management office should not have to rely solely on external reviews to guide its improvement. We need to master the use of self-assessment tools, such as the DeMPA, so that our debt management team can be more proactive in identifying and remedying weak areas in debt management operations and in the institutional framework for public debt management.

This Workshop brings together key stakeholders in the areas of debt management, budget, economic policy, treasury operations, audit, the Bank of Guyana and the Ministry of Legal Affairs. It is a representation of the Government’s commitment to maintaining a sustainable debt position, as we seek to fund our national programme for investment and social expenditures, so as to improve the economic and social welfare of all Guyanese.

The Workshop builds on the previous Sustainable Funding Strategy Workshop, which was conducted in December, 2015 and two (2) missions in April and June 2016 to prepare and update procedures manuals for debt management operations within CEMLA’s PDP. These debt-related workshops and other interventions, such as the proposed introduction of a consolidated public debt law, reflect the seriousness with which this government pursues the issue of public debt, and our continuous efforts to improve the debt management in our country.

Guyana’s collaboration with CEMLA, through its PDP, is geared at responding to the risks and vulnerabilities associated with public debt in the globalised financial system, as was clearly demonstrated by the international financial crisis of recent vintage. These associated vulnerabilities demonstrate the need for ongoing improvements in the analyses and management of financial liability. The primary aim of the PDP is to assist governments in maintaining public debt sustainability and improving macroeconomic management by helping them design and implement sound public debt and financing strategies.

With this in mind, I again want to thank Mr. Coronado and CEMLA for partnering with us to support this capacity building effort. This training is a part of the larger goal to have a cadre of officers that are familiar with the assessment and scoring methodology, as well as understanding the linkages between the debt performance indicators and the use of evidence-based data for assessing debt management in Guyana.

Ladies and gentlemen, I wish you all a very productive training workshop. I look forward to receiving a report on the assessment as well as recommendations for the improvement of debt management in Guyana.

It is my distinct pleasure to now declare this National Workshop on Debt Management Self-Assessment and Improvement officially open.

Thank You!

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02 Jun
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Minister of Finance Hon. Winston Jordan and US Ambassador Perry Holloway sign historic FATCA agreement

Honourable Winston Jordan
Minister of Finance
Opening Remarks on the Signing of the FATCA

Your Excellency Ambassador Perry Holloway, Other Invited Guests and Observers, Members of the Media:

The significant and historic event witnessed today in the form of the signing of the agreement to implement the Foreign Account Tax Compliance Act (FATCA), represents both the culmination of a long travelled road and the beginning of a new phase in Guyana/United States cooperation in tax and anti-money laundering matters.  FATCA, which was enacted in 2010 by the US Congress, is designed to prevent tax fraud and evasion by US taxpayers using offshore banking facilities. It creates a new regime of automatic tax information sharing between financial institutions. FATCA requests foreign financial institutions to identify and report information about accounts held by US taxpayers in their jurisdictions. FATCA is part of a global movement towards Automatic Exchange of Information (AEIO) of non-resident financial account data among tax authorities. The Automatic Exchange of Information has the potential to increase transparency, cooperation and accountability among financial institutions, and encourage tax payers to voluntarily disclose all relevant information to tax authorities.

Guyana chose to be involved in this important venture not only because it will help to reduce tax evasion in the United States, but also, in Guyana, through the exchange of information between the two countries.  To fulfill the potential of FATCA to be a potent weapon in the fight against tax evasion and avoidance, Guyana is required to undertake a number of measures to improve and strengthen its legislative and institutional arrangements. Thus, for example, Guyana amended Section 63 of the Financial Institutions ACT, Chap 85:03, Laws of Guyana, to designate the Guyana Revenue Authority as the competent Authority, on behalf of the Government of Guyana. This will allow Financial Institutions to provide the GRA with customer information on reportable accounts.

The sharing of information across countries is important for the enforcement of domestic tax laws.  By working together to increase transparency, both Guyana and the US will be able to detect and deter abuse of the tax system in both countries.  This will enable better accountability within the global financial sector.  The FATCA Agreement represents another step in our countries’ cooperation with each other, in order to combat money laundering and tax evasion and avoidance.

Improving financial regulation and cooperation with international regulators has become an urgent priority in recent years, as the loss of correspondent banking relationships, due to de-risking, has put pressure on financial institutions in Guyana and the rest of the Caribbean region.  Healthy correspondent banking relationships are essential because they facilitate trade, foster economic growth, create legitimate avenues for growing remittances and providing access to financial services. The adverse effects of de-risking on international trade, financial stability and growth, and money transfers (including remittances) have already been felt in many of our countries. If de-risking continues unchecked, all Caribbean states can expect to experience some level of macroeconomic instability, financial exclusion and, ultimately, economic collapse.

The implementation of FATCA is only one aspect of Guyana’s recent efforts to strengthen the regulation of its financial sector.  This year, Guyana undertook a National Risk Assessment in order to allow a more pro-active approach to address Money Laundering and Terrorist Financing.  The results of this exercise will allow us to examine to what extent Guyana is compliant with the Financial Action Task Force (FATF) recommendations.  Further, numerous studies, reports and high level meetings with organisations such as the IMF, World Bank, United Nations and the Commonwealth Secretariat have been undertaken.  Additionally, Guyana also has a pre-existing Tax Information Arrangement (TIEA) with the US Government that imposes an income tax arrangement.  We are not unaware of the onerous burden and the great financial and human costs placed upon us to meet the requirements of the organisations imposing the new regulations. We will require technical and other forms of assistance, if these regulations are to be implemented in a timely and effective manner.

Your Excellency, Guyana supports all initiatives that will build our domestic and global financial sectors, including the sharing of tax information.  We look forward to continued fraternal relations with the US, not only on the issue of taxation, but also on other social and economic issues, as we strive to stamp out corruption, money laundering and the illegal trade of drugs across the globe.

Thank you!

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02 Jun
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Opening Remarks Delivered by Hon. Winston Jordan at the Caribbean Breakfast Meeting

OPENING REMARKS DELIVERED BY HON. WINSTON JORDAN AT THE CARIBBEAN BREAKFAST MEETING WITH THE MANAGING DIRECTOR, IMF, WASHINGTON, DC, USA, SUNDAY, OCTOBER 9, 2016

Madame Christine Lagarde, Managing Director, IMF; Distinguished Governors, Delegates, Ladies and Gentlemen:

It is my distinct pleasure this morning, on behalf of the Caribbean Group, to give the opening remarks at this Caribbean Breakfast Meeting.   After my first experience in Lima, Peru, last year, when I was asked to perform a similar task, I have come to consider these meetings to be extremely valuable to our region, as it provides an important, yet infrequent, opportunity for us to voice our concerns on matters affecting us at the highest level in the Fund. It is my fervent hope that this opportunity will be grasped on both sides in our quest to find appropriate workable solutions to our problems.

This year’s meeting, in particular, is very timely as it occurs at a time when Caribbean economies are facing a number of challenges, challenges that are neither being grasped nor addressed in a timely and effective manner. Among the most pressing of these matters are the downturn in Caribbean economies, occasioned by external shocks; high and rising levels of public debt; correspondent banking relationships; and climate change and recurring weather-related challenges.  The consequences of this failure to deal definitively with these issues are self evident: Our economies continue to be buffeted by strong headwinds and tossed by dangerous crosswinds; our people continue to suffer immensely while valuable resources and time are devoted to what we regard as sub optimal solutions.

Eight years after the Global Financial Crisis, in 2008, the slow pace of growth in the world economy has placed a strain on many Caribbean economies. Given our small and open nature, we remain vulnerable to the external forces in the world economy.  For 2016, the IMF predicts that the world economy will grow by 3.1 percent, the same level achieved in 2015, with considerable downside risks.  Slow world growth negatively affects our regions through two major channels: reduced tourism, and reduced demand for our commodity exports.  Despite tourism-dependent Caribbean countries experiencing a steady inflow of tourists from the United States in 2014, with arrivals increasing through 2015, with growth in the United States expected to decline in 2016, these countries may face more challenges in the years ahead.

While low commodity prices, especially oil prices, have been favourable for tourism-dependent countries, commodity-based Caribbean countries such as Suriname and Trinidad and Tobago have been devastated by falling prices for their key exports, including oil.  Trinidad and Tobago’s economy has contracted each year since 2014 and this situation has continued into 2016, while growth in Suriname declined significantly in 2015 and is expected to be negative in 2016.   In my homeland Guyana, as well as Belize, the end of the commodity boom years has put pressure on some of our traditional agricultural sectors, and resulted in lower export values.  For both tourism-dependent economies and commodity exporters, lower growth has resulted in reduced tax revenues, causing a deterioration in the fiscal position of many Caribbean nations.

Commodity prices have shown some recovery in 2016.  However, even as this occurred, the global economy experienced another shock—the United Kingdom’s vote to exit the European Union (“Brexit”).  The results of the vote shook global financial markets: volatility spiked, and the British pound fell against major world currencies.  Financial markets stabilized in the weeks following the vote, but economists believe Brexit could have longer-term negative impacts on growth of the British, and global, economy. To date, the impact of Brexit on the Caribbean has been muted. However, slower growth in the United Kingdom and Europe could have negative impacts on tourism and reduce demand for our exports.

To help Caribbean economies successfully navigate these external shocks, the IMF needs to provide more appropriate policy options and support; including support for expanding fiscal space to enable countercyclical policies, and developing more diversified economies through better business environments, enhancement of human capital, and greater economic integration within our region.

On the financial front, the latest challenge to the Caribbean is the withdrawal by international banks of correspondent banking relationships, a process known as “de-risking”.  It comes at a time when, more than any other time, our financial system is deeply integrated with, or substantially connected to, those of other countries across the world through correspondent banking. While this trend has affected countries around the globe, the small economies of the Caribbean have been hit especially hard.  In the first half of 2016 alone, at least sixteen banks, across five countries in the region, have lost all or some of their correspondent banking relationships.

Correspondent banking is the life blood of global commerce.  Healthy correspondent banking relationships are essential because they facilitate trade, foster economic growth, create legitimate avenues for growing remittances and provide access to financial services.  The adverse effects of de-risking on international trade, financial stability and growth, and money transfers and remittances have already been felt in many of our countries.  If de-risking continues unchecked, all Caribbean states can expect to experience some level of macroeconomic instability, financial exclusion and, ultimately, economic collapse. The recommendations that have been posited, such as bundling of services, taking out insurance, and collectively approaching correspondent banks appear to be unrealistic.

The issue is further complicated by the fact that banks in the Caribbean do not have a long list of international banks with which they can form correspondent banking relationships.  The progressive loss of correspondent banking relationships will increase, therefore, the already disproportionately high level of operational risk.

Over the last three years, the region has been addressing this issue not only through the implementation of FATF recommendations on AML/CFT, but, also, through numerous studies, reports and high level meetings with organizations such as the IMF, World Bank, United Nations and the Commonwealth Secretariat.  In spite of numerous promises to address the problem, however, there has been virtually no progress to staunch the hemorrhaging by these banks.  This non action, in light of the substantial work that has already been done, is worrisome. We, therefore, call upon the Fund to play a more realistic and proactive role in dealing with this phenomenon.

We applaud the efforts of the IMF and other multilateral institutions as well as Secretary of the Treasury of United States, Lew, whom we met a few days ago, for recognizing the importance of this issue to the Caribbean and the need to have it resolved. But it is to the IMF to whom we look to aggressively support Caribbean nations in taking a  multi-faceted approach to fighting de-risking, consistent with the Financial Stability Board’s four-point plan. This plan includes a further examination of the issue, clarification of regulatory expectations, capacity-building jurisdictions where respondent banks are affected, and the strengthening of tools for correspondent banks to perform due diligence checks.  Implementing this plan will require cooperation with both international banks and regulators in the United States, Europe, and other regions where international banks are domiciled.  We must ensure that rather than being cut off from international banks, our local financial institutions and supervisors can learn from their best practices for AML/CFT risk management. The IMF can play a critical role by facilitating engagement and collaboration among international banking institutions, global supervisors, and the nations suffering from this wave of de-risking, by pressuring these institutions to take immediate action.

Ladies and Gentlemen, we cannot overlook the impact that climate change has been having on the economies and livelihood of the people of the Caribbean. Climate change is upon us and is wreaking havoc on vital sectors and infrastructure of the Caribbean, including fishing, tourism and agriculture sectors.  Only a few days ago, Tropical Storm Matthew, with less than hurricane winds, wreaked havoc on the economy of St Lucia. A few days later, the tropical storm morphed into a hurricane, in the process leaving a trail of death and destruction to property and infrastructure in Haiti and The Bahamas. According to a recently released report by the United Nations Food and Agriculture Organization, climate change will lead to more frequent and severe drought in the Caribbean region which, in turn, will affect agriculture with the attendant risk of food shortages.

Extreme weather conditions, whether they vary from hurricanes to floods to droughts, will devastate the economies of the region, in the process threatening the livelihoods of millions of people.  Frighteningly, a World Bank study has concluded that a one meter rise in the sea level could destroy sixty percent of the coastal wetlands in the Caribbean and the developing world.   Many of our islands are threatened by rising sea levels. The increasing number and severity of extreme weather patterns and their changing weather cycles, with all that they entail for loss of lives and damage to property and infrastructure, can easily cripple small economies like ours.

Paradoxically, even though Caribbean nations have contributed very little to the release of harmful greenhouse gases that drive climate change, they are paying a heavy price for global inaction in reducing emissions.  Scarce financial resources have had to be diverted to deal with this phenomenon, including building climate resilient infrastructure and encouraging the movement of people to highland and more secured areas. This has resulted in an increase in the financial debt burden that Caribbean countries can ill afford at this time.   It is, therefore, imperative that there be provision of accessible climate finance at concessional rates, as well as greater use of market mechanisms to compensate low carbon emitters and economies most severely affected by climate change.   Again, the Fund’s leadership would be crucial to making this a reality.

While the Caribbean region has been grappling with these challenges, a health crisis broke out, with the emergence of the Zika virus in the region.  The World Bank’s estimates have indicated that this virus could cost US$3.5 billion to the Latin America and Caribbean region, or 0.06 percent of its GDP.  For Caribbean economies such as Belize, Bahamas, Antigua and Barbuda and Barbados, the cost of Zika is estimated at over 1 percent of their GDP.  As many Caribbean countries are already operating under constrained fiscal space, this health crisis could lead to further erosion of fiscal positions.

Presently, many Caribbean economies are aggressively pursuing policies to address these formidable challenges.  However, if we are to build a strong and resilient regional economies, the IMF must play a stronger role as well. We welcome the IMF’s views on additional steps that would enable the region to deal with its challenges, in the face of global uncertainty.  We especially welcome solutions to dealing with the corresponding banking crisis which has recently blighted our region and has threatened our financial stability.  We also welcome new solutions for promoting inclusive growth within our region, in order to end poverty.  We look forward to a broader perspective on these and other issues, in order to build economies within the Caribbean region which are resilient to global shocks and can provide “the good life” for all of our people.

Thank you ladies and gentlemen!

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02 Jun
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Remarks delivered by the Hon. Winston Jordan, Minister of Finance, at the Opening of the Student Loan Agency Building, University of Guyana

Salutations:

I am very pleased to be on these hallowed grounds of my alma mater, the place where it all began, culminating in the position I hold today, that of the Minister of Finance- a position not without its fair share of headaches and heartaches but, equally, rewarding. Rewarding in the sense that it gives me pleasure when I can be part of something that is aimed at improving the lives of Guyanese. This is what this Government, your Government that you elected over a year ago, is committed to doing.

Today’s occasion is a simple, yet important, one in the life of students and the University. Today, we meet to officially declare open this spanking new building, the new home of the Student Loan Agency.

As we all know, the Agency has been temporarily housed, since 1994 – when fee-paying at the University was re-introduced – in a building provided by the University. By way of a bit of history, that building previously housed the project office of Sub Component A of the Human Resources training and Development Loan, which was financed by the IDB to the tune of US$14.4 million, with counterpart financing of US$1.6 million being provided by the Government. The University of Guyana got the bulk of the resources, over US$11 million.

That building served its purpose. However, after 22 years of occupation by the Student Loan Agency, the attendant wear and tear, which was unmatched by the necessary maintenance, has taken its toll. In addition, the need to adequately service a growing student population in a comfortable, friendlier, more inviting atmosphere became an imperative whose time could no longer be postponed.

And so, if my memory serves me right, in or around the third quarter of last year, after a meeting with the then UGSS President – I believe his name was Mr. Griffith – who pleaded with me for the Government to do something about the Student Loan Agency, I pledged to provide a new building. I had a conversation with the then Vice Chancellor, Professor Opadeyi, who was immediately receptive to making available, a piece of land for the construction of the building. I then instructed the then Chief Planning Officer, Clyde Roopchand – who has since deceased – to assemble a team to bring the project to fruition. Overseen by a young engineer of the Ministry of Finance, Mahendra Vanbrook, the project has been finally realised.

Not only will the staff be housed in more habitable premises but the students, past and present, and other users of the services of the Agency could be assured of a more pleasant atmosphere. I ask that the building be used for the purposes intended, and that due care is taken to preserve the edifice for many years.

This building cost the Government $26.5 million to build and furnish. this taxpayers money well-spent because we see it as an investment that is principally aimed at benefitting the students attending this University. But this investment pales in comparison to the investment the Government has been making in students since the inception of the Student Loan Agency. I am speaking of the $9.5 billion that the Government has made available to the Agency, since 1994, so that students could obtain the financing to pay for their tuition at this University. The following statistics may help to give some perspective in this matter:

The following is a summary of loans issued and the state of repayment:

Number of loans issued                                                                  26,239

Value of loans issued                                                                       $9.5B

Repayments as at 2016-05-31                                                        $1.75B

Installments due as 2016-05-31                                                     $5.7B

Repayments as a % of Installments due                                         31%

Principal repaid                                                                               $1.075B

Principal due as at 2016-05-31                                                       $3.4B

Principal repaid as a % of Principal due                                         31%

Number of loans repaid                                                                  2,016

Number of loans that are up to date in payment                          1,331

Number of delinquent loans                                                           18,344

Number of persons with multiple loans                                        2,546

Repayment Funds – BOG Account 0164100413001(#1004)                         $1.79B

General Funds – BOG Account 01641004130 (#993)                                    $0.22B

Following concerns about the high delinquency rate of borrowers of the Student Loan Agency (SLA), an audit into its operations was commissioned and submitted to Cabinet for a review.

The report, which was prepared by H. L. B. R. Seebarran and Company, identified a number of deficiencies in the SLA and made several recommendations to improve its operational efficiency and the rate of collection of outstanding loans.

Cabinet undertook a preliminary review of the report before remitting it to a Cabinet sub-committee for further examination and recommendations.

There were wide ranging discussions on the SLA’s operations, its loan portfolio performance, debt collection and recovery, and organizational development, including technological development and capacity building.

The Committee agreed that there was need to review the organizational structure, so as to ensure that there is adequate balance between the workload and staffing and the business processes, in order to ensure that operations are in compliance with auditing and accounting frameworks.

We also agreed after that documents and records were being improperly stored, that there are problems in accessing the database.

We also learnt that the application used by the SLA was archaic; indeed, so was the physical computer infrastructure. This of course, reinforced the need for proper document management and information technology systems.

So the commissioning of this building today is certainly a very firm step in the direction of recalibrating the SLA so that it can be more efficient and effective in its mandate.

It was also recognized that the Committee should provide some catalyst for borrowers to repay their loans.

I am, therefore, happy to announce that in this Jubilee year, the Ministry of Finance will give a Jubilee offer to borrowers by way of the following:

  1. A 75 percent reduction in the accumulated arrears of interest, if borrowers clear their indebtedness no later than August 31, 2016
  2. A 50 percent reduction in the accumulated arrears of interest, if borrowers bring their accounts up-to-date by September 30, 2016. If, however, a borrower defaults, subsequently, the interest so waived will be restored to the borrower’s account.

And in keeping with the mandate to strengthen the work of the Agency, there will be some immediate changes to the status quo:

  • Loans will be given only to Guyanese students resident in Guyana for one hundred and eighty days continuously within a calendar year. Student borrowers must be holders of valid Guyana passports.
  • There will be new requirements for borrowers who wish to switch from one programme to another. Such borrowers must now pay off the full sum of all outstanding loans before accessing a new loan.
  • Letters of Notifications are to be sent to borrowers informing them of their loan balances. These will be sent one month after the loan is issued. In the event of a failure to respond positively by the borrowers, after a reasonable period has elapsed following a demand for payment, the Government will exercise all options to recover the debt, including litigation.
  • Where students cannot be located or have failed to respond to written and oral communication, the SLA will send notification to the guarantors.
  • As part of the strengthened screening process, guarantors will now be required to produce Liability Statements and/or credit reports from the Credit Bureau. The current forms will be reformatted to include an option to change guarantors.
  • Students will now be required to start repayment on or before the one year grace period, once they have secured employment.

Consideration be given to a scheme wherein a borrower who serves continuously for five years after graduation, in designated areas away from his/her normal place of resident (for example, a borrower normally resident in Region 4 serving in Regions 1, 2, 7, 8, 9, or 10) can have the entire balance of his/her loan at the end of the five year period written off.

The Government has been fulfilling its obligation to provide funds so that students can access loans to finance their education. Students have an equal obligation to repay those funds upon completion of their University education and in keeping with the terms and conditions of their contracts. Otherwise, a Fund that is meant to be revolving, would soon dry up, and future students will be denied an opportunity to fulfill their dreams. The selfish attitude of many borrowers who are in a position to pay, but who refuse to honor their obligations, must not be allowed to derail the Scheme. In putting in these measures, we do not want to make life hard or difficult for any student. But, we would be irresponsible, nay derelict in our duty as a Government, if we allow hard-earned tax payers money to be frittered away in high delinquent rates and low recovery ratios.

Earlier, I spoke to you about loan that was extended by the IDB for education development. That loan had two other Subcomponents, B & C, one of which was targeted to assisting eligible persons to pursue postgraduate training overseas. That in essence was the first Student Revolving Loan Fund. But, sad to say, it never revolved because the borrowers did not repay their loans. History is repeating itself at a higher level. Luckily, the indifference paid in the past to managing the Student Loan Agency and collecting past due debts has been arrested. With these new measures, we hope that both current, past and future students will develop a culture of honoring their obligations. For what is a nation, whose soul is populated by the recalcitrant and the disinterested.

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