The Proposed Guyana Development Bank, Part II

ECONOMIC ANALYSIS · DEVELOPMENT FINANCE · LEGISLATION

Georgetown — June 25, 2026 · Second of two parts

In April, in these pages, I argued that the question before the country was no longer whether Guyana should build a development bank but how — and that the answer would be written not in the announcements but in the unglamorous clauses of a bill then sitting with the President. That bill is now public. Gazetted on the fourth of June as Bill No. 5 of 2026, and tabled by the Senior Minister with responsibility for Finance, the Guyana Development Bank Bill gives us at last a text to read instead of an intention to trust. A bill is a more honest interlocutor than a press release: it cannot gesture, it must say. In April I named four variables on which the institution’s survival would turn. The bill has now answered all four. It is worth recording, plainly, what it said.

Let me grant the bill its merits first, because they are real and the argument is stronger for conceding them. The Bank is brought squarely within the Fiscal Management and Accountability Act: its budget must be prepared under section 79, its annual report and audited statements laid under section 80, and its accounts audited each year by the Auditor General (clauses 28 to 30). It is forbidden to take deposits from the public or to trade speculatively (clause 6). Its Chief Executive is appointed by the Board rather than the Minister (clause 17). It is required to adopt written credit policies addressing eligibility, risk, approval thresholds, and recovery (clause 25). And in clause 9(c) the Board is charged, in so many words, to “safeguard the independence of credit decisions.” A drafter indifferent to governance would not have written that line. The difficulty is that everything the bill does does not make the line true.

The bill supplies the vocabulary of independence and withholds its architecture. It names the principle in a single clause and entrusts it to a board every member of which is the Minister’s appointee. — Terrence R. Blackman

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The Four Tests, Answered

Take the first and gravest. The single most important recommendation of April — a credit committee whose independence is structural rather than asserted — is the one the bill declines to make. Competence it secures: directors must come from finance, economics, banking, and law (clause 7(4)). But competence was never the question on the table. The question is whether a board every member of which is appointed by one office, serving terms renewable by that office, and paid at a rate fixed by that office, can “safeguard the independence of credit decisions” from that office. Independence is not a quality of persons; it is a property of structures — of the constraints a framework places on the powerful, not the credentials of the people it appoints. A board can be wholly competent and wholly dependent at once. This one is built to be both. And the safeguard on which the integrity of the whole rests — the power to remove a director — is written in the passive voice: “a director may be removed” (clause 15), naming grounds but no remover, no procedure, and no appeal.

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What Was Announced, and What the Act Encodes

This is the quiet revelation that comes from reading the text against the announcement. Nearly every concrete feature this Journal described in April as well-conceived — the second tier through the commercial banks, the sub-four-per-cent rate, the ten-million-dollar combined envelope, the prioritization of youth, women, and persons living with disabilities — is policy, not law. It lives in speeches and is unprotected by the statute. The commercial-bank tier, which a reader of this Journal rightly doubted the banks would honor without a first-loss guarantee, is not in the Act at all; it is a hope expressed as an architecture. And the two numbers that do appear — the forty-billion-dollar authorized capital, funded “in such amounts and at such times as the Minister may determine” (clause 20(3)), and the three-million-dollar ceiling — are both adjustable by Order under negative resolution, the procedure designed precisely not to require debate. The scale of the institution, in other words, is set in primary legislation only nominally. In substance it is a dial. Two further gaps the Gazette exposes deserve naming. First, the bill instructs the Bank to have regard to “financial sustainability” (clause 5(1)(b)) and, three lines later, authorizes it to lend “with or without collateral and with or without charging interest” (clause 5(2)(a)). These provisions point in opposite directions, and the Act referees between them nowhere — no floor on interest, no minimum on security, no recovery target, no cap on the share of the book that may be lent free and unsecured. The whole reconciliation is delegated to a credit policy written by the appointed board. We have seen this institution before: the Guyana Agricultural and Industrial Development Bank was founded in 1972 to direct concessional credit, lent on political logic, and closed insolvent in 1995. It did not fail for want of competent directors. It failed because nothing in its design constrained the use to which competent directors could be put. Second, the one body in Guyana whose business is to ask, while loans are being made, whether they are prudent — the Bank of Guyana — is statutorily excluded: clause 32 exempts the Bank from the Financial Institutions Act entirely. The only external checks that remain are retrospective. Disclosure after the lending year has closed is not supervision; it is an autopsy.

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Six Amendments, Before It Becomes an Act

None of this is an argument against the bank. It is an argument for amending the bill while it can still be amended — for closing, on the floor of the National Assembly, the distance between what the institution says and what it is built to do. Six changes would close most of it.

The test of this bank is not whether its first directors are honest. It is whether its design would survive a change of government — whether it is built so that no party, this one or the next, could turn a forty-billion-dollar loan book into an instrument. — Terrence R. Blackman

When this bill reaches the floor, the temptation on all sides will be the one I named in April: to debate the existence of the bank rather than its architecture. The opposition will be tempted to call it a patronage instrument in waiting; the government benches will be tempted to call any criticism obstruction. Both framings miss the question that matters. A framework that works only so long as those who hold power choose to honor it is not a framework; it is a wager on their character, renewed at every election. The remedy is not to abandon the bank — the diagnosis that justified it remains correct, and the country still needs the institution this bill is trying to build. The remedy is to amend the bill before it becomes an Act, so that the vocabulary of independence is matched, clause for clause, by its architecture. The Assembly will not return to this statute for a generation. It should debate it now as if the next government, not this one, were already in office. That is the only audience for which good institutional design has ever been written. Be well.

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This essay is the second of two parts. The first, “Guyana’s New Development Bank,” appeared in this Journal on April 23, 2026. Published with the support of MCCGUSA and the Guyana Business Journal’s commitment to independent economic analysis.