ST. JOHN’S, Antigua - Prime Minister Gaston Browne has criticised the local banking sector for not making “enough loans available” so as to stimulate the domestic economy.
Prime Minister Gaston Browne speaking on his weekly radio programmeSpeaking on his weekly radio programme, Browne told listeners that the banks operating here are “not stepping up to the plate” and “are not making enough loans available.
“In fact, credit to the business sector increased by only three per cent and domestic credit remains stagnant. So, our banks to some extent, are failing us as they rely almost exclusively on fees in order to turn large profits and I want to call upon them to review their policies and to be a bit more responsive to the credit needs of the people of this country,” Browne said.
Browne, who is also the Minister of Finance, told the programme that the banking sector here is “overly conservative” in its lending policies, making referencing the latest International Monetary Fund (IMF) assessment of the Antigua and Barbuda economy.
According to Browne, the Washington-based financial institution noted that the local banking sector remains liquid, while lending to businesses had declined.
“Businesses have reported limited access to finance as a key obstacle. Bank credit to the private sector has declined substantially as a share of GDP (gross domestic product)since the 2008–09 global financial crisis (GFC).
“But banks cite a lack of bankable projects and invest a large share of their assets abroad,” the IMF reported noted with Prime Minister Browne telling radio listeners that “(IMF) staff saw the launch in Antigua and Barbuda of the regional credit bureau for banks—and the planned
inclusion of credit unions—as a welcome step towards bridging this gap, by reducing informational asymmetries between lenders and borrowers and facilitating broader access to credit”.
He said this could be done for example by enabling lenders’ use of entrepreneur-individuals’ credit scores as proxies for their business creditworthiness.”
According to PM Browne if left to the domestic banking sector, there would be no growth in the economy, appealing to the banking sector to be more aggressive to lending to build new
homes as invariably these loans are usually low-risk as no one wants to ever lose his/her home and would do anything to make the mortgage payments.
Browne told the radio programme that the banks should get together and offer the government up to EC$100 million (One EC dollar=US$0.37 cents) to construct houses knowing that this would be relatively safe investment for the financial institutions.
He warned that if the banks continue this level of conservative policies they could end up losing market share to any new entrants into the market.
