Prevailing narrative of alarm expressed by some critics seems misplaced

Dear Editor,
Allow me to clarify some of the misunderstandings surrounding the Guyana Development Bank Bill that was recently tabled in Parliament. While scrutiny of any major financial institution is both necessary and welcome, commentary from a small group of critics appears to overlook a central fact: the proposed bill has been deliberately designed to address the very weaknesses that historically undermined national development banks.
It is well established in the literature that development banks tend to fail primarily due to “directed lending”, where credit decisions are influenced by political expediency or personal patronage rather than the technical merit of projects. The drafters of this bill have clearly taken this lesson seriously. At its core, the legislation establishes a robust institutional firewall between the executive branch and the technocratic machinery responsible for allocating the Bank’s funds.
Firstly, the Bill prevents the Minister responsible for Finance from determining credit decisions and limits his power to the appointment of the Board of Directors (see Clause 7(2)) and making regulations (see Clause 34(1)). It is the Board of Directors that is responsible for such decisions. Clause 9(b) and (c) explicitly mandate that the Board of Directors, and not the Minister, assess risk and approve credit and governance policies, as well as safeguard the independence of credit decisions. In other words, while the Minister is allowed to set strategic parameters by way of regulations, these clauses insulate the bank’s lending decisions from external directives and political interference.
An additional measure to preserve the bank’s independence is introduced by the operational architecture proposed by the bill. Clause 25(1), for instance, mandates that the Bank create explicit credit policies to guide eligibility criteria, risk assessment, approval of thresholds, and monitoring and recovery (see Clause 25(2)). These clauses not only help formalise the lending process but also make it transparent and rules-based. In doing so, these clauses also limit discretionary decision-making and reduce the likelihood that management could be pressured to approve loans on non-commercial or political grounds.
Clause 26, which clearly limits debt restructuring and write-offs, is an equally important safeguard. This provision mandates that such actions be carried out under board supervision and in accordance with approved internal policies, rather than arbitrarily. Therefore, the prospect of arbitrary or politically motivated concessions on debt restructuring and write-offs is eliminated by Clause 26.
The bill clearly delineates the roles of the board and staff of the bank. Under Clauses 25(1) and (2), the board is tasked with strategic oversight and business planning, while Clauses 18 and 19 assign day-to-day operations to the chief executive officer and technical staff. These clauses further entrench a merit-based lending culture to ensure that professional, career technocrats – rather than political actors – drive project appraisal and credit allocation.
Moreover, by explicitly defining eligible small and medium-sized enterprises under Clause 2, the Bill prevents the Bank from being repurposed as a discretionary financing vehicle for large, well-connected firms. This is a critical safeguard in ensuring that the institution remains focused on addressing genuine market gaps.
Finally, all the Bank’s activities will be subject to audit scrutiny under Clause 29, reinforcing accountability and compliance at every level. Taken together, these provisions align closely with the governance frameworks of successful development banks. As a matter of fact, the bill outlines a Government framework consistent with best practices that will directly confront the historical pitfalls responsible for the failure of state-led financing institutions.
In view of the foregoing, the prevailing narrative of alarm expressed by some critics seems misplaced. Rather than undermining the initiative with speculative concerns, the national conversation would benefit from a more careful reading of the bill and a more balanced appreciation of its safeguards. The legislation does not ignore good governance and the factors that contribute to the failure of development banks. Instead, it makes sufficient provisions for good governance.
Kind regards,
Professor Tarron Khemraj & Sukrishnalall Pasha