Guyana likely to face several adverse effects of global financial crisisGuyana is likely to face some of the adverse effects of the global financial crisis in various sectors and the country could take about a year to recover fully from its impact.This was disclosed during a panel discussion arranged by the Georgetown Chamber of Commerce and Industry on the crisis and its implications for countries like Guyana.Panelists were Dr. Maurice Odle of CARICOM, and Assistant Chief Accountant of Bank of Guyana, Maurice Monroe.In his presentation, Dr. Odle focused on the implications of the vulnerability and volatility of Guyana-type economies; the impact on the financial sector and financial sector policy; the Non-financial sector, which is the real sector; and broad policy implications for Guyana and CARICOM, as a whole.According to Dr. Odle, Guyana is usually characterised as a small vulnerable economy which is susceptible to a high degree of income volatility. The vulnerability, he added, stems primarily from the very open nature of the economy as is reflected in the fact that exports are equivalent to approximately as much as 75 per cent of GDP.Dr. Odle said that the trade vulnerability is compounded by a considerable degree of structural dependence in that a few commodities (sugar,Jerseys From China, rice,Cheap NBA Jerseys China, bauxite, seafood, gold and diamonds and wood products) account for the bulk of the export earnings.Moreover, he said, the sales of the commodities are concentrated on a few traditional markets in Europe and North America (although the Caribbean is not an unimportant market for rice and shrimp).The Guyana goods sector is therefore likely to be adversely impacted by the external shock occasioned by the current financial crisis, especially if it leads to a full blown recession, Dr. Odle contended.“Guyana is also a very significant exporter of labour and last year was said to have received in remittances as much as US$424M, which represented as much as 43% of GDP. Since remittances are primarily out of income earned, the severe global downturn, centering on the USA, the main destination of the Diaspora, will have an almost immediate impact and is likely to persist beyond the period of the recession, until asset items foregone are acquired by the metropolitan based remitters.”He pointed out that vulnerability also exists with respect to foreign investment flows (averaging nearly US$100m in the last three years) since these constitute a rather high percentage of private sector capital formation.Large projects, he added, involving a considerable capital outlay are likely to be the ones most affected,Cheap Jerseys USA, although ongoing projects would tend to be continued until the completion stage. “Thus the Marriott hotel project may be pushed backwards.”IMPACT ON FINANCIAL SECTORHe told the audience that the financial sector is said to be made up of commercial banks, insurance companies and other institutional investors, and the security sector.Commercial banks in a country like Guyana are fairly insulated from the global financial crisis because they are not holders of the toxic mortgage backed securities which have depreciated in value.The banking system does not have branches, or even stand-alone subsidiaries, of the worse hit foreign banks and correspondent banking relationships for facilitating day-to-day trading transactions are mostly intact, Mr Odle added.However, there is a danger that the local banks may become even more risk averse than they are today and will gravitate towards holding more liquid assets and fixed income government securities, and away from start-up ventures and the more risky activities that lack assured outcomes or adequate collateral, he said.“In any event, in a worse case scenario, the government should be prepared to perform its role of ‘lender of last resort’.”Dr. Odle asserted that the current global financial crisis should also cause the government to revisit the issue of introducing depositors’ insurance, moral hazard notwithstanding. Similar consideration could be given to savings in credit unions since there could be substitution between the two outlets, depending on depositors’ perceived levels of relative safety.With respect to the insurance sector, Dr. Odle said that a lack of sufficient disclosure and transparency makes it difficult to determine whether any toxic mortgage-backed securities are being held locally.“However,Authentic Adidas Hockey Jerseys China, it is possible that some of the major industrial, commercial and public utilities assets are insured by the distressed giant, American International Group (AIG) as is the case in Jamaica and Trinidad and Tobago, via a cross-border supply process operated