Antigua PM criticizes banks over lending, calls for more credit to boost economy
Key Points(5)
- Antigua and Barbuda Prime Minister Gaston Browne has criticized the country's banking sector for failing to provide enough loans to businesses and households, arguing that conservative lending practices are limiting economic growth.
- Browne, who also serves as finance minister, said on his weekly radio program that banks operating in the twin-island nation are “not stepping up to the plate” despite having sufficient liquidity.
- “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.
- The prime minister pointed to the latest assessment of Antigua and Barbuda's economy by the International Monetary Fund, which highlighted limited access to financing as an obstacle for local businesses.
Antigua and Barbuda Prime Minister Gaston Browne has criticized the country's banking sector for failing to provide enough loans to businesses and households, arguing that conservative lending practices are limiting economic growth.
Browne, who also serves as finance minister, said on his weekly radio program that banks operating in the twin-island nation are “not stepping up to the plate” despite having sufficient liquidity.
“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.
The prime minister pointed to the latest assessment of Antigua and Barbuda's economy by the International Monetary Fund, which highlighted limited access to financing as an obstacle for local businesses.
According to the IMF, bank credit to the private sector has declined substantially as a share of gross domestic product since the 2008-09 global financial crisis.
“Businesses have reported limited access to finance as a key obstacle,” the IMF said. “But banks cite a lack of bankable projects and invest a large share of their assets abroad.”
Browne described the country's banking sector as “overly conservative” and argued that stronger lending is needed to stimulate economic activity.
He said the IMF viewed the launch of a regional credit bureau for banks in Antigua and Barbuda, along with the planned inclusion of credit unions, as a positive development that could help expand access to financing.
The credit bureau could reduce information gaps between borrowers and lenders, including by allowing lenders to use entrepreneurs' personal credit scores as an indication of the creditworthiness of their businesses.
Browne argued that without greater lending from domestic banks, economic growth would be constrained and called on financial institutions to become more aggressive in providing mortgages and financing housing construction.
He said home loans generally represent relatively low-risk lending because homeowners have a strong incentive to remain current on mortgage payments.
The prime minister also suggested that commercial banks collectively provide the government with as much as EC$100 million, or about US$37 million, to finance housing construction, describing such lending as a relatively safe investment.
Browne warned that banks could eventually lose market share to new competitors if they continue pursuing what he described as excessively conservative lending policies.
