Economist Richard Rambarran has commended the government for its plans to modernise the country’s financial sector, describing the initiative as a significant step toward driving economic growth.
Those plans, which include a significant focus on the stock market, were reiterated by President Dr Irfaan Ali on Thursday at a gathering of local business professionals. He also announced that a junior stock exchange would be established.
So what does this really mean?
According to Rambarran, Guyana’s private sector has long advocated for the modernisation of the stock market. He explained that a large amount of money currently sits idle in commercial banks and financial institutions, earning very low interest rates in savings accounts.
So, the economist explained that by modernising the stock exchange and introducing new financial instruments, unused capital can be redirected into productive investments.
“Modernising the stock exchange and providing more instruments allows that idle capital to actually earn more by being mobilised and placed in investments in the country,” Rambarran told the News Room.
The economist also highlighted that introducing more types of investment products and giving investors the ability to trade stocks more easily, including the option to trade without going through a broker, would benefit the entire financial system.
“So, if you think about it, increased equity investment, different types of products being offered on the stock exchange, the ability to use stocks etc., to trade amongst oneself without going through a broker, there are a number of things that that bears benefit from, so that is one very important component in terms of the modernisation,” Rambarran explained.
Another key part of the government’s plan is the creation of a junior stock market, which Rambarran described as “extremely important.”
“The junior stock market really permits smaller enterprises to integrate into the financial architecture, raise capital, modernise their operations, and structure themselves for increased investment,” Rambarran explained.
He posited that while the announcement may seem narrow in focus, its impact could be transformative.
“It is really something that has a catalytic effect,” he said.
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