Allowing Treasury Bills for budgetary support is akin to converting BoG into a slush fund

Dear Editor,
I was encouraged to undertake some research after reading your newspaper article dated January 5, 2020, headlined “Bank of Guyana overdraft now over $75B”. My investigation revealed that there is something exceedingly more dangerous than the overdraft, and that is the new practice by the Bank of Guyana (hereafter referred to as the Bank) to issue Treasury Bills for budgetary support.
The Statistical Bulletin for the 3rd quarter of 2019 of the Bank shows that Treasury Bills explicitly issued for this purpose increased from $1,300 million in May 2018 to $67,517.1 million by August 2019.
It is important to note that this new practice is unlawful and severely undermines the independence of the Bank. According to Section 46 of the Bank of Guyana Act, “The Bank may purchase or sell negotiable securities issued by the Government: Provided, that the Bank may not, except as otherwise specifically permitted under Section 7 (3), 49 (2) or 50 purchase or sell such securities from or to the Government.”
When Section 46 is read conjunctively with these Sections, it means that the Bank can only issue Government securities: (i) where its General Reserves Fund is inadequate to cover any net loss of the Bank; (ii) to cover any loss from the revaluation of the Bank’s assets or liabilities denominated in gold, foreign currencies or internationally recognised reserves, and (iii) for open market operations.
The general rule governing the credit operations with Government securities, as well as the exceptions to the general rule, does not provide for the issue of Treasury Bills for fiscal purposes. The new practice by the Central Bank is, therefore, completely illegal.
Editor, I am upset not only by the complicity of the Bank to facilitate this illegality but its impudence to report the breach. Indeed, by reporting the breach, the Governor and Board of the Bank are collectively telling the nation that they have no qualms breaking the law or shying away from their purpose set out in Section 3 (1) of the Act, which states that “… the Bank of Guyana shall be an autonomous institution governed by this Act”.
While it has become customary for all and sundry to trample upon our laws, I believe this new practice should be challenged at every level. If not, it will continue with the intensification of the risk of the Bank being used as a slush fund to support the reckless spending of Government, eg, purchase of flags, $600 million medical bills for 29 Cabinet members, fireworks and helicopter rides by Government officials to deliver kites to citizens in the interior regions. Allowing this illegality is akin to giving someone with a spending addiction a signed cheque to spend at his/her whims and fancy.

Sincerely,
Name withheld