General and Regional Elections are creeping closer and closer and the central bank’s overdraft of public funds keeps increasing in size— with the latest figures from the Bank of Guyana showing an overdraft of over $75 billion.
The Bank of Guyana
According to the Bank of Guyana’s statement of Assets and Liabilities, the bank had a negative balance of $76.8 billion as of November 12, 2019. This is a situation that can lead to revenues, in particular, the oil revenues, being diverted.
The International Monetary Fund (IMF) has warned about this situation since 2018, writing in its 2018 staff report that: “Staff reiterated and stressed the importance of settling these balances at the central bank, which the authorities agreed to do in the short-term through the issuance of Treasury Bills”.
Public deposits at the central bank were plunged into overdraft status back in 2015 when the new coalition government ended the year with a $2.3 billion overdraft. When the Government took over in May 2015, they had met public deposits of approximately $10.4 billion.
By 2016 year-end, the overdraft had grown to approximately $21.3 billion, after a year of increasing withdrawals. At the end of the 2017 fiscal year, the overdraft had reached 25.7 billion.
In contrast, Bank of Guyana data shows that the bank’s public deposits were in the positive – $21.4 billion to be precise – at the end of 2014. In 2013, the bank’s deposits were $52.1 billion. And the preceding year, the funds were approximately $57.2 billion.
While the drawdown on funds started under the previous administration, public deposits were built up to over $69 billion in the year 2010. Far from being built up under the current government, they have never been able to rise above the red.But with the coming oil revenue and the extra case it brings, Government has not appeared too worried about filling fiscal holes. It was previously reported that Finance Minister Winston Jordan when asked about replenishing the fallen foreign reserves, had said there was nothing to worry about with oil money coming in.
Jordan had said that with the revenue the Government is expecting from first oil in 2020, the foreign reserves will be replenished. Since he made those comments in September, Exxon and its partners have started pumping oil since last year.
“That is just a temporary situation, given our receipts that come in next year,” Jordan said. “And then subsequent to that. One of the reasons you have savings is that if you have need to use some, you do that and afterwards you replenish it as you pick up again.”
“So essentially, I don’t know that people have to make an alarm over it. Imports are coming into the country, the exchange rate is relatively there, notwithstanding all the pressure on the regime itself.”
“Despite all of that, we are still there. It would be something of a concern if we didn’t have on the horizon foreign exchange coming to replenish, stabilise and grow (the fund),” Jordan had said.
