Dear Editor,
As a financial analyst, I want to express my deep gratitude to the teams in the Ministry of Finance and the Research Department at the Bank of Guyana for a job well done in producing their respective half-year reports for 2017.
But the story from the numbers is not very encouraging. 1: When you want foreign currency, then the rate that applies to you is called the selling rate. The average selling rate for the US dollar depreciated by $5.40 against the US dollar in six months, between January and June 2017. That was a decline in value of almost a dollar a month.
2: If one observes the depreciation rate over this six-month period, the Guyana dollar depreciated by 2.9%, while the TT dollar and Jamaica dollar depreciated by 1.8% and 1.7% respectively.
3: The difference in the average buying rate between the banks and the non-bank cambios increased from G$0.81 at the end of 2016 to G$3.44 at the end of June 2017. Can this be one of the reasons why some US$6.2 million less were sold to the banking system by John Public? Or was it a case of money being moved into the underground economy?
4: What is absolutely clear is that the Bank of Guyana, in the first six months, refused to reveal how much foreign currency it had injected into the local financial system. But to get a glimpse of what is happening, one only has to peruse the Bank of Guyana’s Balance Sheet. The Central Bank has lost about US$20 million in foreign asset value over the six months to June 2017. To confirm the position of this balance sheet, there is a corresponding increase in other local assets. This is a clear indication of the size of the foreign currency injection into the system, and that is a major shift from the first six months of 2015, when it was reported that the Central Bank had injected US$0.7 million into the system in that 6-month period.
5: Using Professor Erbe’s model, which is also used by the World Bank, and the Balance of Payment figures released by the Ministry of Finance as the source of the input figures, capital flight in the first six months of 2017 was estimated at US$53 million. In case we did not know it, capital flight is a real phenomenon in Guyana today, and by way of a process of foreign currency arbitrage and transfer pricing, the local business community is moving boatloads of money offshore. As Rome burns, Nero fiddles; carry on Mr Jordan.
Now, having these figures and the two reports at our disposal, any policy-maker would have reflected deeply on changing course swiftly; because, clearly, what the doctor has ordered since May 2015 does not appear to be working.
I am again appealing to President Granger; it is his duty to appoint Minister Carl Greenidge to be the Minister of Finance. This guy has the experience, the exposure, the talent, and training to improve the performance of this economy. He may not be as talented and skilled as Ashni Singh or Bharrat Jagdeo, but he is many times better than Mr Jordan, and I have confidence that he can stabilise this economy.
The longer President Granger allows petty grudges to deny the rightful PNC Minister of Finance access into Main Street, the more the poor and the working class will suffer, because ‘bluff’ is not a substitute for real talent.
Sase Singh
