Guyana’s finances are being mismanaged

Dear Editor,

From Plato through to the 21st century, mankind could draw on comprehensive thoughts to guide their governments and societies towards a better life. What I am witnessing today under this Granger government are major acts of economic mismanagement of the nation’s finances. But what is even scarier is how unprepared the Fourth Estate is at exposing this economic mismanagement. If it were not for some stellar work from Chris Ram and Anand Goolsarran, the nation would have been totally in the dark on many key things.

Am I to believe that we, as a people, have lost our foundational supports in the media? Where are the investigative journalists on the local scene? The media should be aware that the politicians have set a trap for them by creating a daily circus to fill the papers with nuisance value items. It is all “smoke and mirrors” tactics to hide the current financial skullduggery in the economy.

As an example, the nation has lost G$58 billion at the Bank of Guyana from Government Deposits since President Granger was sworn.

I am presenting a chart below with source documents to attest to this fact. I am hoping a bright journalist will have the courage of conviction to ask the good Minister the hard questions behind this situation.

A Central Bank is a lender of last resort in an economy. When the banking system seizes up, it is the function of the Central Bank to prevent the financial system from failing. But it can only do this if its balance sheet remains stable and strong. If one were to peruse the balance sheet of the Bank of Guyana, one would see it has been losing value for a while now under this Granger administration. This is a major economic threat, and all the evidence of this economic meltdown can be found on Table 1.2 on the latest Bank of Guyana Statistical Abstract.

On the liability side of the Balance Sheet, if one cross-examines the numbers, one will find a column called Government Deposits. According to the notes of this BoG document, Government Deposits are current account deposits from the Central Government at the Central Bank – literally the local savings of the government.

In February 2014, the Government had liquid cash (saving) deposited in the Bank of Guyana to the tune of G$38 billion (see chart). When Mr. Ramotar left in May 2015, some G$23 billion had been depleted, but there was still a savings of G$10 billion.

But what has happened since then? Mr. Granger told the nation that he was the better man, and the man who would turn around the economy. Utter bollock!

Since Mr. Granger came to office, some G$58 billion was drained from the Government Deposits at the Central Bank. But you only met G$10 billion in savings, so what did you do? You borrowed some G$48 billion from the Central Bank. And it was déjà vu and the Burnham days of reckless spending not supported by adequate revenues are here again.

You have deliberately imported major systemic risk into the Central Bank, which they did not experience since the Burnham days, when his team collectively drove the economy into a state of “uncreditworthiness” and bankruptcy in the 1980s.

This act of deliberately weakening the balance sheet of the Bank of Guyana by offering the silly explanation that the future oil revenue will replenish the overdraft is economic hogwash. WHY?

What if the oil price changes? What if the world demand flattens and another source floods the market, leading to a slow up in the production in Guyana? This Granger government has unilaterally made the decision to already spend 2 years of the oil revenue before it has actually touched it. What a gamble!

I am calling on President Granger to reflect deeply on what his government is doing to this nation’s finances, and take the high road and repay the Central Bank every single cent of the G$48 billion that his government took from this institution of financial stability since May 2015. It is your duty as the President to preserve the integrity of the nation’s financial system.

Regards

Sasenarine Singh