By Sase Singh; MSc – Finance, ACCA
The negative economic impact of the mismanagement of the economy is escalating and there is no greater evidence of this than the state of the Government Deposits at the Bank of Guyana.
Lawmakers in Georgetown are really testing the mettle of the people when they conduct the affairs of the State so tragically. Every day uncertainty continues to build in society, so much so, that it has now been ingrained in the psyche of consumers, the investors and most definitely – the official Private Sector. This is not how you mould a nation.
If one is to observe how the A Partnership for National Unity/Alliance For Change/People’s National Congress (APNU/AFC/PNC-led) Government has managed the deposit account of the Central Government at the Bank of Guyana, it is a manifestation of gross incompetence of the highest order. That account should at all times have cash in it as a strategy to combat inflation. Yet this PNC-led Government continues to spend and spend and not earn adequately. All they are doing is empowering the economic demon called inflation to creep deeper into the economy, and in the process destroy the wealth of the people. Inflation usually hits the poorest hardest and their “bellies ah bun” already. Could that be a big part of the reason why they delivered a shellacking on the siting PNC-led Government at the recently held Local Government Elactions?
The International Monetary Fund continues to recommend that limiting overdrafts at the Central Bank enhance its credibility and is a key ingredient for achieving effective monetary policy. Recently, the rules governing Central Bank lending to the Government have been revisited to make them efficient (Bank of International Settlements, 2009). The basic recommendation was to establish explicit restrictions to Central Bank financing governments in order to avoid disrupting Central Banks’ objective of preserving price stability.
The graph above illustrates that when the People’s Progressive Party lost power in May 2015, they transferred to the new PNC-led Government GY$10.4 billion in liquid cash sitting at the Bank of Guyana. Fast-forward three plus years to the end of September 2018, and the evidence shows that the PNC-led Government spent all that cash and ran up an overdraft of some GY$55.4 billion. That translates to the fact that they have drained all of the deposit and then went on to borrow from the Central Bank at a rate of G$54 million per day during their tenure with no source of inflows to replenish those outflows.
The empirical evidence further proves that for more than 12 months there has been massive capital flight from the country, as the Private Sector thought it fit to park their resources in Miami rather than Mahaica. One only has to look at the data and they can see that private investment is down drastically. Additionally, there is a stark reduction in money circulating in the hands of the working class and one only has to visit places like Canje on the Corentyne to witness how a once vibrant community has been reduced to an economic ghost town.
But do these politicians in Congress Place care? From where the Guyanese people sit, all they are seeing is a bunch of opportunists singularly focused on personal power and enrichment and do not care a hoot for the welfare of the working class. Even after more than half of the electorate rejected the ruling political establishment, we continue to see an opacity and denseness in the brains of these politicians.
The demographic evidence proves that Guyana is a nation of minorities and that our Constitution is outdated at serving the nation. Yet the PNC found the opportunity to scuttle the constitutional reform as proposed in the APNU/AFC Manifesto? All the PNC has done – by destroying that process – was to put Guyana firmly on a path that is heading for the bottom of the Caribbean economic ladder and fast.
Today the majority of Guyanese truly believe the Government of Guyana cannot be depended on. More importantly, the Guyana Parliament has been reduced to the laughing stock of the Caribbean. No side can be proud of itself today. I keep hearing Bharat Jagdeo must do this and Jagdeo must do that, but Jagdeo is not the President of Guyana.
This situation demands leadership from Congress Place and what I saw at that Moses Nagamootoo press conference held at Congress Place on November 16, 2018, was most uninspiring. What next must we expect from these incompetent and intellectually bankrupt politicians?
