A $35 million-million-dollar Memorandum of Understanding (MoU) was signed with the World Bank on Friday, with Finance Minister Winston Jordan dubbing the money as “Balance of Payments” support.
The signing was done at the Finance Ministry, under the eyes of incumbent World Bank Country Officer Pierre Nadji. The money had first been announced in June, intended to go towards strengthening the financial sector. According to Jordan, the money was fast tracked.
“Today’s (Friday’s) simple ceremony is to sign the development credit that has been extended us by the World Bank for approximately US$35 million in support of the emerging oil and gas sector,” Jordan stated. “I would like to thank the World Bank, and Mr. Nadji in particular, as our country manager for fast tracking this facility.”
“The World Bank has made available roughly US$90 million for us over the next two to three years; all of this is coming from the IDA (International Development Association) resources, which is the soft window of the bank, and this roughly
Finance Minister Winston Jordan displays the MoU alongside Senior Country Manager Pierre Nadji
US$35 million is part of that facility,” he said.
Jordan noted that a second tranche to go specifically towards the oil and gas sector is being worked out. He referred to the US$35 million as balance of payments’ support.
Since the money was announced, some persons have linked the recent financial legislation passed in the house to the loan. And in response, Nadji congratulated Government on passing these bills.
“We commend the Government and our team for the joint effort in partnership. We prepared this loan in a record time, (it) will support the budget of the Government, help stabilising the financial sector, and prepare the grounds for some physical management. The operation is about $35 million; it’s the first of a series of two which we hope to be able to do within the coming year.”
“I must also say the latest legislative act that was passed was passed right at the time for this agreement; and really, this was a significant effort on the part of the Government. So we’re pleased, and (are) looking forward to continuing doing more of these, and help the Guyanese people address the many challenges,” Nadji related.
BoP
Balance of Payments is statistical data on a country’s fiscal transactions, including imports and exports. To record a deficit, a country would have had to spend more on imports, among other things, that it derived from exports.
Data from the Finance Ministry has shown that there is a deficit in balance of payments. In fact, Guyana’s overall Balance of Payments deficit has skyrocketed to US$94 million, compared to US$8.8 million for the corresponding period last year, this represents a telling indicator of Guyana’s economic situation.
The recently released Bank of Guyana (BoG) Quarterly Report and Statistical Bulletin, from which the above figures are culled, attributes this Balance of Payments deficit to an expanding current account deficit and to higher fuel prices.
“This was primarily due to an expansion of the Current Account deficit, despite a surplus on the Capital Account. The deficit on the Current Account resulted from a higher merchandise trade deficit due to higher imports, primarily fuel,” the report states.
According to the report, Guyana’s overall Balance of Payments situation in the 2017 fiscal year showed a deficit of US$69.5 million. This is a hike when compared to US$53.3 million of the previous year. And a breakdown of the figures shows stunning disparities.
On the one hand, the Current Account shows a deficit of US$287.4 million for the year 2017. But in the previous fiscal year, the report notes, this was just US$12.4 million. The report admits that this is because of a negative balance on the merchandise trade account.
“The further weakening was due to the negative balance on the Merchandise Trade Account. Merchandise exports were slightly lower than projected, mainly on account of lower export earnings of gold and other exports in the last two months of the year,” the report states.
