The PNC has looted the nation’s net foreign assets again?

first_imgBy: SASE Singh; M.Sc. – Finance, ACCA.Given the structural character of the economy (a small and open one), it is expected that the nation should have had a growing base of Net Foreign Assets to meet its needs. This Granger regime, keeps telling the nation that there is economic growth but yet when one looks at the Net Foreign Assets in the financial system, one wonders, how are they paying for these imports as the economy supposedly grows?For open economies like Guyana, there must be a high reliance on imports for consumption and capital development. These imports are financed by the Net Foreign Assets controlled by the State. In such a situation, the proper administration of the stock of Net Foreign Assets is of paramount importance in order to enable the economy to be able to meet the demands of the business community in order to conduct their trade. Therefore, there has to be a high level of discipline in how the Net Foreign Assets are managed.The Bank of Guyana has just released its April 2019 Statistical Bulletin and its May 2019 Balance Sheet and what I found from those documents did not provide any good news on the state of our Net Foreign Assets. For the readers, the Bank of Guyana and the private Commercial Banks are expected to keep a stock of Net Foreign Assets to settle all foreign payments. But from the graph below, that was constructed from evidence from these Bank of Guyana documents, it tells a story that is not what the Granger regime is telling us. Some people are strangers to the truth.Between 2012 and 2018, the Total Net Foreign Assets of Guyana declined by 22% and this was driven by a decline in the Net Foreign Assets at the Central Bank by some 32% over that same time period. If it was not for their plundering of the foreign currency in the private commercial banks which cause the Central Bank to buy some US$179 million from the private banking system in 2018, the Central Bank would have seen its Net Foreign Assets depleted by over 50% over the during the period 2012 to 2018.But the mere act of using Guyana dollars to buy foreign currency from the commercial banks is inflationary and if it was not for the Treasury Bills operations by the Central Bank to mop up these same Guyana dollars at a cost to the Treasury, we would have been experiencing hyperinflation in Guyana by now. But these Treasury Bills operations come at a cost – new debt that is a strategy to kick the problem “down the road into the future” for the next generation to clean up. Such a policy action I find wholly irresponsible and reckless on the part of Mr. David Granger and his team. As the saying goes, the buck stops at Mr. Granger’s desk.Even with the oil inflows, this is sort of massive borrowing is unsustainable and bad news for any future government. Even the best experts arrive in Guyana after the next elections, what Mr. Granger and his team has done to this economy in the last four (4) years will create long term damage to the economy.I am therefore encouraging the authorities to cease and desist from this reckless economic and political strategy and think country first rather than cabal. It is time to evaluate the income generative projects and industries and stop selling the people this snake oil that the oil revenues will solve all. The financial models reveals that it will not. The first stop for the oil revenue is to pay off the G$55 billion that the Central Government has borrowed from the Bank of Guyana. Then there is a G$30 billion debt borrowed on behalf of Guysuco by Team Granger.The foremost consequence from continuing along this path of not creating more export oriented business is the re-awakening of a parallel foreign exchange market, which will lead to a situation of the State losing control of the foreign currency flows. It is in this light that this column stands with all right-thinking Guyana in exposing, opposing and rejecting these thoughtless economic plans of Team Granger. All will suffer if it is allowed to continue.Guyana can do better than this!last_img

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