Central Bank Govt overdraft widens to over $69B

Former Finance Minister, Winston Jordan
Finance Minister Winston Jordan

The Bank of Guyana’s public deposits, which holds monies for central Government and State-owned enterprises, is wallowing in an overdraft that only gets wider with each passing month, and, in fact, the deficit widened by almost $4 billion from September to now.

In the Central Bank’s statement of assets and liability as of October 23, the bank’s public deposits overdraft was listed at $69.1 billion. Compared to the $65.6 billion overdraft it was at as of September 28, 2019, this shows that over $3.5 billion was drawn down by the Government in little over a month.

Public deposits at Central Bank were plunged into overdraft status back in 2015, when the new coalition Government ended the year with a $2.3 billion overdraft. When the Government took over in May 2015, they had met public deposits of approximately $10.4 billion.

By 2016 year-end, the overdraft had grown to approximately $21.3 billion, after a year of increasing withdrawals. At the end of the 2017 fiscal year, the overdraft had reached 25.7 billion.

In contrast, Bank of Guyana data shows that the bank’s public deposits were in the positive – $21.4 billion to be precise – at the end of 2014. In 2013, the bank’s deposits were $52.1 billion. And the preceding year, the funds were approximately $57.2 billion.

While the drawdown on funds started under the previous Administration, public deposits were built up to over $69 billion in the year 2010. Far from being built up under the current Government, they have never been able to rise above the red.

But with the coming oil revenue and the extra case it brings, Government has not appeared too worried about filling fiscal holes. It was previously reported that Finance Minister Winston Jordan, when asked about replenishing the fallen foreign reserves, had said there was nothing to worry about with oil money coming in.

Jordan had said that with the revenue the Government is expecting from first oil next year, the foreign reserves will be replenished. Since he made those comments in September, Exxon and its partners have moved up their oil production schedule to this year-end.

“That is just a temporary situation, given our receipts that come in next year,” Jordan said. “And then subsequent to that. One of the reasons you have savings is that if you have need to use some, you do that and afterwards you replenish it as you pick up again.”

The Government deposits have not been the only thing heavily used by the Government. According to figures released by the Bank of Guyana, the contingency fund stood at $2.356 billion as of August 28, 2019.

In fact, the contingency fund has been hovering in this region for some time. But back in 2015, at year-end, the Bank of Guyana, according to its report for that year, held a contingency fund of $5.182 billion.

The previous year, the bank reported that the contingency fund held $4.765 billion and the general reserve fund, $2.879 billion. In 2013, it was $4.332 billion and $2.448 billion, respectively.

However, by 2016, the fund had dropped to $2.356 billion while the general reserve fund stood at $3.493 billion. The next year, it remained untouched at $2.356 billion while the general reserve ballooned to $5.558 billion. And in 2018, the contingency fund balance remained the same while the general reserve had increased to $5.767 billion.

The contingency fund is meant for emergencies, but its misuse has frequently been highlighted by the Audit Office of Guyana (AOG). The 2015 Auditor General report had exposed instances of the fund being abused under the present Government.