GGMC and CH&PA monies to be taken out of commercial banks

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By Jomo Paul

Finance Minister, Winston Jordan
Finance Minister, Winston Jordan

[www.inewsguyana.com] – Finance Minister Winston Jordan has confirmed that government will be taking steps to withdraw funds from commercial banks to finance a fiscal deficit; however these funds will not amount to $60B.

Jordan offered the clarification on Friday August 07, at a press conference where he outlined that the monies being withdrawn from the banks would in no way harm the economy.

The Finance Minister made it clear that the monies to be withdrawn belong to the Guyana Geology and Mines Commission (GGMC) and the Central Housing and Planning Authority (CH&PA).

According to him, the banks have monies being held in the Central Bank – Bank of Guyana, and if they so please, they can withdraw sums from there.

“As of today, commercial banks have $64.4B in ‘T bills within the Bank of Guyana,” said Jordan explaining that the monies being withdrawn from the banks would amount to just over $30B

“The Private Sector Commission is concerned that the current situation can lead to a high level of non-performing loans and is extremely concerned about the intended removal of over $60 billion in Government funds that are deposited at the Commercial Banks. There is an increased level of defaulting loans being recorded in some sectors of the Economy,” a release from the Private Sector Commission stated on August 4.

However, Former President of the Georgetown Chamber of Commerce and Industry (GCCI), Clinton Urling says the PSC should not ask the government not to withdraw funds from commercial banks.

“If government deposits into a commercial bank, it is the same as any private individual or company doing so: they can withdraw their deposits at any time. Commercial Banks must cater for this reality at all times. Moreover, the Central Bank caters for this through the application of a statutory reserve requirement (a percentage of transaction deposits and other liabilities) for commercial banks,” said the Former GCCI President.

1 COMMENT

  1. Borrowing Money To Finance A Fiscal Deficit From Our National Reserve Fund.

    Whenever states are in financial woes, borrowing money from the Commonweal via BONDS, or Withdrawing from the Central Bank Reserve Funds is the way to go.

    Another way is to PRINT new money, which may be just a temporary solution

    However, ALL Private banks MUST have a certain amount of LIQUIDITY to provide for their clients on a daily basis.

    Relieving these banks of that financial liquidity can cause National Panic Withdrawals.

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