There appears to be a dispute over the size of the deposit the coalition government plans to withdraw from the commercial banks to be quarantined into the Consolidated Funds. The Bankers’ Association and Private Sector Commission imply the number is G$60 billion, approximately US$290 at present exchange rate. The government may be uncomfortable with such a sizable amount after all the accusations of PPP corruption, which I have never doubted; except my position was much more nuanced (see essays “Corruption perceptions in Guyana” SN Jan 15, 2014; “Credibility and signalling in public life” SN Jan 9, 2013). One other media outlet reported the size of the withdrawal to be G$30 bill. Minister of Finance, Mr. Winston Jordan, noted that there will be a withdrawal of government deposits, but he was less specific on the exact amount.
Whatever the size of the withdrawal, it is a form of monetary sterilization as the money is quarantined from the private sector. The policy is very likely to diminish bank liquidity. It is through the liquidity channel the potential monetary and real sector implications are likely to be felt. As at June 2015, the broad money supply