The Consolidated Fund showed an overdraft of close to $79 billion when the People’s Progressive Party/Civic (PPP/C) government took office in August of this year.
This revelation was made yesterday by Senior Minister in the Office of the President with responsibility for Finance, Dr Ashni Singh at the fourteenth sitting of the National Assembly which was held at the Arthur Chung Conference Centre.
The Consolidated Fund is the main bank account of the government.
Singh was at the time responding orally to a question asked by APNU+AFC Member of Parliament Annette Ferguson.
Ferguson asked for the total sum which was left in the Consolidated Fund by the APNU+AFC Government as at 2nd August, 2020. Singh said no monies were remaining as of the date given.
In fact, he said the Consolidated Fund account was in overdraft by $78.7B. Singh noted that the overdraft did not reflect the cheques that were issued but not cleared.
“If the overall picture of Government bank accounts at the Central Bank were to be taken, the Government’s net overdraft on that date would have been a staggering sum of $93 billion. And here again, that overdraft amount would not reflect the aggregate of cheques that would have been issued on all of those bank accounts whose clearance were still pending,” Singh said.
He further stated that the net overdraft of $93B could be contrasted with the net position as of April, 2015 just shortly before the PPP/C left office in May, 2015. Singh said that at that time the government had a net deposit totalling $16B with the Central Bank.
According to Singh, the overdraft was “identified” and “flagged” by a number of commentators, including international agencies.
In its annual reports on the Guyanese economy, Singh said the International Monetary Fund (IMF) identified the accumulation of the overdraft by Government as a matter of grave concern.
In addition, Singh said when the PPP/C assumed office, there were also a number of other “significant” sources of indebtedness by Government to a wide range of entities and agencies.
Among them were a sum of $12B owed to the Guyana Power and Light (GPL) and the $30B bond which was issued by the National Industrial and Commercial Investments Limited (NICIL) for financing in connection with the Guyana Sugar Corporation.
“…One of (a) few examples, we inherited a situation where government agencies owed in excess of $12B to the Guyana Power and Light Inc (GPL), which in fact has translated to great financial distress….those numbers constitute liabilities of the state,” Singh stated.
Of the $30B for the bond, he added that $17B was “drawn down”.
Lessons
Ferguson opted to ask a follow-up question which sought to enquire how the 2020 budget was funded.
In response, Singh said that it appears as though “lessons might be required” on how the financing of the budget operates.
During his explanation, Singh said that the budget consists of of several components. “Mr Speaker, it is fairly well known I believe that the budget comprises projected revenue, projected expenditure which is appropriated in the appropriation act and projected financing and the financing sources,” he said.
“Financing of the budget comes from in the first instances, the revenues raised by the state during the course of the fiscal year….taxes are being collected, fees and coins are being collected, etc. So in the first instance, there are revenues being generated by the state on an ongoing basis, on a daily basis. Secondly sir, there are grants and other inflows to the state, those also contribute to the financing of the budget. Thirdly sir, there are loans and other financing sources….” Singh further explained.
Singh also offered to elaborate if necessary but Ferguson stated that she did not ask him to “lecture” her. Rather, she said the question is one which all Guyanese would want a response to.
She also asked about where the $4.5B that was approved by the National Assembly under the PPP/C government for the distribution of COVID-19 relief was sourced from.
Singh repeated his initial answer during which he said he was explaining the process in “simpler” terms.
“Mr Speaker for a long time I tried to understand how the public finances could have been left in such a state of disarray. I now understand. The pieces of the puzzle are finally falling into play because such a display of lack of understanding of the way in which public finances were could only have resulted in complete and absolute mismanagement of the public funds over the course of the last five years. I could not be clearer sir. All of the expenditure provided in the budget and the appropriation act is financed by the traditional sources of financing of budgets and public expenditure around the world,” Singh further explained.
Singh accused the previous administration of being more preoccupied with “holding onto power illegally” than focusing on providing relief to citizens during a global pandemic.
