Guyana has been living beyond its means – Anand Goolsarran

Guyana has been living beyond its means – Anand Goolsarran

$86B accumulated in debts  – Consolidated Fund overdraft about $60B
Former Auditor General, Anand Goolsarran

Anand Goolsarran

June 3, 2015 | By | By Kiana Wilburg
With respect to Treasury Bills, Guyana has accumulated over $80B in debt. And the Consolidated Fund could be overdrawn by as much as $60B.

Former Auditor General (AG), Anand Goolsarran in pointing to these startling findings, said that it paints the clear picture that “Guyana has been living beyond its means.”
To cement his point, he examined the explanation given by Finance Minister, Winston Jordan for the Consolidated Fund being in heavy overdraft. 

In an interview with Kaieteur News last month, Jordan was making moves to get an understanding of the economy. As he and a special team were still crunching the numbers from some “secret accounts” which functioned under the previous administration, Jordan expressed concerns about the state of the Consolidated Fund.

During a meeting with several officials within the Ministry on May 19, last, Jordan said he was told that the Consolidated Fund being in overdraft is due to the behaviour of the Guyana Gold Board and its failure to reimburse the account.

“The government doesn’t have the kind of money it needs to pay miners, so it draws from the Consolidated Fund and reimburses it when it sells the gold. But there is the practice of “hedging” (A strategy used in limiting the probability of loss from fluctuations in the prices of commodities) after they collect the gold, and there are risks involved in that.

“And if you aren’t good at it you can lose, in the sense that you are forced to sell for a price far lower than what you bought at. I think it is public knowledge that the board got caught in the fall of the gold prices.
“So they might have bought at high prices and may have been hedging, but then the prices collapsed…”
Jordan had said that while he believes that the Gold Board has been drawing heavily from the Consolidated Fund hence the state it is in, he will provide a more concrete position when he is informed of the state of affairs of the Gold Board. He had said, too, that he has asked the Accountant General to provide him with some figures in that regard.

“What I do know, is that I have been told that the overdraft is due to the fact that gold has not been able to reimburse the Fund as yet, which means that they are probably hedging, and that’s my only explanation without seeing the accounts as yet. But as an economist I can only presume that this is perhaps the case.”

However, the Former AG, Anand Goolsarran believes that the Minister was sorely misinformed.

Goolsarran explained that there are two bank accounts making up the Consolidated Fund. These are account nos. 400 and 407. He said that the former, ceased to be operational following the introduction of the Integrated Financial Management System in 2004. It was overdrawn by $46.776 billion as at December 31, 2012. This is according to the latest available audited public accounts. It was also not reconciled since 1988.

He said that the new Consolidated Fund bank account no. 407 was also found to be overdrawn by $15.389 billion as at 31 December 2012. This gives a total overdraft of $62.165 billion.

The former AG added that there were a number of other accounts relating to Ministries and Departments which reflected balances totaling $16.559 billion.

“According to the former Auditor General, of the several other special bank accounts held at the Bank of Guyana, eleven accounts reflected balances totaling $4.140 billion. These appeared to be funds that were transferrable to the Consolidated Fund,” Goolsarran asserted.

He stated, “Taking these into account, and excluding the amount of some $4 billion, the accumulated balance on the Consolidated Fund reflected a deficiency of $45.947 billion as at 31 December 2012. If the transactions for 2013 and 2014 are taken into account, including the unauthorized withdrawals from the Consolidated Fund, the deficiency in the Consolidated Fund could very well exceed $60 billion.”

Goolsarran said that the overdraft situation can be traced back to 1992 and earlier periods. But after an examination of the receipts and payments of the Consolidated Fund from 1992 to 2012, the former AG said that it does not indicate any transactions relating to the Guyana Gold Board. He said that it is incorrect to attribute the overdraft to indebtedness by the Board.

He said that the evidence suggests that expenditure from the Fund over the years exceeded revenue paid into it. Goolsarran said that for the period 1992 to 2012, the total revenue paid into the Consolidated Fund amounted to $1.643 trillion while expenditure totaled $1.727 trillion, giving a deficiency of $84 billion.
The Chartered Accountant said, that it is evident that “we have been living beyond our means for decades only to be rescued by borrowings from the issuing of Treasury Bills which attract additional costs by way of interest charges.”

As at December 31, 2012, he pointed out that Guyana’s indebtedness to banks, institutional investors and individuals in respect of Treasury Bills transactions was $86.552 billion.

When Treasury Bills otherwise known as ‘T-Bills’ are bought, it simply means that money has been lent to the government. The special bills have a face value, but are sold for less than they are worth. They also have a specified date upon which the face value is repaid.
If Guyana has a T-Bill worth $60, it is sold for $50. But by a certain date, $60 is what is repaid.  The buyer essentially earns $10 for the investment.
Treasury bills are one of the safest forms of investment and are considered risk-free.

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Comments

  • Aubrey Thompson.  On June 4, 2015 at 1:23 am

    Thanks Reggie!!  Aubrey A. Thompson

  • Aubrey Thompson.  On June 4, 2015 at 1:24 am

    He is not telling us anything new or anything that we did not know!! Aubrey A. Thompson

  • De castro  On June 4, 2015 at 6:03 am

    Surprise surprise
    That’s what the “political classes” do 😈

    Gordon Brown ex UK PM left note for his successors…..at treasury

    SORRY NO MONEY IN THE KITTY

    UK BOE was almost bankrupted.

    One lot spend and borrow….labour
    One lot cut and save…..Tories

    Nothing changes !

    Guyana’s children and grandchildren will inherit not only a failed state but a bankrupt one.😇

    But let’s give the new kids on the block a “fighting chance”

    In a global worldvillage things can get worse before they get better.
    FACT…..

    am optimistic

    Sir kamtan lord of cherin by appointment to HRH QE2 UKPLC

  • Deen  On June 4, 2015 at 10:09 am

    It was always obvious that the previous Guyana governments were living extraordinary lifestyles, “beyond their means,” and the taxpayers were footing the bill. If eel certain that after a thorough examination of the performance of the Jagdeo and Ramotar government there will be much evidence of mismanagement and certainly corruption. We’re only beginning to see the tip of the iceberg of fiscal haemorrhaging.
    No wonder Guyana remained one of the poorest countries in the Western Hemisphere over several decades due to poor leadership, mismanagement and corruption.

  • Gigi  On June 4, 2015 at 1:21 pm

    This is what is known as neoliberal speak, folks. Brought to you by the USA puppeteers. And the solution will be AUSTERITY measures that we see western and western backed societies unfolding in societies across the global sphere. You will now be subject to drastic reduction in govt jobs, reduce salaries, reduce benefits, a part time job society that eliminates most employee benefits, middle class flight/brain drain, and exposure to increase foreign dept and vulture funds/foreign investments hijacking the economy. You asked for it and you got it.

    There is no way that the gold board is in the red with gold being in such high demand AND the black market price for gold being ridiculously higher than what it is being traded on the gold market. Anyone with doubts should try buying an ounce of physical, not a paper certificate, on the legit market and see if they can find any. There is none!

    @Deen, Under the PPP/C administration, Guyana emerged as a middle economy country after cleaning up the PNC mess. And it’s now apparent that it is heading back to those days. Every single country in this world is rife with corruption from having to deal with corrupt countries. Hence the saying, “it takes one to know another.” How would one know a country is corrupt if one does not know what corruption is and what to look for. The difference lies in those govts who can provide their citizens with a decent life and move them forward versus those who hoard it all for themselves like the PNC govt – a govt that left decades of decay and morass in its wake for the people to wade out of.

    This is the party Granger was born and indoctrinated into. Granger got to be the head of his APNU party through violence and blatant corruption. He became president of Guyana through violence and blatant corruption. You can take the pig out the sty but you cannot take the sty out the pig. OR, to quote your beloved Obama, “you can put lipstick on a pig but it is still a pig.”

    If KN was actually a muckraker it would have credibility. It’s not. Reading KN is akin to reading the National Enquirer. It’s sensational trash that appeals to baser society.

  • Gigi  On June 4, 2015 at 5:37 pm

    And one more thing…look forward to the privatization of govt managed businesses. In addition, look forward to unprecedented deaths of their employees. You see, foreign businesses take out life insurance on their employees so that when they “routinely” die, especially in an even more unsafe country like Guyana, guess who collects on their life insurance policy?

    Link to an interesting article Guyanese should prepare to expect …

    ‘Exploitation of a Higher Kind’: How the G7 is Fueling Corporate Dominion of Africa
    http://www.commondreams.org/news/2015/06/03/exploitation-higher-kind-how-g7-fueling-corporate-dominion-africa

    “Under the specious claim of delivering “aid to Africa,” western governments [with Obama as its champion] are backing an initiative—described by some as another form of “colonialism”—that is effectively enabling the corporate takeover of African nations by some of the world’s biggest food and agriculture companies.”

    There is already corporate takeover of their natural resources now they’re coming for what’s left. Hmmmm. Hitler’s mother was Jewish but one would have never guessed from his actions. Obama’s father is black but one would never guess from hi actions, either.

  • De castro  On June 5, 2015 at 3:45 am

    Wow wow …what venum…with some truth.😈

    Hitler “imagined” he was fulfilling the dreams of the German people.
    Obama “thinks” he is carrying out the wishes of the american people.

    That’s how politicians justify their decisions/action.

    Putin won “round one” and set to win round two…hosting WC 2018.
    2022 in doubt for QUATAR…too hot anyway.
    Follow the money trail for CORRUPTION.😇

    WAR on corruption is just war
    WAR on poverty politricks.
    We will be judged by our deeds/action not blabber ….Mr Blatter.

    Que sera

  • Restorer  On June 7, 2015 at 11:42 pm

    Gigi, May God almighty deliver you from hatred, animosity, venom and all other ills, since this type of hate only leads to sickness of the type that no amount of money can heal you. from. Now that the tables have turned the powers that existed from 1992, now see how it feels to be in opposition. God in heaven alone knows the depth of hopelessness and marginalisation that some of us experienced. It is time to change that culture. People of Guyana want to live in peace and harmony and love and unity. There is hope for you in surrendering to God.

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