Unofficial economy benefiting from cash-based nature of country - Chris Ram

Unofficial economy benefiting from cash-based nature of country – Chris Ram

Jan 08, 2010 News

Corruption, money laundering, tax evasion and unfair competition are some of the factors contributing to the stifling of growth in Guyana. This is according to prominent chartered accountant and attorney at law, Christopher Ram, who in an interview with this newspaper on Wednesday, pointed out that the cash-based nature of the country is contributing to the factors affecting its growth.
Ram said that with a more plastic-based system there would be better trails of transactions, which could weed out some of the money laundering and corruption.
He noted, too, that the relaxed nature of the exchange control laws also encourages the holding of cash in foreign currency, “a phenomenon which by its nature is impossible to measure…The law allows any amount of foreign currency to be taken out of the country merely on a declaration at the port of exit.”
Ram pointed out that the total value of currency notes in circulation (including notes held in the vaults of commercial banks) at the end of 2008 amounted to some $37.3B which is an increase of 14 percent compared with a circulation of $32.7B in 2007.
He noted that the share of $1,000 notes in the total value of notes in circulation increased slightly to 93.7 per cent from 93.1 percent in the previous year, while that of the $500 notes fell from 3.2 per cent to 2.8 per cent in the same period.
The share of the $100 notes fell slightly from 2.7 percent in 2007 to 2.5 percent in 2008, while there was no change in the share of $20 notes, which remained at one percent at the end of 2008.
As it relates to coins, Ram stated that the amount issued by the Bank amounted to $597 million at the end of 2008, an increase of 11 percent above the 2007 figure of $538M.
The share of $10 (41.9 percent) in the total value of coin in circulation was 3.2 percent more than that of the $5 coin while the $1 coin continued to have the lowest share among coins in circulation.
In terms of the total quantity of coins issued, the $1 coins accounted for a 61.9 percent share.
The shares of $5 and $10 coins accounted for 24.7 percent and 13.4 percent, respectively.
Ram noted also that the amount outstanding at each December tends to go up with year-end activities, “Government payouts and as Government rushes to spend money voted by the National Assembly but not spent during the early months of the year…Then the amount falls by several billions, rising again in the fourth quarter.”
Ram explained that here has, however, been a fairly marked increase over the past ten years during which time the notes and coins in circulation have more than doubled.
“Some persons in the financial sector attribute this to the heavy influence of cash transactions symptomatic of the underground and the criminal economy, as well as a number of the Cambios which prefer to use cash to avoid any trail or trace of their transactions.”

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Unofficial economy benefiting from cash-based nature of country – Chris Ram

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