Plaudits for Minister Jordan

Apr 16, 2018 Letters

Dear Editor,
The decision by Minister Jordan to invest the proceeds of the Exxon Signing Bonus in United States dollar instruments rather than converting same into Guyana dollars and placing into the Consolidated Fund is a victory not only for observing the principles of sound financial management but more so, for the application of basic common sense.
When viewed against the loud protestations of the naysayers and the legal purists, the wisdom of the Minister’s decision can be seen in the context of those funds already generating earnings of U.S$36,000 in the short period to date as compared to earning no income if those funds were to be converted into Guyana dollars and placed into the sterile Consolidated Fund.
Over the longer-term, those funds (US$18mn) can earn additional income conservatively estimated at US$1.0mn, using an average investment life of three years (based on a six-year disbursement period according to Minister Greenidge) and applying the current U.S Three- month Treasury Bill yield of approximately 1.8% and re-investing all quarterly income earned thereon.
These are merely conservative estimates and do not take account of investing some of the funds for longer periods, say in six and nine-month U.S Treasury Bills at higher yields.
At the end of the period, one notes that Government would have accumulated sufficient funds to pay close to 15,000 pensioners for a month, at current rates, a matter that should not be scoffed at.
Looking ahead, one can imagine the damage to the national economy that will ensue if Government were to follow the advice of those “experts” that now abound in Guyana and convert its future petroleum receipts into Guyana dollars and place them into the Consolidated Fund where they remain idle, generating no income for the treasury.
If being on the front page of the daily newspapers is what determines who is qualified to be regarded as an expert, then we are in for perilous times.
A critical issue for Guyana might be to assess how well those 19th century devices such as the Consolidated Fund are meeting the objectives of sound public financial management and how might they be fine-tuned to deal with twenty-first century contemporary issues.
In addition, we need to address institutions like the cash- rich National Insurance Fund (NIF) and how they can assist in fostering national development in areas such as deepening the mortgage finance market as a wholesaler of funds by intermediating its resources through banks and the larger but vibrant credit unions. NIF’s role as a wholesaler can also assist in improving competitiveness within the sector.
Steve Fraser

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