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Govt. prints $200B debt for future generations
…decision taken to clear ‘illegal’ $163.3B overdraft—AG Report finds
Kaieteur News – Both the Coalition, A Partnership for National Unity + Alliance For Change (APNU+AFC), and the People’s Progressive Party Civic (PPP/C) governments, by the end of 2020, had racked up a whopping $163.3B ‘illegal overdraft’ in the national coffers—the Consolidated Fund.
Finance Minister, Dr. Ashni K. Singh
Illegal, since bringing the Consolidated Fund into overdraft is in breach of the Fiscal Management and Accountability Act (FMA).
To rectify the illegal and fiscally embarrassing books for an oil producing nation, the PPP/C administration in May this year, approved the sum of $200B, “through the issuance of Debentures ranging from 1 to 20 years, to raise funds to clear the overdraft. This exercise took effect in June 2021.”
The damning revelations were made public on Monday when the Auditor General Report for 2020—representing spending for both administrations—was made public when the National Assembly resumed its sittings since coming out of recess.
What the findings essentially mean is that at the end of last year, the Consolidated Fund or Guyana’s Treasury—presided over by the APNU+AFC and PPP/C administrations for that year—was not only empty but had a $163.3B debt.
That state of affairs, according to the FMA Act, is a breach. To this end, the PPP/C Government in 2021 approved the printing of debentures, or a debt guaranteed by government, oftentimes referred to as treasury bills.
This in turn, was then sold to all and sundry in order to raise the $200B needed to clear the overdraft.
The bills were sold to those willing to make purchases on the agreement that government would buy back the bonds when matured—as indicated, for period between one to 20 years—therefore repaying the ‘debt’ incurred.
It was explained that this was done in order to raise the cash needed immediately, clear the overdraft while at the same time bringing government into compliance with the laws of Guyana.
The Mid Year report for this year, in documenting the move by Cabinet had stated in June 2021, that government securitised the inherited overdraft at the bank of Guyana.
That report issued by the Ministry of Finance, under the auspices of Substantive Minister, Dr. Ashni Kumar Singh, had said this securitising of the overdraft was done using 85 variable-rate debentures, with tenors ranging from 1 to 20 years, totalling G$200B.
“Consequently, the first half of 2021 ended with the Consolidated Fund, as well as public deposits, reflecting a positive balance.”
According to Dr. Singh in his report, “these moves were intended to bolster transparency and accountability in public debt management, and to restore the integrity of Guyana’s fiscal accounts.”
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