Guyana’s financial reserves down by $6.7B - BoG

Guyana’s financial reserves down by $6.7B – BoG

Jun 22, 2022 News

Kaieteur News- With inflation and the cost of living skyrocketing globally in recent months countries have been increasingly grappling with volatile price increases for imports. With Guyana expected to maintain a buffer reserve enough to cover three months of import, the most recent Bank of Guyana Statement on the country’s Assets and Liabilities, instead lists the country’s General Reserves as minus $6.7B. The account for the Contingency Reserve accounts for some $2.4B.
The information has since been published in the Official Gazette which documents the country’s total Capital and Liabilities at in excess of $487B.
The current administration has in recent months consistently blamed exogenous factors such as the global supply chain crisis for the prices volatility affecting both exports and imports. The war currently being waged by Russia against Ukraine has also been blamed for escalating commodity prices across the world.
Head of State President Irfaan Ali in a recent public broadcast seeking to address the situation had cautioned Guyanese to brace for an increase in cost of living as a result of the global supply chain crisis.
At the time he had adumbrated, “what are we doing today is presenting you with the facts, with reality, with what the government is doing to address issues that are global in nature, how we are defining policies to address these issues, the impact global challenges is having on our economy, and the way in which the government is addressing those challenges.”

President Irfaan Ali

To this end, he added that he believes that it is very important for all Guyanese to understand that “We do not live in an isolated environment and we are part of the global community.” The President said that Guyanese are part of the process of globalisation and what occurs globally; while highlighting that the country is also affected by global challenges.
Over the weekend during an address at the 74th commemoration of the Enmore Martyrs Thursday last, more than two years after discussions on the issue, President Ali informed that Cabinet had finally agreed with the recommendation of the tripartite committee, and is thus supporting the new increase.
Minister within the Office of the President, with responsibility for Finance, Dr. Ashni Singh in presenting the Budget for this year had said, inflation is predicted to be 4.1 percent, driven largely by continued but gradually moderating imported price pressure.
He had noted at the time that beyond its global public health consequences, COVID-19 also had severe disruptive effects on global production and trade and, particularly, on the global supply chain. Since the onset of COVID-19, supply chains across the world have been clogged up with disruptions in critical shipping routes due to port congestion, shortages in labour and key materials, and fluctuating demand.
Additionally, he said a shortage in container availability helped drive up freight charges significantly.
The consequence has been freight rates that have increased by over 400 percent over the past two years with most of that increase occurring in 2021.
Dr. Singh, “As a result, inflationary pressures were amplified the world over, and global inflation is at its highest in at least a decade and, in some places, inflation is at its highest in over four decades. The disruptions created by the pandemic are not expected to dissipate in the near term.”
According to Dr. Singh, however, the government has moved to contain the pass-through to the domestic economy.
Specific interventions identified by Dr. Singh at the time included the restricting of the freight cost to pre-COVID-19 levels for the purposes of determining the taxable value of imports.
Additionally, successive reductions in the excise tax charged on diesel and gasoline, first in February 2021 from 50 percent to 35 percent and then in October from 35 percent to 20 percent, also helped contain the cost of domestic transportation which feeds through directly to prices more broadly.
The price for fuel has continued to increase internationally and locally already leading to the increased prices for transportation and commodities.