Treasury to pick up $9.2B shortfall in BoG’s General Reserve

Feb 19, 2023 News

Kaieteur News – The Bank of Guyana (BoG) in its most recent declaration of the nation’s Statement of Assets and Liabilities has revealed a disturbing occurrence indicating that the bank has in fact not been making sufficient profits in recent years.

In the most recent statement published in the Official Gazette, it is documented that the General Reserve held at Bank of Guyana was in fact minus $9.2B.

Under the Laws of Guyana establishing that account—the Bank of Guyana Act—the BoG shall establish a general reserve into which it would deposit 50 percent of the net profit made by the bank for each financial year.

The other half of net profits earned by the BoG, according to the Act, would then be transferred to the Consolidated Fund through the Accountant General.

According to the most recent publication of BoG, that account stands at -$9,223,246, 431, dated February 8, last.

It was noted that net profit for BoG, is calculated by deducting from gross income all expenses, together with allowance for depreciation of assets, contribution to staff benefit funds, provision for bad and doubtful debts, and such other contingencies and accounting provisions as are usually made by banks.

Additionally, the BOG Act does provide for instances where if, the General Reserve Fund is in any year insufficient to cover any net loss of the bank recorded in its profit and loss account, an amount similar to the deficiency will be appropriated and shall be debited to the account of the Govt. with the bank.

“Such debit shall be made in the form of shall be made in the form of a transfer from the Consolidated Fund or interest bearing marketable obligations issued by Government.”

As such, it would mean that it is ultimately the nation’s treasury that will have to pick up the shortfall.

Minister within the Office of the President with responsibility for Finance Dr. Ashni Singh, in presenting the National Estimates for this year, did reflect on Guyana’s reserve while not specifically naming the state of the General Reserves.

According to Dr. Singh at the time, total reserves deposited with BoG, in line with the expansive credit by commercial banks and increased stock of money, declined by an estimated 6.7 percent to $109.5B over the review period—2022.

He noted that “of this amount, excess reserves are estimated to account for $33.2 billion, 44.8 percent below the $60.2B at the end of 2021.”

He further noted that the required statutory reserves, however, are projected to grow by 33.4 percent to $76.3B this year.

Additionally, he said total liquid assets of commercial banks are forecasted to contract by 5.2 percent to $244.2B over the review period, primarily underpinned by the mentioned 44.8 percent fall in excess reserves.

As it relates to the most recent statement of assets and liabilities, it is documented that in relation to its foreign assets, there is in excess of $48B in addition to other categories such as Capital Market Securities held overseas totaling some $138B, altogether accounting for just over $189B in total foreign assets.

As it relates to those held locally, BoG reported Government of Guyana Securities and Treasury Bills amounting to almost $300B.

With regards to the listed Capital and Liabilities, BoG reported that there is in circulation over $1.2B in coins in the country while there is some $204B in bank notes in circulation.

Public deposits account for just over $82B while Bankers deposits with BoG account for $129.8B.

Altogether, the nation’s Total Capital and Liabilities registered at Bank of Guyana for the period ending February 8, 2023 was $585.2B.

Bank of Guyana (BoG), Guyana, Laws, Official Gazette, Statement of Assets and Liabilities

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Treasury to pick up $9.2B shortfall in BoG’s General Reserve

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Treasury to pick up $9.2B shortfall in BoG’s General Reserve

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