Shrinking foreign reserves spell trouble for Guyana – audit firm

Over the past year, reports from the Bank of Guyana and even the Finance Ministry itself have painted a worrying picture about Guyana’s rapidly depleting foreign reserves.
According to audit firm Ram and McRae, this problem is still not being addressed by the Government.
In its annual publication Budget Focus, the audit firm referenced Finance Minister Winston Jordan’s announcement in his budget speech that Guyana’s international reserves will go from US$581 million to a forecasted US$477 million.
According to the firm, which was founded by noted anti-corruption activist and Accountant Christopher Ram, this situation is a matter for concern. Despite the implications of depleted reserves for Guyana’s future, the firm lamented, Government is not paying any attention to the issue.
“A ballooning (Government accounts) overdraft and increasing debt domestically coinciding with depleting reserves internationally is a recipe for trouble even with first oil approaching,” Ram and McRae noted.
Besides these worrying indicators, Ram and McRae acknowledged the Finance Minister’s announcement that the balance of payments are projected to go from a deficit to a surplus of US$15 million.
Reserves
A report earlier this year from the central bank had indicated that Guyana’s net foreign reserves, held by the bank in foreign currency notes, has fallen to its lowest point since 2008. It is a road that took the reserves from a high point of US$825 million in 2012 to US$498.5 million as of March 2018.
A perusal of the Bank of Guyana’s statistical abstract shows that from the lows of US$298.8 million 10 years ago, Guyana’s foreign reserves were built up to 2012’s high point. And then it started dropping, declining to G$751.2 million in 2013 and G$652.2 million in 2014.
The slide continued the year after, with the foreign reserves being recorded at US$594.7 million at the end of 2015, before picking up in January of 2016 and being recorded at US$621.1 million. While the year 2016 saw the reserves fluctuate, it never strayed below the US$450 million mark until the end of the year.
It is in 2017 that the reserves plunged well into the US$500 million range. By November of last year, the reserves were recorded at US$562 million. And as of March 2018, for the first time since 2008, the net foreign reserves fell to below the US$450 million benchmark.
According to the bank’s Half Year Report last year, it had G$4.8 billion worth of gold in its foreign holdings as assets.
Indeed, the gold reserves have steadily been declining with each passing year. At the end of 2016, the bank had G$7.4 billion in gold, while at the end of 2015, the gold reserves stood at G$14.2 billion. At the end of 2014, the Bank of Guyana had G$25 billion in gold as assets.
In the case of total assets, that has also seen a marked decrease.
At the end of 2014, total assets were G$207.9 billion. The sum decreased in 2015, as it was recorded as G$188.7 billion in December of that year, before recovering by 2016 year end to G$220 billion. At June 2017, total assets were G$221.8 billion, before the drop recorded this year.