Worrying decline in international reserves signals govt. may be dipping into it – Nagamootoo
- Finance Minister insists reserves “adequate” enough to meet obligations
Vice Chairman of the Alliance For Change (AFC), Moses Nagamootoo recently expressed concern that government may be dipping into the international reserves, considering its notable decline. According to reports on the country’s accounts, reserves fell from US$835M in 2012 to US$609M by November last year. This is a decline of US$226 million. Nagamootoo subsequently asked, “Where did this money go?” Asked at his most recent press conference to say what caused the drop, Dr. Singh did not answer this question directly. Instead, he said what would be the general causes that would lead to a drop in international reserves. “Well, external reserves are a function of course essentially of our trade and other external flows which include exports, imports, capital transfers into our country, Foreign Direct Investments and disbursement of official loans etc. and they are determined by a number of factors .
AFC Vice Chairman, Moses Nagamootoo
We are of course a commodity producing and exporting country and so production on the export commodity side and indeed export commodity prices would be a determining factor as would be imported commodities and import commodity prices. And so when your export commodity prices are strong, you have a stronger potential of having a stronger current account balance and as a result a healthy reserve.” The Finance Minister added, “Similarly, when the prices are coming down, it would have an effect on the reserve. And so there are all of these variables, moving constantly; production of exports, production of commodities…I would say that obviously our reserves have been fluctuating. When gold prices are not doing so well you have a potential for an impact of the balance of payments but then you have an offsetting impact because oil prices are so much lower and your import bill is also lower so factors like that sometimes counter each other. What is not in doubt is that our external reserves remain adequate enough to meet external obligations and they are strong.” Pressed to address directly, the opposition’s concerns or perception that government is dipping into the reserves, he said, “I am not in the habit of addressing capricious perceptions.”
Minister of Finance, Dr. Ashni Singh
Last year, Nagamootoo had complained that his party was being kept in the dark with regard to details about the Marriott Hotel and the identity of the US$8 million private equity investor(s). “What we have noticed is that there is a “dip” in international reserves and we are wondering whether any money has been transferred to NICIL in order for further financing at the Marriott Hotel,” Nagamootoo had said. The parliamentarian had said too that his party was also studying the third quarterly report from Bank of Guyana on the state of the country’s finances. “There are quite a few alarming revelations in that report,” Nagamootoo had retorted.
