Dec 30, 2015 News
– Finance Minister
Finance Minister Winston Jordan expressed that while $7B was transferred to the Treasury, it still remains in heavy overdraft. This Fund is Government’s main bank account into which revenues are deposited and out of which expenditure is made.
Speaking to Kaieteur News, recently, the Minister clarified that the $7B is not to be construed as only coming to the attention of the Government during the launch of forensic audits as was previously reported.
He clarified that these monies were already identified by the Auditor General as either lying in dormant accounts at the Bank of Guyana or in accounts maintained by several semi-autonomous agencies.
This publication was informed that the phased transfer of billions of dollars includes $1B from Guyana National Cooperative Bank (GNCB) which was being held by the National Industrial and Commercial Investments Limited (NICIL), with the rest from the Lotto Funds, the Guyana Geology and Mines Commission (GGMC) and other agencies.
Just a few months ago, there was much concern by local economists and even the Minister of Finance, regarding the Consolidated Fund being in heavy overdraft. A look at the Auditor General’s (AG) 2013 report reveals similar concerns.
Auditor General, Deodat Sharma, noted that the old Consolidated Fund bank account (No 01610000400) was not reconciled since February 1988. He said that a cash book for the account was subsequently reconstructed for the period 1989 to 2003 in order to aid the reconciliation of this account.
However, despite attempts by the Accountant General’s Department to reconcile the monthly transactions on the account from January 1994, the AG said that it was found that a proper reconciliation was still not done.
He emphasized that this account continues to be overdrawn over the years with a balance of $46B as at December 2013.
He said, too, that it should be noted that the new Consolidated Fund Bank account which was opened in January 2004 with a transfer of $5B from the old Consolidated Fund account, was also found to be in overdraft of $2B while the cash book reflected an overdraft balance of $21B.
However, the very 2013 AG report shows in more than a few instances that there are several accounts with unused monies.
As at December 31, 2013, Sharma highlighted that 22 Government bank accounts were listed as inactive. He said that the net accumulated balance of these accounts and other operational accounts excluding the balances of the bank accounts of special projects totaled $54. 9B.
Sharma said that this account included the unspent sums of money by ministries, departments and regions. In spite of his annual recommendations, the monies after 10 years have still not been paid over to the Consolidated Fund. The period of review, reflected a balance of $647.943 million in this account.
Sharma said that prior to 2004; money was released from the Consolidated Fund for use by the non-sub accounting ministries and departments. The money placed in bank account number 3001, Sharma said, was under the control of the Accountant General’s Department.
He also found that there are eight accounts at Bank of Guyana holding $1.8B. These monies had been untouched for over a period of five years.
Attorney General Deodat Sharma insists that these monies belong to the Consolidated Fund. This Fund is Government’s main bank account into which revenues are deposited and out of which expenditure is made.
The country’s financial laws dictate that all advances made from the Consolidated Fund which have not been utilized must be returned to the Consolidated Fund.
Sharma expressed concern over the heavy overdraft of the Consolidated Fund, stating particularly the need for agencies which received advances from the Fund to make the necessary repayments.
In this regard, he cited a number of agencies throughout his 300-page report which failed to repay funds taken from the Consolidated Fund. One such entity was the Ministry of Health which failed to refund the Consolidated Fund to the tune of $292.4M which it had received in 394 cheques.
In response to the AG’s concerns about the heavy overdraft of the Fund’s old and new accounts, the Finance Ministry said that it is making efforts to bring closure to the un-reconciled position of the old fund. The AG nevertheless emphasized that the Ministry should take necessary steps to properly reconcile the account and close it.
Earlier this year, Chartered Accountant, Anand Goolsarran, had stated that up to then, the Consolidated Fund could be overdrawn by as much as $60B.
The Former Auditor General in pointing to this startling revelation had said that it paints the clear picture that “Guyana has been living beyond its means.”
He had stated that the accumulated balance on the Consolidated Fund reflected a deficiency of $45.947 billion as at December 31, 2012.
“If the transactions for 2013 and 2014 are taken into account, including the unauthorized withdrawals from the Consolidated Fund, the deficiency in the Consolidated Fund could very well exceed $60 billion.”
Goolsarran had said that the overdraft situation can be traced back to 1992 and earlier periods.
He said that the evidence suggests that expenditure from the Fund over the years exceeded revenue paid into it. Goolsarran said that for the period 1992 to 2012, the total revenue paid into the Consolidated Fund amounted to $1.643 trillion while expenditure totaled $1.727 trillion, giving a deficiency of $84 billion.
The Chartered Accountant said that it is evident that “we have been living beyond our means for decades only to be rescued by borrowings from the issuing of Treasury Bills which attract additional costs by way of interest charges.”
When Treasury Bills otherwise known as ‘T-Bills’ are bought, it simply means that money has been lent to the government. The special bills have a face value, but are sold for less than they are worth. They also have a specified date upon which the face value is repaid.
If Guyana has a T-Bill worth $60, it is sold for $50. But by a certain date, $60 is what is repaid. The buyer essentially earns $10 for the investment.
Treasury bills are one of the safest forms of investment and are considered risk-free.
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