The net foreign assets vs local currency in circulation

first_imgBy: SASE Singh; M.Sc – Finance, ACCAForeign asset investments overseas by the Central Bank as at the end of 2018 have regressed. The evidence reveals that the nation in at its weakest position since 2009. What does this imply for the country today?New figures issued by the Bank of Guyana have shown that the bank is even more vulnerable to external shocks today than at any time since 2009. That is because the bank’s net foreign assets (NFAs) are at their lowest-ever point since 2009, despite the economy having grown by some 84 per cent since that time. Today we have a bigger economy, but less net foreign assets to pay for the imports that are needed to fuel this bigger economy.The Bank of Guyana has stated that its NFAs are valued at G$108.2 billion as at the end of 2018, compared to a peak in 2012 of G$161.7 billion (See graph below). This stark fact exemplifies that, since 2012, the Central Bank has lost G$53.5 billion of its NFAs. The Ramotar Administration can appeal to the fact that the average oil price between 2012 and 2014 was US$103 per barrel, which consumed significant chunks of the NFAs. But what is the excuse of Team Granger? The average oil price between 2015 and 2017 was US$47 per barrel, 54 per cent cheaper than previously, but yet we lost billions in NFAs.Oil is the largest consumer of foreign currency in Guyana. With cheaper prices, we still saw that some G$20 billion, according to the Monetary Survey from the Bank of Guyana, evaporated during the three and half years with Mr Granger at the wheel. What a mystery!The answer to this mystery lies in the fact that, under Team Granger, Guyana imported too many unnecessary items, which can be produced at home. Can you imagine we are importing canned pigeon peas today? Between 2015 and now, the importation of clothing and footwear doubled. Yes, doubled! Meanwhile, our exports have declined by some 3 per cent. We continue to import and buy utter nonsense to feed the parade and pageantry machinery that Mr. Granger sits on top. But pageantry and parades do not generate foreign currency; to earn foreign currency, you have to have an export-focused mentality and attitude. Any great thinker will tell you that great nations are built when their collective teams work smarter and with a determination focused on exports, rather than dress and drinks.But what is even more concerning is that the stock of national debt (both domestic and external) has expanded by more than US$120 million since APNU/AFC came to office. This means that more of those NFAs are being reserved for the payment of debts, rather than being made available to fuel the expansion of the private sector and the economy.If one were to look at the graph again, one would find that, since 1999, there were enough NFAs to back every Guyana dollar in circulation — which had been a stabilising factor on the value of the currency. However, for the first time in 20 years, there is, in 2019, more local currency in circulation than there are NFAs. The situation reverts to the horrible old days of 1989, when all that was done was the printing of valueless paper money that was not even worth its face value in real terms. Investors are not fools; they know that if you have more local currency than foreign currency in the system, then the currency of trade will always be the foreign currency. Thus the Guyana dollar is slowly losing its relevance in domestic and international trade.I was reliably advised that an increasing number of transactions, but “on-the-books and off-the-books”, are being negotiated in US dollars in Guyana. What does this do to the wealth of the working class? It will vaporise their little wealth and demolish their economic wellbeing, just like what happened to them in 1989 under the then PNC’s ERP Programme.Why are we here again? Oh yes, the same old PNC attitudes of dress, drinks and parades, rather than the good, old-fashion principles of working smarter, exporting more, incentivising the investors, and building the nation. It is time for change again!last_img read more

Watch photographer’s brilliant slip before Birmingham took on Wolves

first_img1 Cameraman at the Birmingham v Wolves game has had one too many.— Reece Heard (@Reece_GFC) December 4, 2017 The fall did not deter the photographer from getting a shot of Michael Morrison center_img It’s fair to say the job of a photographer is a difficult one, particularly when they are at a football match. They are required to get pictures which capture the sheer drama of the contest and that can sometimes involve going the extra mile for that perfect shot. But this photographer abandoned personal safety to achieve that as the teams came out in the crucial Championship encounter at St Andrews. And as you can see the photographer took a bit of a tumble, forcing Birmingham captain Michael Morrison into side-stepping the man to prevent a bad accident. Thankfully the photographer dusted himself off and resumed his work.Wolves’ Leo Bonatini gave the Championship leaders the three points with his strike in the eighth minute, but it was the photographer who arguably stole the show. We hope he got the shot he was looking for!  last_img read more