Government spending from international reserves --official
by Gitanjali Singh
The government has begun to spend money held for its international reserves and is also borrowing locally to meet expenses, a key government official said recently. The International Monetary Fund and the World Bank had set a target of the equivalent of four months of imports, as the international reserve requirement for Guyana as part of its structural reform. "The Bank of Guyana has told the Ministry of Finance that the government accounts are in the red; yes, that means negative balances," the official, who preferred not to be named, said in an invited comment. The source could not say how much money had been used from the international reserves, but pointed out that the public service strike had lasted almost two months, and the government's recurrent expenditure still had to be met even though revenues had not come in. The official confirmed an earlier Stabroek News report stating that money from sterilisation was being used to fund government spending. The source said that the government had no alternative at this stage. Between January and now, the government had offered more than $10 billion in treasury bills to the public in excess of the amount issued over the same period last year. The public sector strike effectively crippled imports and exports and blocked the major revenue streams via the Inland Revenue Department and the Customs and Excise Department. The source pointed out the government's inability to collect taxes and said that it had been forced to spend what it did not really have. Warrants still had to be prepared for salary payments for the month of June and these had been issued. Meanwhile, the source said that some persons/businesses had expressed a willingness to make available the taxes they owed to the government but a mechanism had not been worked out for these to be collected. A meeting scheduled last week to iron this out did not come off.
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