Over the last five years, the People’s Progressive Party/ Civic (PP/C) has displayed in more ways than one, that it has paid keen attention to the spending of the APNU+AFC administration. One area that it is often highlighted in this regard, is the diminishing foreign reserve which is used to service external debts and cover the nation’s import bill.
In a recent letter to the press, Finance Minister, Winston Jordan said he has taken note of these accusations of squandermania and sought to make it pellucid that figures presented by PPP/C agents are usually twisted to paint a picture of doom when this is not the case.
The economist said, “Our country’s foreign reserves are used principally to service our external debts, pay for fuel imports for GPL and intervention in the foreign exchange market, periodically…Since 2015, our imports have been distorted and dominated by several goods.” Jordan said that these include chemicals, parts and accessories, other intermediate goods, and machinery for the oil and gas sector.
For the cumulative period, January to March 2020, Jordan disclosed that total import amounted to US$609.4 million, of which the oil and gas sector imports accounted for 34.4 percent.
Jordan said that these oil and gas sector imports are financed almost exclusively by foreign direct investments. He also noted that from January to March 2020, total non-oil imports amounted to US$397.5 million or US$132.5 million on average per month. He also stated that the foreign reserves of the Bank of Guyana totaled US$499.2 million at the end of March 2020, covering 3.8 months of such imports.
“If oil companies were mandated to remit foreign exchange earned from export sales of their share of petroleum, our foreign reserves position would be improved, but such measures would certainly limit the interest of reputable oil companies in investing in our nascent sector,” the Finance Minister said while adding that this is why the economic and fiscal policies of the past five years, and those envisaged in the Green State Development Strategy, focus on the diversification of the economy, and recognizing the need to ensure the economy is firmly grounded.