Georgetown: The Bank of Guyana in 2015 will roll out a three-year strategic plan, designed to scale-up monetary regulations to maintain and enhance the soundness of its financial system, according to newly-appointed Central Bank Governor, Dr Gobind Ganga.
He said this will coincide with the bank’s 50th anniversary.
The visionary document, put together by staff of the bank, with the input of the Directors, and Dr Ganga, who played an instrumental role in the process, is results-based.
Dr Ganga said Guyana has enjoyed a stable financial system, and for the banks, it has been one that is highly liquid, profitable and solvent, and the new plan will build on these positive indicators.
This aside, the plan also addresses issues relating to anti-money laundering and financing of terrorism, but notwithstanding, the Central Bank Governor urged parliamentarians to arrive at a consensus, sooner rather than later, allowing for the passage of the vital legislation currently before the House.
This, Dr Ganga said, is imperative in protecting Guyana from being blacklisted by the FATF, noting that the global reputational risk would significantly impact national growth, balance of payment, exchange rate and transacting business both within the economy and externally.
Guyana has been given an extended deadline of September 2015 to pass the Anti-Money Laundering and Countering the Financing of Terrorism Bill, which has been held up in Parliament.
The held up has been largely due to feet-dragging and some unreasonable demands from the combined Opposition, the Alliance For Change (AFC) and the A Partnership for National Unity (APNU).
Scores of persons from civil society, the business community and regional organisations have implored parliamentarians here to green light the legislation to protect both the local and regional financial architecture.
Dr Ganga on Friday echoed these calls, noting that the non-passage of the amendments to the Principal Act of the Anti-Money Laundering Bill will have a devastating impact on the economy as trading partners will not want to do business with Guyana.
The local economy, he said has been doing well, enjoying sustained growth, mainly due to prudent financial management, which in part has resulted in Guyana achieving an inflation rate of around 1.2 per cent.
Low inflation means more disposable income in the pockets of the citizenry, which means they are able to purchase more.
Positive outlook
Dr Ganga said the lowered price levels experienced during the past 11 months, are expected to continue during the Christmas period, allowing everyone, whether they are rich or poor, to enjoy a high level of disposable income.
An important term in economics is liquidity, which speaks to money supply. With excess money supply, there is excess aggregate demand and excess aggregate demand results in an increase in price levels, causing high levels of inflation.
This is not good for the economy of any country, and Guyana has been able to be on top, in managing to avoid a situation of high of inflation.
Coming back to the subject of liquidity, Dr Ganga explained that Government does not control the economic variable, pointing out that it is done by the Central Bank.
“Essentially, what we do, we target a certain per cent of money supply in the system that will be conducive and allow for growth and development,” the Central Bank Governor told Guyana Times.
He explained that excess liquidity is sterilised, absorbed from the system to the issuance of Treasury Bills, noting that these bills are essentially Government’s Treasury Bills.
Government has sequestered some $90 billion to control excess liquidity, and over the past decade, Dr Ganga said it has cost the Government around some $20 billion.
He disclosed that this figure has been reduced significantly since the mid-1990s when in excess of $5 billion was sent in terms of interest costs and absorbing liquidity. In 2014, the cost is around $1.4 billion.
The bank has also been investing foreign reserves in government-backed securities that are highly credible and are A and above in rating.
“We are very conservative, at no one time we try to put investment in securities that will result in a loss, Dr Ganga said.
Currently, the bank keeps about 15 per cent of its reserve in gold, earning an interest on the holding.
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