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April 4, 2021

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The government’s overdraft (negative balance) as at end February 2021 stood at G$139.7 billion. As at end 2020, the number was negative G$135.4 billion. The present government inherited a negative balance of G$92.8 billion in August 2020. One can think about this balance as the level of water in a bathtub. The water level increases in the tub when the inflow from the faucet is greater than the drain at the bottom of the tub. If the leak or outflow is larger than the inflow, the level of the water will fall.

Similarly, the government has its core account at the Bank of Guyana that it uses to make payments to other sectors of the economy, namely households and businesses in the private sector. The government, of course, cannot make payments to foreign nationals from this account since they would not accept the Guyana dollar as settlement. Foreigners will want US$, Euros or some other major world currency. Nevertheless, if there are excessive payments from the said account, there can a steep increase in demand for US$ and other hard currencies, as well as foreign goods. Excessive use of the account would cause scarce hard currencies to exit Guyana.

When the government puts in more money than it spends, the balance will increase like the water level in the tub. The fact that the balance is continually negative means that the inflows into the account are less than the outflows or leakages. The inflows and outflows are connected to the fiscal balance which we will define as revenues (taxation, etc.) minus expenditures (public sector wages and salaries, road construction, maintenance of buildings, financing of prior debt, etc.).

If in a given month a household spends more than its salary and other gains, then the household has a deficit that that must be financed by using previous savings, asking a relative for a cash gift and/or borrowing using credit card. Similarly, a government’s deficit must be financed each year by borrowing, seeking foreign grants, and/or using money from its account at the central bank (the BoG). In general, spending from the BoG account should not exceed the deficit. At least, according to accounting, economic and mathematical logic.

However, we are talking about Guyana where politicians across the divide have assumed control of every aspect of the society. Politics is contentious because of the objective to capture the government. Those who control government are able to steer goodies to agents – foreign and local – who finance election campaigns and to their respective solidified ethnic base. Of course, this patronage flow is not the whole story. The PPP/C government spends enormous amounts of money in communities outside its primary ethnic base in the hope of expanding future votes. On the other hand, the core partner, PNCR, in the APNU + AFC coalition, was not too willing to extend outside its ethnic base, except to a few business people who financed its election campaign. In a few columns, I will back this statement up with mind-blowing data.

There is just one task in today’s column: to point out a connection between the BoG overdraft and the government’s fiscal deficit.

The table at left below presents data from the official accounts that I pieced together. Various observers and myself in the past have shown the stock of money (the water level in the tub) in the account. However, for the purpose of this essay what matters is the change in the amount of money in the account from one year to the next (the flow of water draining out from the tub compared with the inflow).

As can be seen, in the years 2008, 2009 and 2010, the change in the account’s balance was positive, implying that the government was putting in more than it was taking out from the account. However, the change in the balance turned negative since 2011 when the PPP/C was in government. This means that more money was going out than flowing into the account. The year 2011 is pivotal in the post-1992 political economy of Guyana. The PPP/C lost the majority in Parliament but kept the presidency.

The table shows that the PPP/C cranked up the fiscal deficit from G$16.4 billion 2011 to G$34.9 in 2014. How did the then government finance this? It did so by expanding money creation more than debt sales (T-bills). Money can be created out of thin air when government spends from its account at the BoG, making it the most special bank account in the land. This is what monetary sovereignty means, albeit Guyana’s sovereignty is much narrower compared with say that of Japan or the United States. More of this in my forthcoming academic paper.

Important for our purpose, however, is the sturdy desire to regain the parliamentary majority would result in a significant amount of political patronage in this period. In a future column, I will provide some data to show on what items the PPP/C spent by generating money. In the year just before the 2015 election, the G$34.9 billion fiscal deficit was financed by money creation to the level of G$30.8 billion. This means that 88.3% of the deficit was financed by creating money from thin air.

As can be seen, the year 2015 is very interesting. First, the PPP/C lost government to a historic coalition under APNU + AFC. Second, and more interesting from my viewpoint, the deficit was smaller at $9.3 billion, possibly because of the disruption to the budgeting process. However, the spending did not stop. The government’s account moved into a deeper overdraft by an amount of G$23.7 billion. This is what I meant earlier by a violation of accounting, economic and mathematical logic. Is this a statistical error? Well, it happened again in 2018 under the APNU + AFC government when the overdraft of G$28.7 billion exceeded the fiscal deficit of G$26.8 billion.

Both 2015 and 2018 suggest that monies were created outside of the budgetary process and extended to political groups. Indeed, there were numerous reports of monies being paid to various groups who were not official employees of the government. Many were PYO, YSM and other party members. There was liberal contract employment under the early PPP/C government, but substantially more under APNU + AFC.  Finally, the year 2015 was also interesting because of the Grangerian D’Urban Park fiasco and the possibility that a few elements inside the PPP/C might have received a percentage of these funds as exit patronage.

Imagine how this narrow monetary privilege could be used if there was a more cohesive society. There would be no more homeless people, help with mental health will be available for those who need it, and pensioners would receive good care. However, these funds have disappeared and there is nothing to show, perhaps except a few fancy SUVs (that have to be imported) and homes in poorly drained neighbourhoods with lots of rum shops and noise, but without green places and space for physical activities. In closing, it will take several more essays to fully explore the angles. I hope you will stay tuned.

Comments can be sent to: tkhemraj@ncf.edu

Original Post

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TK is at it again.  During Jagdeo's tenure, he wrote a paper every week denouncing the economic mastery of the Supreme Leader.

Now he is teaching us maths, not economics.

The PPP inherited G$92.8 billion negative balance from the Coalition Government.  At the end of Feb 2021 that negative balance went up to G$139.7.  What Dr. TK didn't mention was that the Interest alone on that debt went up to G$139.7.

The PPP has been spending and spending to better the lives of all Guyanese, only to be accused of mis-managing and stealing by anti-coolies. The aftro_Guyanese are so happy with the progressiveness of the PPP. There coolies oppose the PPP rebuilding the infrastructure.  They are happy when Indians suffered under the hands of the Coalition.

The Coalition Government bankrupted the country and TK is attempting to through blame on the PPP.

The Coalition raised salaries and cut taxes. They destroyed the sugar Industry and tried to jail their opponents for crimes they have committed in the past during The Burnham regime.

If TK is so smart why doesn't the PPP want him in their fold?

Dis fkn Kakakant is a dumb idiot.  Why do people engage him in serious exchanges?  I have no time for his crap.  He is dumb, lies, changes people posts and overall is a fkn moron.  Why has he not been banned from participating on this forum?

@Ramakant-P posted:

If TK is so smart why doesn't the PPP want him in their fold?

Because he is too smart for them, they don't like that. They like those that agree with everything and follow blindly...the sheeple

Last edited by cain
@Totaram posted:

Dis fkn Kakakant is a dumb idiot.  Why do people engage him in serious exchanges?  I have no time for his crap.  He is dumb, lies, changes people posts and overall is a fkn moron.  Why has he not been banned from participating on this forum?

Your outburst has nothing to do with the topic.  If you read your own post you will realize that you are a dumb idiot.

You use the 'F' word and you want them to ban me. Disguising the "F" word does not cut it. I can only say that you have bad manners.  Why do you engage me in conversations?  Why don't You block my posts.? You call me Kakakant and you can't even tell us anything about yourself. You are rude and crude.

Your family must be very proud of you. That is hard to believe. 

Last edited by Ramakant-P
@cain posted:

Because he is too smart for them, they don't like that. They like those that agree with everything and follow blindly...the sheeple

Because he is arrogant and egotistical.

Why did the PNC kick him out from the Coalition?

@Ramakant-P posted:

You are saying that TK is smarter than all members of the PPP and APNU/AFC.

? Follows a question or is that a statement?  Both parties contain idiots who are in it for themselves and no one else.

As can be seen, in the years 2008, 2009 and 2010, the change in the account’s balance was positive, implying that the government was putting in more than it was taking out from the account. However, the change in the balance turned negative since 2011 when the PPP/C was in government. This means that more money was going out than flowing into the account. The year 2011 is pivotal in the post-1992 political economy of Guyana. The PPP/C lost the majority in Parliament but kept the presidency.

The table shows that the PPP/C cranked up the fiscal deficit from G$16.4 billion 2011 to G$34.9 in 2014. How did the then government finance this? It did so by expanding money creation more than debt sales (T-bills). Money can be created out of thin air when government spends from its account at the BoG, making it the most special bank account in the land. This is what monetary sovereignty means, albeit Guyana’s sovereignty is much narrower compared with say that of Japan or the United States. More of this in my forthcoming academic paper.

Important for our purpose, however, is the sturdy desire to regain the parliamentary majority would result in a significant amount of political patronage in this period. In a future column, I will provide some data to show on what items the PPP/C spent by generating money. In the year just before the 2015 election, the G$34.9 billion fiscal deficit was financed by money creation to the level of G$30.8 billion. This means that 88.3% of the deficit was financed by creating money from thin air.

All those IDIOT PPP supporters who chant "progress, progress, progress" should read the above carefully. Labba man is on point. Note especially the bolded parts (my emphasis).

PPP sleight of hand with numbers, a grand foking optical illusion of "progress" while shithead drunks on Liberty Avenue, genetically racist base men and brahmins from Canada engage in orgasmic screams while the nation is being bankrupted.

Someone here was wondering why the Guyana dollar hasn't appreciated in spite of oil money. Your answer is in the above.

@Iguana posted:

All those IDIOT PPP supporters who chant "progress, progress, progress" should read the above carefully. Labba man is on point. Note especially the bolded parts (my emphasis).

PPP sleight of hand with numbers, a grand foking optical illusion of "progress" while shithead drunks on Liberty Avenue, genetically racist base men and brahmins from Canada engage in orgasmic screams while the nation is being bankrupted.

Someone here was wondering why the Guyana dollar hasn't appreciated in spite of oil money. Your answer is in the above.

Iggi, At least the PPP knows how to spend money. They are rebuilding the Infrastructure that the coalition destroyed. It takes time for things to materialize. In the meantime, if you and your buddies are going to accuse the PPP of wrongdoings don't waste time.  Everything you read about in the Papers is real progress. The notion that the PNC can do better is figment of your imagination.

Of course, It's all in your contradiction of the PPP and the progress that they are making. The thing is with anti_PPP boys, they say one thing and then deny it afterward. Guilty people always ask for proof.

@Ramakant-P posted:

Of course, It's all in your contradiction of the PPP and the progress that they are making. The thing is with anti_PPP boys, they say one thing and then deny it afterward. Guilty people always ask for proof.

You are FOS, because someone contradicts the PPP they must be PNC?

Asinine people make stupid accusations and when confronted they can't provide proof of what they accuse others of.

Last edited by cain
@Ramakant-P posted:

TK is at it again.  During Jagdeo's tenure, he wrote a paper every week denouncing the economic mastery of the Supreme Leader.

Now he is teaching us maths, not economics.

The PPP inherited G$92.8 billion negative balance from the Coalition Government.  At the end of Feb 2021 that negative balance went up to G$139.7.  What Dr. TK didn't mention was that the Interest alone on that debt went up to G$139.7.

The PPP has been spending and spending to better the lives of all Guyanese, only to be accused of mis-managing and stealing by anti-coolies. The aftro_Guyanese are so happy with the progressiveness of the PPP. There coolies oppose the PPP rebuilding the infrastructure.  They are happy when Indians suffered under the hands of the Coalition.

The Coalition Government bankrupted the country and TK is attempting to through blame on the PPP.

The Coalition raised salaries and cut taxes. They destroyed the sugar Industry and tried to jail their opponents for crimes they have committed in the past during The Burnham regime.

If TK is so smart why doesn't the PPP want him in their fold?

Mr Persaud. I don't know who TK is. Me hear how he ungrateful and how he betray we people. He side with black people on we.

@Ramakant-P posted:

Iggi, At least the PPP knows how to spend money. They are rebuilding the Infrastructure that the coalition destroyed. It takes time for things to materialize. In the meantime, if you and your buddies are going to accuse the PPP of wrongdoings don't waste time.  Everything you read about in the Papers is real progress. The notion that the PNC can do better is figment of your imagination.

Rama, what nonsense you talking? Read my post again, it's not about govt. spending money, infrastructure and all the other horseshit you wrote.

@cain posted:

Rama, can you point me to where there is mention the PNC can do better?

This is the thing with these PPP people. They cannot embrace thinking which criticizes BOTH the PPP and PNC in their current forms. I have stated here unequivocally that Guyana has had over 50 years of corrupt, underachieving governance. It is insanity to keep supporting either of these parties in their present form.

The PPP supporters defend all the malfeasance of the PPP by pointing to the PNC. They go back to the 73 elections, the Burnham years and Burnham himself, who has been DEAD for 36 years I think. They live in the  past.

Meanwhile with just about equal time in office by both these parties, the country is a shithole! These fking PPP morons cannot see that. Or perhaps they are so blinded by race and "ahwe pan tap" that it doesn't matter if the country descends into the abyss, as long as Indians rule it.

This is why Guyana is a shithole country.

Yep, a shithole regardless which party ran it thus far.

For all the years I've been on GNI there were COUNTLESS posts such as yours criticizing both of the main parties, these posts were/are done by those who supported PNC/APNU/AFC. On occasion (perhaps FIVE times in twenty years) a mention would be made by those who supported the PPP about their mishandling of matters etc.

Even though these criticisms were made we still heard the same bullshit as we hear now about backing PNC and PPP angels being better than everyonelde. Pathetic people they are.

Last edited by cain

Mr Rama Persaud, I contact people in high up place. They say Mr Khemraj want minister big wuk and dem did not give he. And that is why he write bad things about we innocent virgin PPP. What you say?

Mr Rama Persaud, I contact people in high up place. They say Mr Khemraj want minister big wuk and dem did not give he. And that is why he write bad things about we innocent virgin PPP. What you say?

The PPP doesn't trust Traitors. Jagdeo once offered a job to Moses and look what Moses did. There are many like Moses and who would like to get back into the PPP's fold but it is a matter of trust.

Mr Persaud. I don't know who TK is. Me hear how he ungrateful and how he betray we people. He side with black people on we.

TK is an associate Professor at Florida College. He joined the AFC and was very disappointed with them, so he joined the PNC. He wrote many papers denouncing the PPP and the implementation of their economic plans.

although he and I are on opposite sides, I admire him a lot.

@Ramakant-P posted:

TK is an associate Professor at Florida College. He joined the AFC and was very disappointed with them, so he joined the PNC. He wrote many papers denouncing the PPP and the implementation of their economic plans.

although he and I are on opposite sides, I admire him a lot.

I dont know why you admire he. He betray we great leader Dr Jagdeo and we party. He side with blackman.

@Ramakant-P posted:

Iggi, At least the PPP knows how to spend money. They are rebuilding the Infrastructure that the coalition destroyed. It takes time for things to materialize. In the meantime, if you and your buddies are going to accuse the PPP of wrongdoings don't waste time.  Everything you read about in the Papers is real progress. The notion that the PNC can do better is figment of your imagination.

Yeah? They now have access to ile money so you can now prematurely  boast while you ignore the facts of their past bungling! I've said before that I'm willing to give President Ali.a chance and see what unfolds by year end! His religious beliefs as a Muslim should benefit Guyana, provided he.doesn't allow Jagdeo to run the government! He's young and certainly not stupid!

Examples are needed to support.man's laws! The poor are expendable for they are always.with us and available!

The rich are few!

Last edited by shallyv