Tarron Khemraj
Balances due from abroad and the foreign exchange “shortage”
By Tarron Khemraj On September 10, 2023 On August 19, the Stabroek News reported that the government is willing to make necessary interventions in the foreign exchange (FX) market in order to enable the smooth access to hard currencies. In the same news report, Vice President Jagdeo noted that there is ample foreign exchange if one considers the…
Dollarization for Guyana?
According to the last count, there are seven countries that have jettisoned their national currency and adopted the American dollar as their legal tender. There are also four countries that have adopted the euro as their currency. These are examples of complete dollarization or euroization. Closer to home, Panama and El Salvador of Central America,…
De-Dollarization? Not so fast
The previous column discussed several important international functions the dollar performs. The dollar serves as an international store of value enabling countries that earn foreign exchange to save in an easily convertible currency. It serves as a medium of exchange allowing payments beyond the American border. It also serves as a unit of account permitting…
De-Dollarization: Is it real?
The topic of de-dollarization is all over the popular press these days. Some have been predicting the demise of the American dollar for decades, while others have taken the enlightened view that the world will be a better place if international payments are settled in a multipolar currency framework, involving about four or five dominant…
On cost recovery and oil contract renegotiation
Recent discussions surrounding the cost recovery provision in the oil contract and the possible renegotiation served as motivation for this column. I intend to clarify and reemphasise several points I made on these topics in previous columns. Over the years, I have examined various topics which are still relevant to present deliberations. These include the…
BOOT illusions and Amaila
The build-own-operate-transfer (BOOT) financial arrangement has been used around the world to fund important infrastructure in partnership between government and private investors. In this financing model, the private investor upfronts the initial investment cost and expects to be repaid over some time period. The investor has an expected rate of return before underwriting the project….
The withdrawals from the NRF, the new Demerara bridge and more
Today’s column will simulate two scenarios of expected money inflows into and outflows from the Natural Resource Fund. All simulations are based on the NRF Act of 2021. The Act allows for higher early withdrawals from the Fund. Several justifications for high initial withdrawals were outlined by government officials. First, the dire shortage of the…
Notes on the withdrawal rules of the 2019 and 2021 NRF Acts
Last week’s column (‘Macroeconomic issues relating to the NRF’) made the point that there are many similarities between the Act of 2019 and 2021, but it is the withdrawal rule which separates the two Acts in a major way. The withdrawal rule is very important and it needs to be transparent so that Guyanese can…
Macroeconomic issues relating to the large early withdrawal from the NRF
In the previous column, I noted several positive features of the Natural Resource Fund (NRF) Act of 2021. I also outlined several potential downsides such as the possibility for employing unnecessary financial consulting in the face of a legally-mandated passive investment strategy, the power relations between the officers of the Fund and government given the…