The 2022 audited public accounts ...

claimer of opinion for one statement. Strange enough, in that same year, the Auditor General had not issued opinions on three important statements in his overall certification of the public accounts, namely, Receipts and Payments of the Consolidated Fund; Statement of Expenditure from the Consolidated Fund as compared with the Estimates of Expenditure; and Expenditure in respect of those services which by Law are directly charged upon the Consolidated Fund. It is also important to note that the Auditor General’s findings were substantially the same for both 2020 and 2022 as well as earlier years.

As regards the Statement of Current Assets and Liabilities, there was a net liability of $267.131 billion as at the end of 2022, mainly due to due to the issuance of additional Treasury Bills to finance the National Budget. The net liability also included an overdraft on the Consolidated Fund which has increased from $4.425 billion to $90.695 billion at the end of 2022. These liabilities resulted mainly from expenditure exceeding revenue, which over the period 2020-2022, amounted to $326.572 billion, or an average of $125.524 billion for each of the three years. The 2024 budget outcome is expected to yield another fiscal deficit of $92.049 billion.

In today’s article, we continue our review and analysis of the audited public accounts for 2022.

Schedule of Issuance and Extinguishment of all Loans

The Schedule of Issuance and Extinguishment of all Loans reflected a balance of $81.759 billion as at 31 December 2022, of which Guyana Sugar Corporation (GUYSUCO) accounted for $28.784 billion and $52.669 billion, respectively. GUYSUCO’s latest audited accounts to be posted on its website were in respect of 2021. They showed a long-term indebtedness to the Government of $17.240 billion while debts due for repayment within one year amounted $15.146 billion, giving a total indebted to the Government of $32.386 billion. It is unclear whether the Auditor General carried out a reconciliation between the records of GUYSUCO and the Government’s books. The amounts involved were mainly in relation to the Skeldon Sugar Modernisation Project and were based on outstanding loans from the Exim Bank of China and the Caribbean Development Bank as well as counterpart funding from the Government. We have, however, not been able to access the latest accounts of Guyana Power and Light.

Schedule of Government Guarantees

The FMA Act defines a government guarantee as a contingent liability that is an obligation undertaken by the Government to pay the debt of a third party should that party defaults on its obligation. The Act also defines a contingent liability as a future commitment, usually to spend public moneys, which is dependent upon the happening of a specified event or the materialisation of a specified circumstance.

Section 3(1) of the Guarantee of Loans (Public Corporations and Companies) Act authorizes the Government to guarantee the discharge by a corporation or a company of its obligations under any agreement which may be entered into by the corporation with a lending agency in respect of any borrowing by that corporation which is authorized by the Government. The aggregate amount of the liability of the Government in respect of guarantees is not to exceed $1 billion. On 7 August 2013, the National Assembly approved of the limit to $50 billion to facilitate the Power Purchase Agreement between the Guyana Power and Light and Amaila Falls Hydro Inc. However, since 2015 the Amaila Falls Project has been put on hold. The present Administration plans to resuscitate it.

The Schedule of Government Guarantees at the end of 2022 shows one guarantee in the sum of $500 million relating to the Bank of Guyana’s contribution to the Deposit Insurance Fund.

Schedule of Contingent Liabilities

The general principle for the recording of a contingent liability relates to the probability of occurrence of an event. If such probability is remote, then the transaction is a contingent liability. If there is a possibility that the event will crystallise out, then financial prudence will dictate that the transaction be recorded as an actual liability.

The Schedule of Contingent Liabilities is the same as that reflected in the Schedule of Government Guarantees.

The Public Debt

The public debt is debt contracted by the Government to finance public expenditure. There are two categories involved: (i) external debt arising from disbursements of loans from international financial institutions such as the World Bank and the Inter-American Development Bank as well as bilateral debts; and (ii) domestic debt arising from local borrowings in the form of Treasury Bills and debentures.

At the end of 2022, the public debt stood at G$802.318 billion, compared with G$690.697 billion at the end of 2021, an overall increase of G$111.621 billion, or 16.16 percent. This increase was mainly due to a significant increase in the internal debt that moved from $403.990 billion in 2021 to $487,258 billion in 2022, representing an 18.13 percent increase, as shown below:

Treasury Bills outstanding at the 2022 amounted to $228.977 billion, compared with $146.507 billion, an increase of $82.47 billion. Debentures totalled $245.292 billion, mainly due to the issuance in 2021 of five sets of variable interest rate debentures totalling $200 billion, with repayment periods ranging from one year to 20 years. These debentures were issued to liquidate the overdraft on the Consolidated Fund.

In equivalent United States dollars, the external debt was US$1.554 billion, compared with US$1.375 billion at the end of 2021. This net increase was due mainly to: (i) disbursements totalling US$261.284 million in respect of loans contracted; and (ii) repayments of principal amounting to US$60.710 million.

Conclusion

While the Auditor General is up to date in the auditing of central government activities, the quality of his audit and reporting of the results can be improved significantly if comprehensive quality assurance procedures are adopted.

These procedures ensure that: (i) the audits are conducted in accordance with approved audit plans and detailed audit procedures based on risk assessments, are carefully followed; (ii) the findings are supported by adequate audit evidence and are properly formulated; (iii) the recommendations are concise and precise, and follow the SMART ( simple, measurable, achievable, relevant and time-bound) approach; and (iv) the overall conclusions in the form of certification of the accounts are carefully crafted in accordance with the International Standards of Auditing.

The Auditor General needs to reflect on the impact of his reports which are unwieldy in terms of size and content and are substantially a copy and paste of the contents of the previous report, with appropriate amendments.

Some of the findings are also not material to the proper presentation of the public accounts and are essentially in realm of internal audit. Additionally, consideration should also be given to a revised reporting format. The present reporting template has been in place since 1992.