Fiscal deficits and their macroeconomic implications

first_imgIn a Guyana Times article published on October 28, 2018, it was reported that Guyana recorded an overall fiscal deficit of a whopping $24.268 billion for the period January – December, 2018. This article therefore seeks to put into context what fiscal deficit means, and their macroeconomic implications.Fiscal deficits, as conventionally defined on a cash basis, measure the difference between total government cash outlays — including interest outlays, but excluding amortisation payments on the outstanding stock of public debt — and total cash receipts, including tax and non-tax revenue and grants, but excluding borrowing proceeds. In this manner, fiscal deficits reflect the gap to be covered by net government borrowing, including borrowing from the central bank.Central bank deficit financing in a constrained fiscal spaceThe financing of fiscal deficits by central banks is not a new phenomenon in both developing and advanced economies. However, it has assumed importance particularly in the aftermath of the recent global financial crisis. Generally, budget deficits can be financed in a number forms: increasing fiscal revenues, reduction in expenditure, printing money, or by borrowing from domestic and external sources (Alagidede, 2016). Each of these mechanisms carry different tradeoffs that policy makers have to always bear in mind. In some countries, there are provisions governing the amount of central bank financing.A brief review of experiences of developing countries with central banks’ financing of deficits showed varied outcomes. For example, in Costa Rica, the central bank finances 5 per cent of government expenditure and 25 per cent of the national budget. In Bahrain, the maximum amount that can be borrowed is left open to negotiations between the central bank and the Minister of Finance (Alagidede, 2016).Central bank financing is subject to congressional approval in other countries, such as Korea (Jacome et al, 2012) cited by (Alagidede, 2016); and in some other developed countries, such as the United Kingdom and Australia, their central banks do not finance deficits at all.Jacome et al (2012) found that the legal provisions on central bank financing of the government deficit seem to be inversely related to a country’s level of development. The implication is that where countries have lax laws, central banks are allowed to provide advances to the government, which is a common feature in many developing economies, especially those with undeveloped financial systems and shallow tax base. Alagidede (2016) put forward the argument that central bank financing of deficits can be detrimental to economic growth and stability. Continuous central bank financing of structural deficits may undermine their operational autonomy.Fiscal deficits, current account dynamics and monetary policyA transition from a fiscal regime in which the budget deficit is set “exogenously” to one in which it “endogenously” responds to the business cycle (as the empirical evidences suggest in the 1990s) may induce a transmission mechanism that amplifies the distortions in the system following a structural shock. Any attempt by monetary policy alone to stabilise the external balance could prove effective, but would require excessive fluctuations in the exchange rate, and imply high costs in terms of inflation and output gap volatility (Giorgio and Nistico, 2008).Fiscal policy, public debt and monetary policyin emerging market economiesDuring the 1980s and 1990s, the vulnerability of EMEs to shocks was often exacerbated by high fiscal deficits, underdeveloped domestic bond markets, and large currency maturity mismatches. In many cases, fiscal and monetary responses were procyclical. Debt management policy played very little part in either the choice of an optimal debt maturity or in stabilising the economy (BIS, 2012). Fiscal policy remained a major concern for monetary policy in EMEs for much of the past three decades. Unsustainable fiscal deficits and public debt levels created the spectre of fiscal dominance in many countries, leading to high and volatile inflation and elevated risk premia on government debt. An unfavourable exchange rate dynamic–linked to weak fiscal and monetary policy credibility – exposed EMEs to destabilising capital outflows.The Guyanese context/conclusionThe question was asked: What is responsible for this magnificent fiscal deficit? The answer is very simple. Over the last three years, Guyana has had the largest budgets compared to those under the previous Administration, and almost all of the national budgets have been largely deficit budgets; meaning, the expenditure is greater than the revenue collected. This deficit means it has to be financed by borrowing from both domestic and external sources. In Guyana’s case, the central bank has also been financing these deficit budgets viz-á-viz the overdrawn accounts, as was cited by other commentators and analysts alike.The most important concerns at this point in time are those which have been recently highlighted in the Auditor General’s Report, wherein billions of dollars are not accounted for properly. There are definitely real issues in regard to excessive, wasteful and unproductive spending which need to be addressed. With respect to the actual macroeconomic implications in Guyana’s context, further research and analysis is needed, which is forthcoming.last_img read more

Neymar saga topples Barca president

first_imgSporting vice-president Josep Maria Bartomeu will replace Rosell as president for the remainder of the board’s mandate, which runs until 2016.Rosell once again defended his position on the Neymar signing by describing the complaint made against him as reckless.“From the first day I have said that the signing of Neymar was done correctly and it has provoked jealousy from some of our rivals,” he told a press conference at the Camp Nou.“I don’t want an unjustified attack to negatively affect the image of the club and therefore I believe my time at the club has come to an end.“I have presented my irrevocable resignation to the board.”Bartomeu will now take over and dismissed rumours earlier in the day that presidential elections could be called in June.“My first message as the new president of Barca is to announce the continuity of our project until 2016,” he said.“We continue with the utmost desire and commitment to maintain the sporting, economic and social excellence of our club.”Rosell has routinely insisted that Neymar cost the club 57.1 million euros ($77 million), but refused to divulge how much money each of the parties to the deal received on confidentiality grounds.That led Jordi Cases to launch the case against Rosell last month for not informing the club’s members as 40 million euros of the fee was supposedly paid to a business owned by Neymar and his father called N&N.The club were subsequently asked to submit the contracts that sealed the player’s arrival in Catalonia, as well as Barca’s financial accounts for the past three years.And the judge, Pablo Ruz, decided that the documentation handed over reveals “sufficient elements” for an investigation to go ahead.On top of the 57.1 million euros attributed by the club for the signing, Barca also paid Santos 7.9 million euros for the first-option to buy three youth team players and nine million euros for playing two friendly matches, the documentation for which Ruz has also now requested.Rosell’s popularity amongst the club’s supporters and indeed some senior players has been on the wane for some time.His decision to cash in on a commercial sponsor on the club’s shirt for the first time in its 111-year history shortly after becoming president in 2010 was decried by many as selling out on Barca’s “more than a club” motto.More recently the failure to offer defender Eric Abidal an extension to his playing contract at the end of last season shortly after returning from a liver transplant was seen as lacking compassion with Dani Alves even changing his shirt number to the number 22 previously worn by Abidal as a tribute to the Frenchman.0Shares0000(Visited 1 times, 1 visits today) 0Shares0000MADRID, January 24 – Barcelona president Sandro Rosell, facing legal action over the signing of Brazil star Neymar, resigned after a three-and-a-half year spell in charge of the Spanish champions on Thursday.Pressure had mounted on Rosell, 49, after a judge agreed on Wednesday to hear a case made against him by one of the club’s own members for alleged misappropriation of funds in the deal which brought Neymar to the Camp Nou last year.last_img read more

Clubs get bigger say in UEFA

first_img0Shares0000STOCKHOLM, Sweden, March 31 – European clubs will get a greater say in UEFA’s decision-making as well as extra cash from European tournaments under an accord announced Tuesday.After securing concessions from FIFA about deciding the international match calendar, top clubs have won two seats on UEFA’s executive committee, the ECA announced on the sidelines of its annual assembly in Stockholm, the European Club Association (ECA) said. “The agreement sets a new benchmark for the relationship between clubs and national associations, providing clubs a greater role in top-level governance and an increased share of funding,” said an ECA statement.UEFA’s congress last week announced in principle to allow greater representation by “stakeholders” on the executive.The ECA said that the presence of club representatives with full voting rights will be decided at the European confederation’s congress next year.“This is a major achievement for ECA and a strong statement of UEFA’s commitment to modern and dynamic governance models. Most importantly, it is an unequivocal acknowledgement of clubs’ importance to the European game,” said an ECA statement.The deal also gives clubs a tighter grip on the UEFA Club Competitions Committee, which now be “consulted on financial and marketing matters”.UEFA also announced last week that it had increased prize money for the Champions League and Europa League by 25 percent to more than 1.6 billion euros ($1.7 billion).The statement added that European clubs will also get at least 200 million euros ($215 million) in revenue from the 2020 European Championships, 50 million euros more than for 2016.Clubs will get eight percent of income from broadcast, commercial and other Euro revenues with a minimum of 200 million euros set in the deal.The figure is higher than the $209 million that FIFA has agreed to give clubs for the 2018 and 2022 World Cups.The ECA said it had developed a “revolutionary” system to distribute the extra money it will get from the Champions League, Europa League and European Championships more evenly among European clubs.It said that more money would go to clubs in the Europa League and to clubs in the Champions League qualifying rounds and to clubs in medium and smaller domestic championships.0Shares0000(Visited 1 times, 1 visits today)last_img read more

QPR victory over Tottenham won’t be any sweeter for Ramsey

first_imgQPR head coach Chris Ramsey says he has nothing to prove to former club Tottenham when the two sides play on Saturday.Ramsey worked with the youth academy bringing through a number of their current stars and was part of Tim Sherwood’s backroom staff in his short stint as first-team boss.Having left White Hart Lane in June 2014 shortly after Sherwood was shown the door, he faces his former club for the first time on Saturday after being appointed QPR interim boss in February.“I don’t have anything to prove to Tottenham,” Ramsey said after the Loftus Road clash. “I have done that already.”“It’s a very good club that gave me nine years of employment in football and topped it off by being involved with the first team at the end.“I’m very happy for all the years I spent at Tottenham, great fans and board and now a very good management team that is doing very well. I have nothing but admiration for that club.” Chris Ramsey 1last_img read more

Run, don’t walk, to Web to check out baby sitters

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREPettersson scores another winner, Canucks beat Kings JEN LEV GOES LIVE: Jen Levinson is a major source of kid and parenting-related info for San Fernando Valley moms. Many of you receive her daily e-mail list of events and insider tips. Well, she has now officially started a Web site, where you can subscribe to her infamous list and read her soon-to-launch blog. Check her out at http:// jenlevinson.com/. KNOW YOUR RIGHTS: Wynonna Harris was a driver for Santa Monica’s Big Blue Bus line in 2005 when she gave her boss a doctor’s note advising that she was pregnant. She was fired two days later. Harris filed a wrongful-termination suit and won a $178,000 jury award; the judge boosted that amount to almost $600,000. “A lot of people think that if they are pregnant and their employer terminates them, it’s OK,” said Michael Nourmand, Harris’ attorney. “I want (pregnant) women to know that they have rights.” WHAT’S IN A NAME? New studies published in the journal Psychological Science say baseball players whose first names begin with the strikeout-signifying letter K strike out more than others. Students whose names begin with C or D achieve lower grade-point averages than those whose names begin with A or B. For information on work, family and parenting issues in Los Angeles, see www.insidesocal.com/momspace. barbara.correa@dailynews.com 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!center_img MYSPACE FOR BABY SITTERS: At www.sitter city.com, you can check out prospective baby sitters – their photos, profiles, availability and hourly fees (which vary wildly, from $7 to $25). The site has partnered with LexisNexis to do instant background checks for $9.99. TRAVELER BEWARE: During a decade of trans-Atlantic holiday travel, I’d never before had an airline call and tell me that they’d bumped me from one flight and stuck me on another. But last week, a month after we bought and paid for our tickets, United Airlines left a computer-voice message on my home answering machine telling me that my family will be traveling on an earlier flight on Dec. 24. Earlier is not good news when traveling with toddlers. Anyway, it’s a reminder to confirm, confirm, confirm before you go. SANTA’S COMING TO TOWN: Santa Claus really is coming to town – aboard Metrolink. The annual Holiday Toy Express includes a nighttime light show and Santa polar bears and snowmen dancing on the rail platform. The train will stop in Burbank and Glendale on Friday; make the Simi Valley-to-Van Nuys trip Saturday; and travel from Montalvo to Moorpark on Sunday. The train will also stop along the Santa Clarita-Antelope Valley route Dec. 15. The event will be rescheduled if it rains. For times and other information, call 800-371-5465 or see www.metrolinktrains.com. last_img read more

LISTEN: Premier League captain claims Wayne Rooney much better as a number ten

first_imgCurtis Davies believes that Wayne Rooney’s best position is as a number ten, and not as a out-and-out striker.The Manchester United captain has come under much scrutiny in the last year, following a series of poor performances for both club and country.After a woeful Euro 2016 where the England skipper was deployed in front of the back four, new Red Devils boss Jose Mourinho insisted the star was a striker – not a midfielder.Yet Davies believes the 30-year-old is easier to mark when he plays up front, and is more effective when he drops into midfield.Speaking to the Alan Brazil Sports Breakfast Show, Davies said: “I think you prefer him to play up right against you because you know where he is.“When he plays that number 10, he’s very difficult because he drops into the holes where, as a centre-half, if you dragged out of there you make space for a Rashford, Martial or an Ibrahimovic.”Marcus Rashford’s late strike was the difference when the two sides met earlier on in the season, with Rooney providing the crucial assist.And the Hull City defender believes that Rooney has to know his position if he is to reproduce more moments of brilliance.“The problem with what is happening with Rooney is that people are saying that he hasn’t got a position,” he said.“I think he is sort of being told different things and it might be difficult for him.”last_img read more

HeyCosmo: Automate Your Life Via Your Mobile

first_imgWhy Tech Companies Need Simpler Terms of Servic… Top Reasons to Go With Managed WordPress Hosting A Web Developer’s New Best Friend is the AI Wai… sarah perez Related Posts center_img To capitalize on the growing mobile market, a company called HeyCosmo is launching two new location-based service designed for use on both the web and the phone. The first service, HeyCosmo Concierge, wants to help you save time on everyday tasks like making dinner reservations or finding an affordable contractor. The second, HeyCosmo Blaster, is a social event planning tool. HeyCosmo ConciergeThe goal behind HeyCosmo Concierge is great: save you time. However, its practicality makes me wonder. The service implements advanced telephony technology to help you complete tasks. The easiest example of this would be making dinner reservations. Instead of you calling restaurants one-by-one in order to find an 8:00 PM seating for a party of five, you could use HeyCosmo Concierge to do the dialing for you. With an automated, but customizable, message, its robo-dialer immediately contacts all the restaurants in your area (and this can be narrowed down by cuisine, too) and asks the recipient of the call to press (1) for yes, we can accommodate you, (2) no, we cannot accommodate you, etc. in response to the initial recorded greeting and question. The particular questions and how they are phrased can be specified by you. You can also record your own voice if desired. At the end of the messages, an ad will play, which is how the service makes money. After placing the call, you’ll see results return immediately, in real-time, and next to each listing you’ll see the status of the call and then how the person on the other end responded (1, 2, 3, etc.) or if there was no answer. HeyCosmo ConciergeThe technology behind this is pretty impressive, but my concern is for the people on the other end of the call. Would they think this recording is spam? Would they realize it’s just a recording and hang up? Did I just save my time at the expense of theirs? Based on the number of restaurants dialed with no response, I think it’s entirely possible that the answer in many cases would be “yes.” The reason? Phone trees. After years of navigating the annoying phone trees in an effort to reach an actual human being when dialing up customer service, there’s a profound distaste for automated greetings and messages that’s still very prevalent in our culture. And unfortunately, without willing participants on the other end of the line, HeyCosmo Concierge won’t be effective.HeyCosmo BlasterHowever, the other app by this company, HeyCosmo Blaster, might have some potential…at least among the mobile-savvy kids, teens, and young adults of Gens X, Y, and Z. Blaster is a simple social planning app. To use, you just enter in a date, time, and place to meet along with the names and numbers of your friends. Blaster, like Concierge, immediately dials your friends and presents the menu choices you specified. (i.e. “Press (1) from Meet at 1:30 PM at the mall,” “Press (2) to meet at Katy’s house at 2:00 PM,” etc.). Organizers can then see the results in real-time and pick the most popular choice. HeyCosmo BlasterAlthough the technology is essentially the same as that of Concierge, the difference here is that you can have a personal conversation with your friends, family, or other group of message recipients beforehand: “Hey guys, since there’s so many of us, I’m going to use this new mobile tool from now on to organize our __________ (Fill in the blank: meetings, study groups, classes, meetups, parties, etc.) Your phone number will also show on their CallerID, so they will know it’s you. Since your friends will be expecting the call, the responses are bound to be a notch above those that come from Concierge, which is essentially a recorded message beamed to perfect strangers around your city.As for who this service appeals to, my vote goes with the younger crowd. Obviously, anyone could use it, but with this group, mobile devices are glued to their hands, so here it has a better chance of success.Learn MoreYou can visit HeyCosmo’s web site and check out all their services here: www.heycosmo.com. Concierge and Blaster are both also available as Blackberry apps; an iPhone app will arrive in a few weeks.Note: HeyCosmo also has another service, HeyCosmo Prankster, which was not demoed today. As a 10-year-old, I would have loved it. As an adult, I have to say that it’s just plain wrong. Tags:#Product Reviews#web 8 Best WordPress Hosting Solutions on the Marketlast_img read more

Trump says White House to fight House subpoenas

first_img(AP) President Donald Trump says his White House will be “fighting all the subpoenas” issued by House Democrats in their investigations into his administration.Trump is criticizing those investigations and telling reporters at the White House that he “thought after two years we’d be finished with it.”Democrats have stepped up their inquiries in the aftermath of special counsel Robert Mueller’s investigation into Russian interference in the 2016 U.S. election.Trump says “it’s enough” and that “we’re fighting all the subpoenas.”One congressional subpoena the administration is expected to challenge has gone out to Don McGahn, former White House counsel who cooperated with Mueller.And the White House is pushing back on other fronts, including House Democratic efforts to obtain Trump’s tax returns and his business’ financial records.last_img read more

CWG brand ambassador to be announced next week

first_imgCommonwealth Games Organising Committee Secretary General Lalit Bhanot on Monday said that the brand ambassador for the October 3-14 event will be announced by the end of this week.”We have a list of names prepared and we will be announcing it by end of this week or by next week, for sure,” Bhanot told PTI.Archery Association of India President V K Malhotra had proposed the name of Bollywood actor Amitabh Bachchan, who was also the face of Asian Games in 1982, as the brand ambassador but the Organising Committee rejected the proposal.In fact, Suresh Kalmadi, Chairman of CWG 2010 Organising Committee, made it clear that face of the Delhi Games would not be an actor but a sportsperson.”Brand Ambassador for the Games will be a young sports personality,” Kalmadi had said in a press conference last month.Names of sportspersons like Vijender Singh and Mary Kom have been doing the rounds as possible contenders.Vijender won bronze medal for India in 2008 Beijing Olympics, while Mary Kom have been a four-time World Champion.last_img read more