Sunday, May 25, 2014

Of State Treasury and Liquidity Crisis

Of late, newspapers speculated that the state treasury has run out of liquidity. This was due to the fact that some indicators were rife that the state has been unable and or reluctant to carryout some of its responsibilities, such as payment of bills to contractors/beneficiaries. Senators and MPs almost staged a show-down for the non-payment of car loans and micro-project grants. Allegations were also rife at that construction work at the Kribi Deep Seaport and other giant projects nationwide had stopped due to government’s inability to make owns contribution etc. Yet  last April 9, 2014, the Director General of Treasury, Financial and Monetary Cooperation in the Ministry of Finance, Moh Sylvester debunked allegations that the state treasury was in liquidity crisis. In a briefing, he told journalists that the Ministry of Finance has recovered FCFA 673 billion which according to Moh Sylvester corresponds to more 95% realization. In evaluating the first quarter of the 2014 budgetary year, Moh Sylvester said that the indicators are satisfactory given that there had been an excess of FCFA 79 billion from the FCFA 594 billion in cash for recovered income.  
In a desperate attempt to clear the air on allegations that the state treasury is in financial hub, Moh Sylvester said that “we borrow from the national market at below 2% per year. I believe that there are very limited institutions that can borrow at such a rate per year”. He however went further to state that the recovery rate is usually at 300%, reasons why he went further to explain that whenever they ask for FCFA 10 billion, and “banking institutions are ready to give FCFA 30 billion”. Even so, he added “but we retain only the 10 billion which corresponds to what we want because it is not about being indebted excessively. Moreover, to continuously demonstrate our credulity, it should be known that w can make draws on advances at the level of the Bank of Central African States-Beac. We are often called upon to draw from the unforeseen margin of FCFA 335 billion. If the state was in difficulty, it would rather have chosen to go to Beac at an interest of 3%” he emphasized.
However, since nothing is more respected in the world of finance than keeping seal lips on figures, the Director General of Treasury went further to unveil state expenditure for the first quarter of the budgetary year which rounded off on March 31, 2014.
Harping on the total expenditure, including FCFA 632 billion for the payment of salaries, payment of bills for beneficiaries and other state expenses, Moh Sylvester disclosed that there is absolutely nothing to worry about given that FCFA 560 billion was projected. Yet allegations abound that Cameroon is currently witnessing acute shortage of banknotes. A school of thought holds that the Bank of Central African States-BEAC has a hand in the liquidity crisis in the Country. However, public opinion is looking towards the state vuvuzela, Isa Tchiroma Bakary to clear public opinion on the current financial situation in Cameroon given that both the Minister of Finance Ousman Mey and Moh Sylvester are seeming afraid of speaking the truth. It is even alleged that the prices of fuel will soon move to 700 FCFA per litre. This has ignited another public debate on whether it is not FMI pressurizing government or it had rejected state subvention or plans to do so. 

When News Breaks Out, We Break In. (The 2014 Bloggies Finalist)

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