Artificial - Shaw chided over NIR figure

Dr Omar Davies yesterday dismissed claims by the Government of achieving the highest level of net international reserves (NIR) in history.

Davies, the opposition spokesman on finance, said the NIR level is artificial.

The NIR stood at US$2.17 billion at the end of December last year and by the end of the fiscal year at March 31, 2011, it grew to US$2.55 billion, representing a 45.7 per cent increase over the March 2010 figure of US$1.75 billion.

But Davies suggested that the increase in the NIR between December 2010 and March 2011 was, as a result of the US$400 million received from the last bond issue, making it artificial.

"Was this sold to the BOJ, thus pushing the reserves up 'artificially'?" questioned Davies.

"I deliberately said 'artificially', as we all know that the money will have to be paid out this month to meet our debt-servicing obligations," Davies asserted.

"Hence if the money were sold to the BOJ, this 'record' NIR is just window-dressing, as it will be in and out within a few months," he argued.

role of NIR

The NIR is the safeguard for foreign debt servicing and import payments, which at current figures stand at 26 weeks of goods and services.

"If the record NIR is not reflecting the inflows from the bond, I would like to know what remarkable set of inflows could have resulted in an increase of (US)$382 million in that three-month period.

"... I have looked at the projections for the movement in the NIR over the fiscal year 2011-12, and the projections are that we will return to a figure of approximately $2 billion," remarked Davies.

He said that would put the NIR below the level of US$2.4 billion where it stood when the current administration took over government in 2007.