As economy slips, AFC holds the key to unlock our gridlock

Mar 16, 2014 AFC Column, Features / Columnists

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By Moses V. Nagamootoo and Sasenarine Singh

Overshadowed by the crisis in the sugar industry, Guyana’s economic performance last year is far from satisfactory. Gone forever is the 7% economic growth rate in the last years of Desmond Hoyte and Cheddi Jagan.
Whilst prices for our primary products in 2013 have dipped, it is primarily the lack of vision, bungling and incompetence of the minority government that is at the heart of Guyana’s lukewarm economic performance.
The political hustle for survival and rule by propaganda, have eaten valuable time to hone in on how to change things around. Guyanese need leadership and statesmanship, not propaganda trash and cuss-down pantomimes.
Reports indicate that in 2013 production of sugar, fish, bauxite and poultry meat declined. We need to urgently do clinical analyses of our failure in these sectors, and come up with answers.
Rice, forestry, diamond and gold output improved, but the fall in price for gold, and uncertainty over the rice market, have affected performance. For example, the increase in gold production from 438,000 oz. in 2012 to over 459,000 oz. in 2013 was eroded by a 28% decline in gold price.
All of our energies need to be on how to improve our economic performance. Instead, the myopic Robb Street gang diverts attention away from this task, and gets lost in the political propaganda game of “blame-it-on-the-opposition”.
The September 2013 Quarterly Report from the Bank of Guyana gives some startling indications of our economic status. These are some key facts:
1.         The overall balance of payments recorded a deficit of US$220.4 million as compared to a surplus of US$57.8 million for the same period in 2012.  This, in ordinary expression, means that Guyana has a shortfall because our use of funds is more than that what we earned. The situation has gotten worse over 2013.
2.         This deterioration was primarily due to an expanded current account deficit and a lower capital account surplus. This enlarged current account deficit was mainly on account of lower inflow of current transfers and higher services payments. As at September 2013, the deficit on the services account expanded by 57.3 percent or US$75.8 million to reach US$208.0 million on account of higher payments for non-factor services. (In the simplest of terms an increase in payments for non-factor services can be driven by increase payment for shipping costs, airline travel costs, etc. and is an outflow of cash from the economy)
3.         Remittances decreased by 47.5 percent or US$181.5 million to US$200.9 million when compared to the previous year.
4.         The capital account surplus decreased by 20.2 percent to US$172.2 million on account of lower foreign direct investment and portfolio investment by private citizens. (Investments are down as at September 2013 and are expected to decline in 2014 and this is a real problem, But the Minister of Finance is too high of propaganda on the anti-money laundering issue to pay any heed to this crisis)
5.         Inflows from bilateral and multilateral agencies decreased by 19.7 percent to US$120.6 million as at the end of September, and this is a clear sign that the “gravy train” is slowing down. It may not be surprising that after investing hundreds of millions of dollars in the productive sector, the international community expects that Guyana should be in a much more opportune position to facilitate the private sector as the “engine of growth”. But, instead, PPP tried to haul the private sector onto its opposition-bashing propaganda train.
6.         The gross international reserves were drawn down by some US$200.9 million from US$834.9 million to US$634.0 million over the year to September 2013 to finance the overall deficit.  (That was almost a quarter of the international reserves vanishing as a result of the PPP mismanagement of the economy).
7.         Even though the international reserves increased to US$751.2 million at the end of December 2013, when compared to December 2012, we lost some US$74 million of our reserves in 2013 under this PPP Government.
The PPP must answer to the people for the state of our economy. They must say why they have squandered the many opportunities to allow this economy to grow at 7-8 percent annually, which is what is required to grow our people out of poverty.
As a result of the wanton squander-mania and mismanagement of the economy by the PPP, our people continue to suffer in increasing numbers in abject poverty. The latest estimated poverty rate is closer to 40 percent of the population with 70 percent of the Hinterland residents (mainly Amerindians) continuing to live in wretched conditions.
The UN has also revealed that in 2011 some 46.1 percent of our youths are classified as unemployed; classic economic NINJAS (no income, no jobs, no assets). On the flip-side, almost 90 percent of the Guyanese with a University education are on a plane out of the country permanently.
These are horrifying revelations that expose that the current Ramotar administration is failing to deliver on promises to turn the economy around. They have instead turned it upside down.
The AFC stands ready to work with all patriotic Guyanese to transform our society and economy within the next generation. As we said in our Action Plan, we stand ready to pool ideas on re-vamping and re-energising our economy to create more jobs and to resuscitate hope that we could survive.
But Guyana cannot turn around unless we have serious leaders in Government who are focused and driven with an ambition to do what it takes politically to forge national unity and make necessary compromises to put the entire Nation to work.
The AFC has become, over a very short time, the conscience of our people, especially our young people, and we see urgent need for a national conversation on the way forward.
We are not interested in Budget Talk on who to blame for the wretchedness in our society. We need a Budget Plan on how to take us out of the rot, and how to manage our limited financial resources so that everyone, especially our lowly-paid public servants, could get a small bite of the cherry.
It is time this minority government follow the AFC road-map for recovery. In the AFC, we remain confident that we hold the key to unlock our gridlock, by using political consensus to open the door to better economic performance.

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