OUTDONE AND OVERDONE BUDGET

Feb 11, 2009 Features / Columnists, Peeping Tom

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I know there were many Guyanese who were wondering just when the President of Guyana would establish that long-awaited firewall to help cushion us from the contagious effects of the global financial crisis.
We were promised, since last year, that all stakeholders would have been consulted in developing this firewall. This turned out to be idle talk because we began to get another drift.
We were told that Guyana is insulated because of the nature of our financial sector which did not have significant investments in the developed world where there is now a financial meltdown.
And so there were no consultations on the firewall. And judging from what is now emerging, it does seem as if there was only little – if any at all – stakeholder input into the present 2009 Budget. And this is why I was personally apprehensive about this year’s Budget since I did not trust the ability of the government to come up with a plan to allow Guyana to deal with the fallout of the worst financial crisis since the Great Depression.
Yes, I still insist that the present financial crisis is not as bad as the Great Depression. The numbers may be larger but the consequences of the Great Depression were far more cataclysmic than what is taking place now when there is a far greater capability for governments to intervene.
I must confess that at one stage I wondered whether our government simply lacked the answers, and did not know just what to do.
After all, this crisis emerged towards the latter part of the first half of last year and measures and the implications for Guyana should have been assessed and counter-measures taken.
Then when CL Financial of Trinidad began to experience cash flow problems, I was jolted further. It dawned on me that Guyana should prepare for the worse since we can hardly be insulated from a global crisis given our dependence on global commodity markets and remittances, all of which are expected to suffer as a result of the decline in developed economies.
My fears were however allayed on Monday after having listened to the Budget Speech of Guyana’s Minister of Finance.
While I did not hear of a specific stimulus package, while I did not learn about how we were going to tighten our belts, while I did not learn much about the measures we would be implementing to insulate Guyana from meltdown, the minister sounded so impressive that I forgot everything about the crisis, and judging from his own script, it would seem as if the government is not unduly worried about this crisis impacting on Guyana.
The government seems quite confident that it can ride this crisis through.
Instead of cutting back on public expenditure, the government is going on a spending spree, without a stimulus package.  We are told about the need for prudence at the same time that there is spending spree taking place.
We now have the largest budget in our country’s history.
With roars of approval and the thumping of desks we are told that this will be achieved without any new taxes.
This could only mean that the tax burden to sustain increases in tax collection will come down heavier on the already over-taxed consumers.
But perhaps this is all part of the brilliant economic strategy that has been developed to insulate and move Guyana out of the effects of the global economic crisis. Perhaps there is some method to the Budget, some brilliance to its logic and purpose which the average mind has not yet grasped but which will most certainly unfold before our eyes soon.
We can expect a 4.7 % growth this year. Never mind gold and mining will decline; never mind rice production is expected to fall by some seven per cent; never mind the rape that is taking place within our forestry sector, there is expected to be negative growth this year; never mind that sugar will recover to the original level that was previously projected for 2008, never mind the sugar factory at Skeldon is not yet operable, never mind diamond declaration will decline.
Growth rests on GuySuCo and on private and public consumption. The economic projections hang therefore on two tenuous strings.
This has to be a magic Budget. Despite all problems anticipated in the productive sector, we are still expected to chalk up what is going to be the highest growth rate in the Caribbean and possibly in the Latin American region.
We should therefore not worry about having to tighten our belts. We should not have to worry about government downsizing in response to the global financial crisis.
There is no need for that to happen. In fact, we are likely to see an expansion not only in the government but in the interventions.
Our answer to the crises, the local one and the global financial debacle, is blind faith. We are simply hoping for the best, not knowing, not considering, not catering for what will happen. This faith will see us through.
Each year we chase after numbers. This seems to be the principal objective of every Budget. To make it the largest Budget ever.  We have outdone ourselves this year.  But this time, we may have overdone things.

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