The Budget debate should be paused

Feb 20, 2009 Features / Columnists, Peeping Tom

---

The Budget debate which is taking place in the National Assembly should immediately be placed on pause, since the President of Guyana has indicated that he would be summoning a stakeholders’ consultation on building a firewall to insulate Guyana from the global financial crisis.

Since this consultation will directly impact on Budget proposals, since it will most likely identify the priorities and necessitate the reordering of the revenue and expenditure policies of the government for this year, it is necessary that the present Budget before the National Assembly be put on pause, so that the necessary amendments can be made following the national stakeholders’ consultation.

The President however did say that he would like the consultation to take place after the Budget debate, but I am sure that on reflection he will recognise that this makes no sense. It makes no sense for the Budget to be approved and then to have to be subject to sweeping changes following the consultations.

To ask the opposition members to be part of a process of debating a Budget that will have to be amended is to ask them to engage in an exercise in futility, unless of course the President is so visionary that he believes that nothing would come out of the consultations that would affect the Budget numbers. In that case, the usefulness of the stakeholders’ consultation would have to be questioned.

The 2009 Budget has identified the global financial crisis as one of the major hurdles which Guyana’s economy will have to grapple with this year. However the Budget, as has been pointed out by the opposition benches, lacked an analysis of how this crisis is going to affect Guyana and what steps needs to be taken to deal with the crisis.

The Government recognised since the last quarter of 2007 that Guyana would be affected by the global downturn. But clearly it has been unable to come up with answers as to just how the crisis will impact and what is to be done. In short, the Government is clueless about how to deal with the global crisis and has drafted a Budget which is conservative in orientation programmes and extremely hopeful in its projections.

Following a meeting last year between the President and the financial companies operating in Guyana, the nation was told that Guyana need not fear too much, since we did not have a great deal invested in the shaky global financial markets. This seemed to have provided comfort, perhaps sufficient to allow the proposed firewall construction process to be delayed.

We are now witnessing, however, problems in the financial sector in other parts of the Caribbean, which suggests that the crisis has now reached the region and that, despite our limited exposure, we could face problems through indirect means.

CL Financial has its problems in Trinidad and this may filter through to Guyana, since that consortium has interests in the financial sector in Guyana, which as we know is heavily concentrated in a few companies.

As I mentioned in a previous column, all that is required for a serious meltdown in Guyana is for one of the powerful companies in Guyana to run into problems.

In Antigua there are shivers over the problems that the Stanford Group is experiencing in the United States. The Peeper is baffled at the stand taken by the Securities and Exchange Commission of the United States.

I find their actions in relation to the Stanford grouping high-handed, especially considering what has taken place right under their own noses in the United States. We shall have to wait and see how this situation unfolds.

In the meantime though, it now seems likely that the United States’ economy will contract for 2009, and this can only mean more problems for Guyana.

Guyana cannot ignore these developments which are now taking place, and so it is good that Government is now hastily trying to put its firewall in place. I just hope that the local network has not already been infected by the financial virus that is hitting many other places.

The Government has now seen the light and is now rushing into consultations. The Opposition must be careful this time about dancing to the Government’s tune. They must insist that, as a precondition for any involvement in the proposed stakeholders’ consultation, the Budget debate be put on pause.
The Private Sector Commission must also insist on this.

If the Government does not agree to these terms, then stakeholders should decline to participate in the building of the firewall since they would be engaging in an act of futility.

The Government sees a crisis coming; it may not know from which direction it is coming and what form the storm will take, but they know that ill winds are brewing. They need the stakeholders to get them out of the bind that they will encounter, should a crisis hit and Guyana is not prepared.

And this is why the Opposition and other critical stakeholders should insist on some conditions to participation, the foremost of which should be a pause on the approval of the 2009 Budget.

If the Government does not concede on this issue, the stakeholders should leave the Government to face the consequences of whatever the future brings.

---

---