Guyana was not on the brink of an economic take-off in 1992

Apr 15, 2009 Letters

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DEAR EDITOR,
Today, many comments on Guyana’s development fail to appreciate the implications of a huge debt burden; and the nine or ten years subsequent to 1992 that elapsed before Guyana could reach financial viability. And so, under the PPP/C’s watch, we are looking at less than 15 years when we review this country’s developmental gains.
I think it is useful to remind the nation of the sordid legacy the PPP/C inherited and that legacy’s implications for financial viability, especially when it comes to rehabilitating dilapidated physical infrastructure and in many cases, installing new infrastructure.
The debt service burden in 1992 consumed a disproportionate amount of the country’s revenues, leaving very little for social infrastructural works, as in education, health, and human services. Guyana experienced a high poverty rate in 1992. And post-elections violence and ethnic trauma over subsequent years compounded poverty levels. Today, some analyses of Guyana exclude discussions on the inherited 1992 debt burden and subsequent period for financial viability. Any such exclusion will produce a biased analysis, for a heavy debt burden and the process to attain financial viability place enormous strains on the delivery of services.
President Bharrat Jagdeo, then Guyana’s Finance Minister, on June 30, 1999 said, “The people of Guyana appreciate the efforts of the multilateral and the bilateral agencies in making Guyana eligible for debt relief under the HIPC Debt Initiative. Guyana has made significant progress in reforming its economy.  However, much remains to be done. The Government is keen to consolidate the recent economic gains and significantly reduce poverty. In this context, the HIPC debt relief agreed to this week will release resources from debt servicing and enable us to increase budgetary allocations towards improving the health, education and living standards of all Guyanese.”
Notwithstanding four election victories since the restoration of democracy, Guyana continues to face the slings and arrows of outrageous political commentaries; where their lyrics express fury that the PPP/C Party remains in Government.
Today, too, the pundits of discord and contemptible commentaries again have booted up and restarted the wagon of the Economic Recovery Program (ERP), purporting that the PPP/C Government coat-tailed on the ERP. The ERP in 1989 was not Hoyte’s brainchild. The World Bank and the International Monetary Fund (IMF) instituted and drove the ERP, which radically reduced the Government’s role in the economy. During that time, Finance Minister Carl Greenidge pronounced that the country was economically bankrupt.
The World Bank Group Report (1994), referring to the 1988-1992 period, noted “The government’s capacity to deliver essential services has virtually collapsed. Infrastructure remains severely dilapidated. The supply of potable water is limited to a small proportion of the population, drainage and irrigation systems have deteriorated to the point that they are no longer useful, and health and education services have become so inadequate that social indicators for the country have fallen to among the lowest in the Caribbean.” This Report, indeed, dismissed the so-called gains from the ERP.
Concessional lending met its debt obligations and increased economic growth rates between 1993 and 1997; but the sordid and disturbing impact of social infrastructural devastation at the 1992 baseline urgently required a new dynamic and comprehensive strategy to sustain Guyana’s debt burden, if the masses were to receive any meaningful social services. Those who think that Guyana was in fine shape in 1992 need to re-examine their conclusion. Guyana was one of the poorest countries in the hemisphere in 1992.
This level of poverty was only one of the factors that qualified it for the Heavily-Indebted Poor Countries (HIPC) Initiative. The World Bank explains the HIPC Initiative eligibility thus: “Which countries qualify? The poorest countries, those that are only eligible for highly concessional assistance from the International Development Association (IDA), the part of the World Bank that lends on highly concessional terms, and from the IMF’s Poverty Reduction and Growth Facility (previously the Enhanced Structural Adjustment Facility). Those that also face an unsustainable debt situation, even after the full application of traditional debt relief mechanisms (such as application of Naples terms under the Paris Club agreement).”
It is instructive to note, too, that per capita GDP fell by almost 30% in the period 1980 through 1990, a clear case of economic recession in Guyana, according to the World Bank Report 1994. Therefore, those who think that Guyana was on the brink of an economic take-off in 1992 as a result of some ERP need to exercise some rethinking.
Prem Misir

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