AFTER MR. JAGDEO, WHAT?

Nov 10, 2010 Features / Columnists, Peeping Tom

The United States has a problem. Guyana may not hold any major strategic importance at the moment, but it has been a model client state of the IMF and World Bank, and under the PPP, has run one of the more successful structural adjust programs in the eyes of Washington.
So pleased was both the IMF and the World Bank with Mr. Jagdeo’s leadership of the adjustment process within Guyana, that a few years ago they made him the joint President of both organizations, something that no other President or Finance Minister in Guyana has ever achieved or is ever likely to achieve.
Guyana has rarely deviated from the script imposed by these multilateral lending agencies. And it has worked. Guyana has run relative to what Washington and the donors expected, a fairly successful adjustment program. True, poverty reduction has been slow, but those behind the Washington Consensus are more interested in growth and stability than they are about real wages and reduced poverty. True there was a period when growth dipped, but Washington has already found two reasons to explain this: political instability and poor factor productivity, the latter of which is bait to force Guyana into deepening institutional reforms though the competitiveness process
Guyana’s faithfulness to the IMF and World Bank medicine has been rewarded with generous loans and debt write-offs. And Guyana continues to have an excellent credit rating, while reducing its debt burden and making progress in number of areas in the financial management of the economy.
Washington is pleased and has been able to present Guyana as one of the true, if not few, success stories of the structural adjustment exercise. It can point to Mr. Jagdeo as an example of leadership that has shown that adjustment can work. It can even parade him the world over as the man most responsible for the recovery process in Guyana.
But I am sure that Washington would rather have him around to deepen the reforms since they will not be satisfied until Guyana makes a full and irreversible transition to a market economy with an almost total absence of state ownership within the economy. Right now the economy is still being primed by public expenditure, and therefore Washington may wish to have Mr. Jagdeo remain in the seat until such time as the private sector becomes the real engine of growth in Guyana.
Unfortunately, Mr. Jagdeo is on his way out, and this leaves Washington having to worry as to who will undertake to continue the reform process.
Someone from within the PPP who is not committed to the economic reform process could pose problems for Washington, which would no doubt be very much interested in Guyana continuing to be a role model for economic stabilization and reforms.
What happens, then, after Mr. Jagdeo demits office next year? This is Washington’s dilemma.
Washington knows that Mr. Jagdeo cannot run again for President and they will be the least to encourage any such plans by forces who may want to see that happen. Washington, which has invested so much in Guyana, would not wish to have a political crisis in Guyana just for the sake of showcasing a success story. As such, it would most likely seek assurances that the economic reforms of Mr. Jagdeo will be continued after he leaves office next year.
But will the successor of Mr. Jagdeo continue his reforms? How can the West be sure that, given the already heavy role that the State is playing in the economy, there is not going to be a complete somersault and a return to state domination of the pillars of the economy?
The PPP no doubt recognizes these concerns, and this may have been the reason why during the recent trip overseas of both the Prime Minister and the President, the government opted for Ashni Singh to act as Prime Minister.
Singh is someone who is seen as a prodigy of Mr. Jagdeo and very much familiar with the direction in which the economy has moved under the President. He is therefore someone that is most likely to be a key person once the President-to-be stays the course and continues the process of economic liberalization.
The appointment of Mr. Ashni Singh as the acting Prime Minister may therefore very well be the PPP’s way of signaling to Washington that in Singh, there is a rising star within the government, and someone who is familiar with the reform process and capable of continuing the economic legacy of Mr. Jagdeo.

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