Have the regime and the people put serious thought into what is happening to our country’s economy?

Jan 03, 2011 Letters

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Dear Editor,
Happy New Year to all Guyanese! This year we shall commit ourselves to burying the Jagdeoian philosophy of “all Guyanese are equal but the Elected Dictator and his business buddies are more equal than others”. That oppression stops with the AFC Government come October 2011.
Using the Bank of Guyana Statistical Bulletin, one can compute that the regime has spent approx. $132 billion in 2010. Comparing this with what the regime spent in 2000 ($60 billion) clearly reveals the extent of the irresponsible excesses in Guyana; much of which is money Guyana did not earn (but borrowed). If the spending over the period 2000-2010 is aggregated, it is just shy of one trillion Guyana dollars. This is spending on ‘steroids’, but for whom? You got it right; mainly for the maximum leader and his business buddies.
If we continue on this path, it will surely be a terrifying road for the Guyanese taxpayers in the future, if it is not already one. Have the regime and the people really put any serious thought into what is happening to our country’s economy?
My late grandmother always told me that if you earn $10, to create wealth one must spend $9 or less. Simple economics from a simple woman, but it has fundamental merits.  The economists say that you can deficit spend to create wealth; albeit temporarily.  Guyana has been deficit spending for 45 plus years, save an except for a few years in the 70’s and that was the main reason for our 1991 debt of US$2.1 billion.
So why is our Government not making a concerted effort to reduce the deficit to a point at least where we have a balanced budget? When will this madness end President Jagdeo? If one does this in their personal life, they would have been bankrupt a long time ago. So why the Jagdeo regime feel they can spend in the current fashion and everything will be all right in the future? There is only one answer – they are clearly more interested in creating wealth for their few business buddies rather than practice good economics. The regime is hooked on their ‘drugs’ – spending even if it means borrowing more, printing more money or becoming experts at begging for other people’s money. The time has arrived where Guyana has to pay more in debt, leaving less money for developmental work.
Through the hard work of some previous leaders, ministers and technocrats, Guyana received the tangible support from the donor communities and we were able to reduce the external debt of Guyana to US$660 million in September 2007 from the US$2.1 billion level in 1991. Quite a fortunate lease of life for Guyana, thus it is difficult to comprehend why from a position of strength, the Jagdeo regime has chosen to undermine us by borrowing more to do many projects that just do not have the ability to fundamentally transform our productive sectors. Sometimes, one can wonder, where did the maximum leader learn his financial management? Siberian weekend school!
Guyana external debt since June 2007 to September 2010 has risen to over US$1,050 million, an increase of US$390 million (an average of US$130 million a year). What the Jagdeo regime are currently doing is spending money they don’t have. In order to do that the regime:
• Introduced the oppressive 16% VAT rather than a more practical level of 12% (the AFC will reduce VAT to 12% once in office)
• Maintained high levels of corporate taxes
• Sells Treasury bills mainly under the guise of mopping up liquidity created in the first place by all this excessive Government spending;
• Borrows from anybody willing to lend;
• Begging for grant funds even if it means cussing out the donor for their own money.
What this Russian trained economist is failing to factor in, is that the overburdened Guyanese taxpayers need to service these debts, pay the interest and the principle. Basic financial management tells us the only way to keep up with this growing stock of debt is to tax the people more or grow the economy at a rate in excess of 8% per annum.  Clearly for Guyana to grow at a rate of 8% per annum, the private sector must be made the engine of growth with the Government facilitating the transforming of their production process from raw material producers to value added producers.
How much of this was done in the last 3 years after borrowing US$390 million in new debt?  The truth – very little!
The sad reality is that since those in charge cannot grow the economy by 8%, the only way they can feasibly pay this debt is by – increasing taxes. Do we all now understand why the so-called “cash neutral” VAT was the biggest scam of modern Guyana history?  It was a back door initiative to raise taxes and still having the audacity to lie to the people with the phrase “No New Taxes”. Mark my word, if the PPP is allowed to continue in office, all will have to pay more taxes. A vote for the PPP is a vote for more taxes. That is your choice.
Khemraj Ramjattan, the AFC presidential candidate has public committed the AFC to reduce the VAT to 12% to give all the ability to invest more in their productivity.
The people have to decide – five more years of continuing the PNCR/PPP tradition of the maximum leader, squadermania, corruption of the few at the expense of the many, covert tax increases or five years of new policy under the AFC focused on job creation, private sector empowerment, fairer taxes, and good governance.
Sasenarine Singh

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