THE YEAR OF PUMPING

Jan 13, 2011 Features / Columnists, Peeping Tom

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Guyanese love to complain. Bemoaning their problems, perceived, imagined or contrived, is a regular practice in Guyana.
Take the case of last Christmas in Berbice. The stores in Rosignol were open way past midnight. Business was brisk. Many privately admitted that sales were very good and they were pleased with how things went.
Yet from the comments of some individuals, one would have concluded that 2010 was far more difficult that 2009. It was not and there was ample evidence that businesses, especially, did very well over the holiday season, a period that is very crucial to their financial bottom line.
In the next few days, the government will detail its own financial situation and its plans for the remainder of the year. Its bottom line is expected to also be well and many will be looking to see what will be in store for them in Monday’s Budget.
There used to be a time when the financial prospects of most individuals and businesses were tied to the Budget. That used to be the time when the economy was stagnating and when the value of the Guyana dollar melted faster than ice cream on a hot day.
Those were the days when everyone listened to the Budget to see what would have been banned and what additional taxes would have been charged.
Based on what was announced in the Budget, those with business sense made their decisions whether to keep their currency in Guyana or send it abroad for safe keeping and investment, what lines of business to engage in and whether to hire new staff or not.
One of the most dreaded things about Budgets of the past was the fear of devaluation. The rapid  slide of the Guyana dollar meant that for many pensioners, accustomed to savings, the value of their bank savings was seriously eroded to the point whereby today many of them have never recovered and many are too shame and embarrassed to admit that it was these currency fluctuations and high inflation that have left them virtually penniless today.
If you were a businessman or businesswoman, and had an inside track as to what devaluation would have been announced in the Budget, this gave you an advantage. You could buy up foreign currency, on the underground market, and speculate or you could hold the currency for when you needed it. Many did.
Those days are long gone and the Budget no longer holds such direct importance of individuals and businesses. Except if you are in the business of construction, there is nothing that is going to be said in the Budget that is likely to make any major difference to your business.
This year’s Budget is going to be a contractor’s budget. There will be lots of money being spent on public works. So a great deal of pipes will be laid and a lot of pumping will take place as emphasis will be placed, no doubt, on buying more of some expensive pumps to aid in drainage.
A strong case will be made that larger pumps need to be imported to help deal with flooding and therefore one can expect billions of dollars to be dedicated to drainage and irrigation to dig kokers, clean canals and buy pumps.
A great deal of money is going to be spent this year, as has been the case for a few years now. But whether that makes a difference on your bottom line depends on where you stand in the economy.
Right now commercial businesses are interested in ensuring there is no contraction in demand. The more purchasing power citizens have the better for them. For the contractors, the more public works contracts, the more money they stand to make.
But it does not mean that more jobs will be created because there is only so much money that can be spent at any one time in this economy and most of the jobs are already taken.
Taxes are not going to be increased but they are also not likely to be slashed not with Guyana making the necessary adjustments needed to comply with the Economic Partnership Agreement. Businesses therefore will not enjoy tax relief which can then be ploughed into investment.
Any additional investment would have to come either from profits or borrowing. This leaves the small man out in the cold and therefore he will have to continue to struggle for his survival.
Whatever tampering will take place with the income tax threshold will not benefit the poor because they are earning below the threshold in any event and thus paying no taxes.
There is therefore no reason for the average worker to get excited by this year’s Budget. Those whom it will benefit the most will have an interest, but for the small man this Budget means absolutely nothing. There will be nothing in it for him and he will have to persevere in his attempts to place food on the table of his family.

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