Ramotar’s budget could be the turning point

Dec 21, 2011 Letters

Dear Editor,
President Ramotar’s 2012 budget, soon to be released, will bring to bear a new era of fiscal responsibility on the shoulders of the PPP. My humble advice is let’s invest in our people, without having to expand the mountain of debt at the pace encouraged under the Jagdeo regime.
For that to be achieved however, careful scrutiny of the National Budget is vital by independent eyes. For that matter, in addition to APNU and the AFC, even the Trade Union, the religious and Private Sector bodies must be actively consulted before the next budget is read.
That is why this approach of President Ramotar of instructing the Minister of Finance to meet with two persons representing the AFC and APNU to consult on the preparation of the Budget 2012 is a most welcomed announcement. This is a very sensible start at molding a nation.
With great power comes great responsibilities and thus I appeal to all parties to use this new era of consultation responsibly; there should be minimal political grand-standing, with more focus on delivering the good to the people. I am aware how hard that is for politicians to absorb but these are new times in Guyana and it demands new attitudes.
But would the numbers inside the document support the dreams and ambition of the people who ought to benefit from this document? Will the pensioners get the 100 per cent increase in pension they deserve or would the workers get the further 12 per cent salary increases immediately to round off the 20 per cent that the AFC has been vociferously advocating? Would sugar worker get a real salary increase after a long time?
From the actions of President Ramotar, I remain very hopeful. I am observing a willingness to lead, to listen to the experts, to take the tough decisions, and to cooperate with the majority political opposition. However, I can be totally wrong and this can all be political deception of the highest order. Time will tell the truth.
What is vitally needed in Guyana is fiscal responsibility. For too long Ashni Singh was allowed to pontificate that Guyana was having the biggest budget ever without being tasked with the responsibility to funding it from savings and real income rather than resorting to more irresponsible borrowing.
Those who understand the reasons for a budget deficit, realize it is used mainly to fund war, recession, and expansion of the wealth and the job creation ability of a nation. Guyana has done little of this with our perpetual budget deficit thus leading one to ask the question – where has the money gone?
Recent history illustrates this principle. Because of increasing remittance, higher fund flows from the underground economy (drug, etc), high expenditure on public works, hospital, schools, drainage systems and inflation; the nation’s income and tax base did expand over time. The tax collection now is projected at $115 billion in 2011 vs. $107 billion in 2010. That is an increase of $8 billion (US$40 million).
If a government’s debt grows at or below that pace, servicing the debt will not become a major problem. That means the government can run budget deficits in perpetuity, as long as they are not too large and they can be funded.
The truth in Guyana is starkly different. Our combined domestic and external debt is expected to close the year 2011 at approximately US$1,655 million vs. US$1,567 million in 2010. This translates into a growth in the stock of debt of US$88 million over 2011, double the growth in the tax base.
Horrible news! Income growth of US$40 million vs. growth in debt of US$88 million! The ability to service our mountain of debt is heading in an unsustainable direction and thus compromises the future financial stability of the nation. This says a lot about the patriotism of the people who lead the finance of the nation over the last 12 years; they clearly put self enrichment in front of national development. In normal societies, that is tantamount to treason.
It is hoped that the 2012 budget will not be the biggest budget ever; but one better designed with effective programmes that targets job creation initiatives, greater support to the entrepreneurs and workers and the truly vulnerable like the pensioners.
Sasenarine Singh

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