MONOPOLY ECONOMICS

Apr 29, 2012 Features / Columnists, Peeping Tom

Let us presume that you intend to buy a house and that you take a decision to go to the bank to secure a loan to purchase this house. The bank inquires of you how you intend to repay the loan, and you answer that you intend to do so from your monthly salary. What happens if the bank then tells you that they cannot give you the loan because the money that you are supposed to make in order to pay them back is not yet in your possession?
You will ask yourself just what nonsense is the bank saying, and you may try to explain to the bank that you will pay them in monthly installments as you get your monthly salary. But the bank insists that since you have not yet received your salaries for each month, then you cannot have the loan. Does the position of the bank make sense? It surely does not.
Neither does the AFC’s explanation as to why it cut eighteen billion dollars from the budget because the money which was earned from Norway has not yet been received. What sort of ridiculous position is this?
Why did the AFC, using the same logic, not then tell the Minister of Finance that in relation to the country’s external debt servicing that they will not approve the scheduled debt servicing, since they do not know whether he will end up paying this debt service.
Why did they not tell the government that they cannot approve expenditures for the respective ministries because all the revenues for the country have not yet been collected? All the revenues that the government intends to collect this year have obviously not yet been collected. Yet, parliament has voted as to how it is going to spend its collectibles, has it not?
So if government has not yet collected all the revenues, but the opposition has voted as to how these revenues are to be spent for the rest of the year, what prevented the AFC from voting on the use of the eighteen billion dollars which is supposed to be coming from Norway for specified purposes?
Why not approve of it and end the matter? Obviously the government cannot spend what it does not have, and if the money comes later in the year, it will have to spend it according to what the parliament would have approved.
There is therefore no credible explanation that the AFC or APNU can adduce as to why they blocked the spending of the Norway Funds. The only plausible reason is that this was all part of their plan to show that they now have power and that they can use this power to sow confusion.
Even more ridiculous was the situation in which the government was questioned by APNU as to why the funds from Norway were not represented as a foreign inflow.
Well, this question could have been answered by any first-year economic student. It could not be treated as a foreign inflow because it represents revenue that Guyana has earned through the sale of environmental services.
It seems that there is a miscomprehension within the opposition camp that Norway is somehow doling out these eighteen billion dollars to the people of Guyana. This is far from true, and anyone who understands what the deal with Norway is about is not likely to make the mistake of assuming that it is some loan, grant or aid that Guyana is receiving. It is not.
Guyana is selling its environmental services to Norway in exchange for reducing deforestation, while ensuring certain environmental safeguards are in place.
Guyana has earned this money already under a novel plan which is the first of its kind in the world, and details of which are widely available on the worldwide web for everyone to read.
It is like Guyana selling something and receiving payment. But because it is being sold by the government, parliament has to decide how the money is to be spent. But parliament is saying that we are not going to approve the spending until the money gets here.
This could actually cause problems for Guyana, because if the World Bank, which is administering the release of the funds, does not see consent by our national parliament approving the use of the funds, it may not release it if the agreement with Norway provides for parliamentary approval before funds are released.
So it seems as if the opposition was just playing a game. Except that when you are dealing with eighteen billion dollars, this is no time to play monopoly.

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