CHANGES ARE NEEDED IN THE WAY THE ECONOMY IS MANAGED

Sep 24, 2012 Features / Columnists, Peeping Tom

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While the present administration is committed to ensuring that the major infrastructural and investment projects that were initiated under the previous PPP administration are implemented, and while these plans are likely to preoccupy the government in the months ahead, the time has come for the present government to revamp its style of managing the economy.
The style of managing an economy depends on the overriding preoccupation of the time. For the greater part of its twenty year rule, the PPP was in an adjustment programme designed by the IMF and the World Bank. During that programme, the government was required to undertake a disciplined approach to the financial management of the economy. Fiscal targets and expenditure had to be kept within predetermined limits. The country could not accrue unnecessary debt and therefore borrowings had to be carefully managed. Wages had to be constrained because this was expected to drive up inflation and present problems for the deficit. A watchful eye had to be kept over the country’s external payments.  All of the benchmarks and targets and goals were carefully set out for the government in the adjustment programmes to which they were committed.
The government behaved like an obedient child, hardly every deviating from the pre-determined script. They did what they had to do and fortunately they had the skills-set to ensure success.
The skills-sets that were required to manage such an adjustment programme were mainly of an accounting nature. The process of economic management was reduced to managing the Budget and ensuring that major investment and infrastructural projects were implemented on time.
The task of the Ministry of Finance was, in these circumstances, that of an accounting firm or bank, ensuring that the numbers stayed within the prescribed limits and ensuring that funds were released for the major public investment projects.
Guyana complied with the edicts from the World Bank and IMF and was able to run off the most successful adjustment programme ever. Guyana is a success case for the IMF and World Bank.
The downside was that while it was in a fund programme, little attention was being paid to developmental planning and this was because in trying to stabilize the economy, development planning was ultimately placed on the backburner. When you are stabilizing the vital signs of a patient, you do not think too much of post-recuperative care.
The post recuperative period is now upon us and therefore new skills-sets are needed within the Finance Ministry. Development planning needs to be accorded greater attention. But does the government have the skills sets to pursue this priority which will take skills different from financial planning and accounting?
The President, himself a developmental economist, must recognize the need to recruit the skills that are needed to ensure that Guyana is able to engage this task of developmental planning.
Guyana needs a new development plan; one that moves away from the prototype of adjustment towards a long-term development plan incorporating a vision of where the country should be in the next fifteen years, how it is going to get there and what is required for it to get there.
To do this, the rights skills are needed to manage the process. Managing the economy now requires more than reporting on production, on fiscal and monetary targets and implementing projects in the annual budget. It requires following a developmental plan with long term focus.
Guyana did once have a development plan called the National Development Strategy. That plan was however developed during the period of structural adjustment and reflected the constraints that were imposed by the country’s problems at the time.
Since then, of course, the country’s financial situation has improved and there have been changes in the various sectors. Gold, for example is now booming, while international markets changes have affected sugar. There is a need therefore to update, if not revamp, the National Development Strategy and it is hoped that the President will see the wisdom in updating or revising the National Development Strategy to take account of the changes locally, regionally and internationally.
Unless Guyana does this, it will be unable to capitalize on the progress that it has achieved over the years, and only the blind or prejudiced will refuse to concede that life is far better in Guyana today than it was twenty years ago.
But that life can and should be made even better. Guyana must never again face the ignominy of being the laughing stock of the Caribbean or our people when they go the islands of the Caribbean having to rush into supermarkets to buy powdered milk because such milk was hard to come by and was expensive at home, or having to eat rice flour and line up for basic necessities. All of those things happened because we created a bureaucratic state and allowed the productive sectors to decline.
Those days hopefully are thankfully behind us but they can return unless plans are put in place now to ensure that we do not decelerate. There are of course risks involved in the present instance and the principal risk is that the productive sectors will continue to do well but that a few rather than the masses as a whole will benefit.
This is why a new approach is needed, why Guyana needs a development plan now rather than later.

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