SLIPPAGE IN THE ECONOMY IS TROUBLING

Oct 21, 2015 Editorial

There is more bad news on the horizon for Guyana. Apart from the 50 percent salary increase which has created a fuss among the people, the country is faced with several other issues that need the immediate attention of the government before they become unsolvable. Guyana’s GDP has shrunk from 3.6 percent in June to 0.7 percent in September, a slippage of 2.9 percent, tourism is down by a whopping 28 percent, and manufacturing and sales have been steadily declining during the past six months.
The fact that Venezuela has officially ended its Petro-Caribe agreement with Guyana means higher prices for gasoline at the pumps for consumers and lower prices for rice farmers. All this is taking place while the sugar industry is in the doldrums and the outlook for gold and bauxite remains dismal. It seems that Guyana is sinking and the captain has abandoned ship. A government that started off on the wrong foot will likely end-up the same way.
The country is in panic mode and the people are worried about what the future holds for them. It has become a do or die situation for them who have suffered immensely under the PPP and have voted for change. The real question remains, how the government can get the economic growth at a higher rate on a sustainable basis that translates into jobs and a higher standard of living for the lower working class.
However, a modestly high rate of economic growth is not in the near future, and it can only be achieved with increased production of sugar and bauxite, higher prices for rice and gold, and the expansion of cash crops farming and poultry rearing. Skilled and qualified persons are needed from the diaspora to help in the process.
Without a sound sustainable and human development plan, the economy would not grow and jobs would not be created but crime will increase. It will take more than promises, press releases and public statements to rejuvenate the economy and create jobs.
The fact that the government has appointed mostly elders to senior government positions means that it has abandoned the youths who make up more than 60 percent of the electorate and who are the future leaders of the country.
That aside, the government must be applauded for the outstanding work by the Ministry of Foreign Affairs to ease the fears of the people in light of Venezuela’s threat to annex Essequibo. The Ministry of Finance must also be applauded for its forensic auditing of various government departments which has exposed several corrupt practices that took place under the previous administration.
Likewise, commendations must be bestowed on the State Asset Recovery Unit which has retrieved a number public assets, allegedly stolen by the opposition. Its CEO, Mr. Aubrey Retemyer and his team have done and continue to do an excellent job.
But it is not clear whether those involved in corrupt practices or found with stolen state assets will be prosecuted. So far, there is only one known case. However, these achievements do not change the fact that comprehensive policy measures are required to prevent further slippage of the economy. Stabilizing the economy is necessary but not a sufficient condition for producing a higher GDP growth rate.
Economic growth that is accompanied by the creation of jobs requires increased output from existing productive structures or the building of new ones. Both processes require local and direct foreign investment. They should not be funded by more government borrowing, given the current fiscal situation of the country. The government has to promote Guyana as a safe country for overseas investment in North America, Europe and Asia, where most foreign investors are located.
If good economic sense does not prevail, then the chances of retaining political office are slim. However, the APNU+AFC government would have a better chance of winning the next general election if the economy improves and jobs are created. But the display of arrogance and aloofness would likely result in political defeat.

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SLIPPAGE IN THE ECONOMY IS TROUBLING

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