The economy and the predicted growth

May 29, 2016 Editorial

The economy performed unreliably over 2015 and this situation is not expected to improve for the people in 2016. That is why we asked the question, economic growth for whom? The IMF has just completed its Article IV consultation with Guyana, and their preliminary press release paints a mixed picture.
The government in the 2016 Budget stated that the economy is expected to grow by 4.4 percent and just two months after that announcement, the IMF checked the books and the growth rate has been revised downwards, reflecting an economic situation that is going in the wrong direction. All is hedged on the performance of two new larger gold mines that were brought to Guyana by the PPP.
If one looks at the Global Futures Markets the highest settlement price for gold in February 2017 is US$1,288, while the current spot price for gold is US$1,268.
The prognosis is that the Ministry of Business and GO-INVEST have failed to facilitate any major deals in the last 12 months. The evidence is clear, according to the IMF; the Net Foreign Direct Investment (FDI) dropped some 54 percent in 2015 to 3.8 percent of GDP.
This is the lowest level of FDI in 11 consecutive years. And we do not expect marked improvement in this area in 2016.
We expect this four percent growth predicted by the IMF is touch and go as a result of the news coming out of the rice and sugar industry after their first crop performance. It has been publicly reported that Guysuco failed to meet its first crop target by 29 percent. The rice industry should be off by some 20 percent in the same period.
This weak performance from two of the major contributors to economic growth is not great news.
If this IMF report has not clearly staked out the core issues and communicated to the rulers the urgency of this economic situation, then who will? It is time to bring in new talent to turn this economy around.
If one reads most of the press releases from the government on this first 12-months economic performance, it is all coming across as triumphalist on issues that some people have a very different opinion. So it is clear that different people are seeing different things.
Before May 11, 2015 the ruling class lived in a bubble behind locked gates, political handlers, and sirens since their opinions were clearly not grounded in reality. Surely this cannot be the case at this time.
There are big problems facing the people of Guyana – jobs, personal safety, economic opportunities, access to proper healthcare, improving the education system and a public service system that is not functioning.
Who would have thought that 12 months after promising the people the Public Procurement Commission, the Granger administration would have failed to deliver on this promise? But then again, the creation of this body is not up to the government. The PPP which was opposed to it continues to be opposed to it, hence the stalemate.
Nothing has changed in these operations from the PPP days. Cabinet remains integrally involved in voicing no objections to contracts. The accusation of corruption that flowed during the tenure of the PPP continues today under the Coalition government.
The IMF said the 2016 revenue is expected to remain broadly flat. We would not be surprised if the 2017 budget has many new forms of taxation.

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The economy and the predicted growth

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