Not a vote of no-confidence

Jul 22, 2016 Features / Columnists, Peeping Tom

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A proposal has been floated for the establishment of a Ministry of Planning and Development. This proposal will be seen within the government as an indirect vote of no-confidence in the present Minister of Finance.

The proposal is not going to be taken seriously within the government because with APNU, the Minister of Finance is seen as a highly capable individual. The proposal will not gain any traction within the coalition government.
Those proposing a Ministry of Planning and National Development may, however, not be opposed to the performance so far of the Minister of Finance. They may be seeing that what the country needs is greater economic planning rather than simply managing finances, which is what is really happening at the moment.
The APNU+AFC government has for its first year been essentially running the PPPC’s Public Sector Investment Programme. The economy has also been running on the PPPC’s steam. Two major gold mines, all established under the PPPC regime, are principally responsible for the massive increase in gold production this year.
Gold is going to break all records this year because of the production from these two large gold mines. As a result, the economy is likely to grow in excess of 6%, something that should cause the Guyana Public Service Union to want to raise its proposal for a 40% increase in salaries for public servants.
The economy is strong; but business is stagnating, and this is the real problem which can lead to capital flight. It has not happened as yet because people are holding their money and waiting to see what is going to happen. But with the way in which SOCU is operating, it is more than likely that people will begin, as they did in the 1970s and 1980s to move their monies to North America.
There are, of course, fears of APNU introducing a watered-down version of cooperative socialism. These fears will also cause investors to be stagnant. For many years, China was a major investor in Guyana. But the sort of criticism that they faced from the coalition in the run-up to the elections will make the Chinese cautious about doing business with Guyana.
Looking to the Americans and British and Canadians is a waste of time. They will not do anything for Guyana. Their companies rape the economy and do very little socially for the country. They cannot be relied upon.
Despite these challenges, the economy is not going to crash. The PNC took one of the strongest economies in the region in 1964 and within ten years it was in serious problems. This is the fear of many Guyanese. They fear that the APNU+AFC coalition will destroy the economy in its obsession to raise money to spend on a bureaucratic state.
Instead of government becoming smaller, it is becoming bigger. Instead of government spending decreasing and private investment increasing, it is the other way around. Instead of cropping waste from social programmes, these programmes are going to increase the burden on the treasury. We are now learning about plans to give 9,000 persons a conditional cash grant. This is a free handout.
We are also learning that pregnant mothers may soon be entitled to six months’ maternity leave. As laudable as it is, Guyana cannot afford this. It will destroy the finances of the National Insurance Scheme. This measure will place further pressure on an already overburdened private sector. They cannot afford the cost associated with six months’ maternity leave. It will also force many employers not to employ women, because if a woman gets pregnant every year, it means she can be off the job for half the year, during which time she has to be paid.
The government has not introduced any public sector investment project of its own. All of the projects being implemented are leftovers from the PPP. Admittedly, it takes at least three years minimum for such projects to be developed and financed. And this is perhaps why there has been a call for a Ministry of Planning and Development, so that all of the projects which the coalition government has in mind can be fast-tracked.
Small transport operators are being crowded out by the government bus, bicycles and boats programme. A school bus making two trips per day is going to result in eight less trips for mini bus operators.
The economy has problems, but the economy is not going to fold in the next ten years. It will take more than natural disaster for the economy to go into remission. Guyana’s economy is strong, so strong that there are reports that the World Bank is reclassifying Guyana as a middle income country because of ten years of growth under the PPP.
Well that spells doom for Guyana, because if Guyana is reclassified, it will result in the withdrawal of concessional financing. This will mean that the new government will have to turn to private investment. But private investment will not sustain the growth for too long.
This is why it makes sense what is being proposed. It makes sense for a Ministry of Planning and Development to be established. The government should not see this proposal as a vote of no–confidence in the Minister of Finance. It should see it as a response to the need for financing and projects in the context of an anticipated withdrawal of concessional financing.

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