The future looks bleak under the coalition Govt.

Sep 12, 2016 Letters

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Dear Editor;
Contrary to what is being peddled in some quarters, the current APNU-AFC administration inherited an economy that was robust and dynamic and which had been generating employment for Guyanese mainly in the construction, mining and agriculture sectors. The Bank of Guyana reserves were fairly healthy and all the macro-indicators were pointing in the direction of an economy that was on the verge of economic take-off.
This was quite in contrast to what obtained when the PPP came to power on October 1992 after some twenty-eight years of authoritarian rule. The PPP/C government inherited a bankrupt economy and a physical and social infrastructure that was in an advanced state of decay. We were rated as one of the poorest country in the western hemisphere with a per capita income of just over $300 US. The country was declared “uncreditworthy” by the International Monetary Fund (IMF) and there was an unwillingness on the part of the international funding agencies to do business with the country because of its inability to honour its debt obligations.
One consequence of above deformation was a loss of hope and confidence among the Guyanese people in the then PNC regime to provide them with a satisfactory quality of life. Many who can afford flee the shores of Guyana in search for a better life. This explains the high migration rate particularly to North America but also to the neighbouring countries in particular Suriname which until this day has a large Guyanese population.
The first task of the new PPP/C administration was to restore hope and confidence among the Guyanese people. This was done through a people-oriented approach to development which had as its main plank a development strategy which took as its point of departure economic development but with a human face. Development with a human face became the mantra which guided the government’s policies and programmes and which found expression in the reconfiguration of budgetary priorities in favour of the social sectors particularly in the areas of education, health, housing and water.
There could be no doubt that the PPP/C administration, despite having inherited a battered economy, did an extraordinarily good job in rebuilding the economy and creating an enabling environment for the private sector to grow and expand. The growth of the banking sector and the expansion of the business sector resulted in job creation and a more robust and dynamic economy. The PPP/C government declared that the private sector would be the engine of growth and a business friendly climate was created to incentivize local and foreign investment.
The net result of all the above interventions was a growing and dynamic economy which saw an uninterrupted period of growth for ten years in a row averaging some five per cent per annum prior to the departure of the PPP/C government from office. The systemic and sustained levels of growth under the PPP led to a period of relative prosperity which saw a steady and incremental improvement in the quality of life of the Guyanese people.
After just over a year in office, there are already indications that the economy is contracting. With the exception of the mining sector, the rest of the economy is flattening out due to misguided policies especially with respect to the agricultural sector which saw the closure of the Wales Estate and the impending closure of the LBI Estate. The reason given was the need to rationalize production by the merging of estates without due regard to the socio-economic and cultural impact such a decision could have on those who have invested the most, and that is the sugar workers whose entire life and livelihoods depended on the industry. A not dissimilar situation obtains in the rice sector which is currently reeling from the impact of the loss of the Venezuelan market. Despite manifesto promises to increase the price of paddy substantially, the APNU-AFC administration has been unable to find new markets for rice at competitive prices.
The administration seems oblivious to the fact that the good life it has promised the people of Guyana can only be realized through increased production and productivity. Reduced production in sugar and rice and by implication reduced foreign exchange is inconsistent with the creation of wealth which is a necessary condition for economic prosperity. Dependence on a narrow range of export commodities more particularly gold is fraught with dangers given the high fluctuation in world market price. With depressed market prices for rice and sugar, the impact of the economy could be severe which could lead to further contraction of the economy.
The forestry sector is also experiencing problems with the scaling down of the Baishanlin operations and the threat by the Guyana Forestry Commission to withdraw state concessions granted to that company. This would further compound an already bad situation and could have negative repercussions on job creation and foreign exchange inflows.
The government seems to be adopting a compensatory strategy by recourse to widening the tax net and increased taxation but this will only place additional burden on the working people. While on the one hand it has given generous tax concessions to a few select big companies by way of out of court settlements of unpaid taxes amounting to billions of dollars, it has on the other hand refused to honour several of its manifesto promises such as reducing the Value Added Tax (VAT) and substantial increases in public servants salary. This raises some questions as to whether there is once again a return to bureaucratic and parasitic state capitalism as under the previous PNC regime.
My contention is that the current administration appeared incapable to come up with bold and innovative strategies to sustain and accelerate the growth dynamic which was set in motion by the previous PPP/C administration. The only sure way to create a better life is to grow the economy through enhanced production and productivity and greater foreign exchange earnings. Failing to do so, would result in inflation of the currency and a consequential erosion in the purchasing power of the working people. The economic outlook does not look good and there appeared to be no workable strategy to change the mood of pessimism which seems to permeate the psyche of the Guyanese people.
Hydar Ally

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