Latest update May 26th, 2026 12:35 AM
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DANGER LURKING
In Guyana, danger is lurking for the economy that was already shrinking before the government came to office. Charting a new course will require a Herculean task but the government must develop strategies to improve the economy. The incompetence and massive corrupt practices of the last administration have stifled economic growth and undermined the development of the country.
During the 2015 election campaign, the former administration told the nation that the country’s economic growth rate was 4.8 percent and predicted that it will grow to 5.8 per cent by the end of that year. It was not only a false statement but also an election gimmick aimed at deceiving the electorate in order to gain their votes.
The government inherited a sugar industry that was bankrupt, bauxite production was at its lowest level, the timber industry was in crisis, the rice industry was on the verge of collapsing, a huge national debt of US$1.6 billion, and a very high import bill. The country was in serious financial trouble and the writing was on the wall because of the failure of the last government to diversify the economy.
Should the rice industry collapse, and should the government continue its $12 billion annual government subsidy to GUYSUCO, the country will be in serious economic and financial crisis and will most likely have to adopt austerity measures to cope given the fact that the cost to service external debt is very high.
Austerity measures, in the simplest terms, are spending cuts mostly on social programmes and tax increases by governments. Human suffering is the inevitable consequence of austerity measures. Guyana’s economic output for 2017 looks grim and will likely get worst if the government does not act swiftly to increase its growth rate.
Economic growth in a small, open, undiversified, developing economy such as Guyana very often depends on the type of policies the government pursues. Economic growth in most developing countries is also largely determined by and dependent on external factors such as the price of and the demand for their commodities and natural disasters.
However, bad policies can discourage economic growth by stifling the ability of business to take advantage of favourable external circumstances if and when they exist. The government must be business-friendly. Economic growth is desirable because it is assumed that a larger pie means that all, if not the vast majority of Guyanese will be better off.
It is important for the government to create an environment in which the private sector feels it is worthwhile to risk its capital.
Today, Guyana’s dollar is worth less than one US cent, and some 250,000 Guyanese are in extreme poverty, many are homeless and youth unemployment is at 35 percent. Contrary to police data that crime has reduced, many seem to believe that crime, especially murders and armed robberies have increased.
Some have debunked the police data by highlighting the fact that Guyana has the fourth highest homicide rate in South America behind Venezuela, Colombia and Brazil. In 2012, Guyana’s homicide rate was 17 per 100,000. In the first six months in 2016, it had risen to 20.2 per 100,000, which is above the national average in the US.
In terms of income equality, Guyana has one of the highest income inequality rates in the Caribbean and in the hemisphere. It is estimated that on average, women earn 70 cents to every dollar earned by men. And in education, only four out of every ten students pass five or more subjects of the CXC examination to matriculate into university.
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