US$ 1 = G$230 is murder!

Mar 24, 2017 Features / Columnists, Peeping Tom

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The Guyanese working class cannot afford the increases which the devaluation of the Guyana dollar, now trading at a rate of G$230 to the US dollar will impose. The prices of all imports, including petrol, will increase.

The hardships are already piling up on the Guyanese working class. The increases in prices, even before the Guyana dollar reached this new low, had eroded whatever increases in disposable income the working class would have gained since the new government came in.

When you factor in the massive losses of incomes caused by the closure of the Bai Shan Lin Investment, the walking away of Barama from its forestry concessions and the downsizing of the Guyana Sugar Corporation, the new administration has dealt some severe body blows to the Guyanese working class. A major rice milling chain is about to shut shop. Things do not look like it will get better.

The government is in denial mode. It is blaming the banks, blaming unscrupulous operators;  blaming the gold smugglers who are yet to be identified;  and blaming persons from Barbados and Trinidad for buying up our currency.

The government is not blaming itself. It is not critical of the anti-investment tantrums it threw when on the campaign trail and soon after, came into office. It is not blaming its bombast about investigating all the previous investment deals made by the PPPC government; they were not concerned about the impact of this on the investment environment.

The ruling coalition is not blaming the action that was taken against Bai Shan Lin and the reaction this would have had on overall levels of Chinese investment in the economy.  It is not blaming the fact that no pro-growth policies were unveiled in the 3 Budgets presented so far. It is not blaming the rolling back of investment incentives for scaring away investors.

The government is not blaming the actions of SOCU. It seems oblivious to the fact that the early raids conducted by SOCU on the homes of businessmen would have scared others and forced capital flight. The redefinition of currency to include jewelry and the questioning of people leaving and entering Guyana about the money they have and the jewelry they had on their person have created apprehensions that would have most likely contributed to further capital flight.

The government is not blaming legislation that it passed to allow the tax authorities to garnish funds from bank accounts and prevent persons, with tax liabilities, from leaving the country. These measures would have scared the living daylights out of persons and they would led to loss of confidence. People would have decided that they cannot keep their investments here.

The threats against private property would have aggravated the situation and led to persons selling out and sending their monies overseas.

The government is saying there is no shortage of foreign exchange. It is not blaming its own antagonistic attitude towards the Venezuelans for the loss of the rice market to that country and the resulting loss of foreign exchange.

The government is counting the bailout in Guyana dollars of the Guyana Sugar Corporation and not factoring the loss of foreign exchange resulting from the downsizing of that industry. The sugar industry has been sent the wrong signals and it will never recover and never be able to contribute, as before to providing the level of foreign exchange that it used to provide.

The government is not blaming its own ill-considered tax policies for the shortage of the economy.  When people learn about VAT on water, electricity and private education cable TV and who knows what next, they are not going to remain in Guyana. They are going to bail out of Guyana.

People are sensing problems with freedom – economic and political. They are not going to stick around. Not with the spate of visas that the United States Embassy have been distributing over the past few years.

People are not going to stick around when the notice that major sectors of the economy are in distress and there is little being done to help these sectors out. The ordinary man may not have an economics degree but they know that a country cannot run on gold alone and if gold prices drop we are all doomed.

The government is seeing all of these things. Its explanation is that the economy is “righting” itself.

The US dollar is now trading locally at murderous rate of US$1 = G$ 230. People are predicting that it will get worse unless there is an economic reversal. They are predicting that it will decline to as much as US$1 = G$ 250. Let us hope this does not happen and the government stops blaming everyone else for the problem other than its own dismal management of the economy.

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