Budget 2018 – A clear and present threat to Guyana’s economic wellbeing

Dec 02, 2017 Letters

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DEAR EDITOR,
APNU+AFC presented its Budget 2018 under the caption “Continuing on the Road to the Good Life”. Unfortunately, more accurately, Budget 2018 is really a document that deserves the title “Continuing on the Road to More Debilitating Debt”. I was assisted in this initial contribution on Budget 2018 by RA, a public servant who has to remain silent, fearing recrimination.
This past week, Finance Minister Winston Jordan read APNU+AFC’s Budget 2018, the fourth budget since assuming office in May 2015. Budget 2018 further solidifies the sad fact that both the Minister and the entire David Granger-led APNU+AFC Government are clueless or ignorant of the needs of Guyanese, let alone building on the thriving economy they inherited from the PPP in May 2015. They continue to squander the solid economic framework and economic progress they inherited from the PPP in May 2015. Virtually all the economic pillars have declined since May 2015 and Budget 2018 is either oblivious or simply overwhelmed.
One thing is certain about Budget 2018 – Sugar, still one of the largest employers in Guyana, is dead. Mining, manufacturing, agriculture (including rice), forestry, tourism, housing and construction, the service industry have all been treated like step children and orphans in Budget 2018.
Budget 2018 further exposes APNU+AFC’s total reliance on Guyana becoming an oil economy. It reveals the frightening possibility that APNU+AFC wants a Guyana with a monolithic economic framework – a single industry approach. They inherited the possibility of oil from the PPP, but the PPP has always had a diverse economic framework, with oil to become one of the many pillars of a diversified economy.
Budget 2018 does not contain any plans on how Guyana will utilize the oil pillar to reinforce and move Guyana forward with a diverse economic platform. Oil means much to Guyana, but it is an infant industry still and Guyana must never approach it as if it is a panacea.
Budget 2018 contains nothing to show how Guyana will maintain its carbon sink and remain a green economy, even as oil becomes an important part of the economy. Painting buildings green will not transform and sustain Guyana as a role model for a green economy.
My summary for Budget 2018 is that a clueless AFC is throwing darts like a blindfolded person, hoping to hit somewhere, anywhere, on the dart board.
Budget 2018 is clueless, representing a clear and present danger for Guyana. Workers, children, women, pensioners, consumers, the private sector, the hinterland have all been ignored, at a time when half of the nation’s children and 40% of Guyanese are living in poverty.
Budget 2018 continues the APNU+AFC’s economic framework of transferring resources from poor Guyanese families to APNU+AFC and their cronies. Budget 2018 presents a mountain of threats in a visionless milieu of sound bites.
Jordan and his colleagues titled this latest con-game “Continuing on the Road to the Good Life”. The clear and present danger, however, is that Budget 2018 is a clear path towards “Continuing on the Road to More Debts”. Recent revelations, confirmed in Budget 2018, have shown that the debt has grown significantly, by more than $85B since 2016 alone.

APNU+AFC IS CLUELESS ON SUSTAINING AND PROMOTING ECONOMIC GROWTH
Budget 2018 exposes Jordan and his colleagues of being clueless on tackling the anemic growth rate that presently plagues Guyana. The average growth rate for 2011, 2012, 2013 and 2014 was above 4%, even with an overt attempt by APNU and the AFC to sabotage the economic plan in Parliament. The PPP in office for 23 years, had growth rates in 19 of those years and those growth rates varied between 3% and 7%, even with the PNC “slow fyah, more fyah” subterfuge to make Guyana “ungovernable”.
Those years without economic growth were years in which Guyana experienced major disasters, such as the 2005 Great Flood. By their own admission, the 2017 growth rate will be even less than their revised projection. Budget 2017 had projected a growth of 3.4% and this was revised in their mid-year report to 3.1%. Jordan now projects 2017 will end with a GDP growth rate of 2.9%. The IMF has already pronounced that the actual growth rate for 2017 is about 2%.
The economy is rapidly declining. Yet Budget 2018 appears unconcerned and does not cater for any economic growth initiatives. The PPP was able to stay above 4% growth rate, after 2011, even with the crushing cuts in the PPP budgets by the then combined APNU and AFC in Parliament.
Recall, they massively gutted the PPP’s 2012, 2013 and 2014 budgets, with cuts to significant growth-oriented projects, such as the airport expansion, Amaila Hydroelectricity, interior air strips, the Amerindian Development Fund, the Specialty Hospital etc.
In spite of this massive sabotage of the PPP budgets, the PPP maintained stable and reasonable growth of the economy. Since 2015, the economy took a dive, with sectors such as manufacturing and agriculture declining by double digits in 2016 and 2017. Nothing in Budget 2018 gives assurance that Guyana can return on the road to economic growth. To their credit, they admit that growth for 2018 will be nothing more than moribund, an acknowledgment that their policies have damaged the economy.

APNU+AFC, AS SHOWN IN BUDGET 2018, IS COMFORTABLE IN BALLOONING THE DEBT.
Budget 2018 confirms that the economic ideology that stirs the APNU+AFC pot is borrowing to finance their expensive forays, such as the disastrous Durban Park Project, the many corrupt deals, diverting much-needed financial resources to their friends and donors, while sugar workers, farmers, vendors and others are left without food on their kitchen tables. The national debt stood at US$1.143B at the end of 2015 and Jordan himself now tells us he expects the national debt to increase to above US$1.3B by 2018.
Budget 2018 confirms that APNU+AFC intends to continue the trend of borrowing to support the growing and greedy appetite of APNU+AFC. Budget 2015 was funded through 1% borrowing, reflecting a PPP ideological and good fiscal management practice of keeping fiscal deficit low. In contrast, Budget 2017 was financed by 22% borrowing.
More than $85B has been added to the national debt since 2016. When we examine Budget 2018, with its almost total lack of revenue-generating initiatives, other than more taxes, borrowing in 2018 will exceed 25%.
Governments around the world often use heavy borrowing to support their growth initiatives, intending to grow the economy and “borrow themselves out of economic morass”. But this government is not borrowing to stimulate growth. Rather it is spending on wasteful things, like a large increase in contract employees, not for any legitimate government jobs, but for employment of political hacks to do political work and repainting all government buildings and decorations green.

MORE BORROWING MEANS EXPANSION OF FISCAL DEFICITS
Jordan admits that the fiscal deficit is growing. Taken directly from his speech, the fiscal deficit is set to grow again. This is another of the elements that characterized Burnhamism, which Granger has promised to strengthen again in Guyana. Recall that by 1992, almost the whole government expenditure was funded by borrowed money.

APNU+AFC CONTINUES TO RAID THE NATIONAL FOREIGN RESERVE.
Not only is the debt increasing, and the fiscal deficit expanding, the National Foreign Currency Reserve is decreasing rapidly, to a worrying and disastrous level. At the end of 2014, the National Foreign Currency Reserve was US$625M. By September 2017, it stood at just US$579M, more than 7% less since 2015.

APNU+AFC IS A POSTER CHILD FOR INCREASED TAXATION OF THE WORKING CLASS
What is even more worrying is that APNU+AFC is drawing down on the foreign reserve, borrowing more, while collecting more through taxation policies that target the working class. They increased more than 200 taxes and imposed VAT on food, water and electricity. Yes, Food Was Vatted – I will explain in another article.
In 2015, they collected more than $143B in taxes. Jordan estimates that this will grow to more than $181B in 2018. Increased tax collection is happening in a milieu of depressed economic growth – the textbook definition of economic repression. In other words, APNU+AFC is targeting people’s and businesses’ disposable income. It is called funding government’s expensive whims and fancies through taxation and not through economic growth.

BUDGET 2018 DIMINSHES THE PRIVATE SECTOR
In fact, taxing people to support silly government political agendas is Burnhamism at its zenith. While Jordan and Gaskin bellow their empty echo of the private sector being the engine of growth, Granger is talking about Burnhamism. Budget 2018 echoes the Granger doctrine of bringing back Burnhamism. We see the influence of the private sector diminishing. In 2015, the private sector consumption was about 65%. In 2017 it has reduced to about 56%.
Budget 2018 exposes APNU+AFC for what it truly is, a political machinery bent on using the State for its personal gains, returning Guyana to a state of backwardness. Budget 2018 is simply a disaster.
Dr. Leslie Ramsammy

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