Economy lost over $3 billion in 2017 – former Housing Minister

Dec 05, 2017 News

– says Gov’t promise was a good lie, not a good life

Former Housing Minister and PPP/C MP, Irfaan Ali, debating the 2018 budget

The lack of measures to attract foreign investment in the 2018 budget presentation, as government sits and waits on anticipated revenues from oil, was highlighted at the commencement of the budget debate in the National Assembly yesterday.
Former Housing Minister and People’s Progressive Party/Civic (PPP/C) Member of Parliament (MP), Irfaan Ali opened the expected five-day debate session by labelling the budget presentation by Minister of Finance Winston Jordan, one of most disastrous presented to the House since 1992.
He said the 2018 budget presentation is the first to be devoid of plans to attract foreign investors.
“Outside of mentioning investment coming in for the oil sector, for the first time a budget does not identify a single foreign investor that is coming to invest in any other sector in the economy,” Ali told the House.
He also pointed out that for the first time there is a lack of quantitative and qualitative analysis in terms of new jobs which will be created in a budget.
Focusing on the performance of the economy in 2017, Ali contended that it is a widely accepted fact that the economy has lost its vibrancy since 2015, the year the coalition administration was elected to office, and that the economy continues to limp along towards the ‘elusive good life concept’ proposed by the Government.
According to Ali, this is evident from the suboptimal growth registered over the past three years.
He pointed to the 2017 Article IV Surveillance Report, which showed the growth for 2015 and 2016 should have been 4.07 percent and 3.93 percent, instead of 3.2 percent and 3.4 percent reported by the authorities.
According to Ali, an analysis of the 2017 figures shows that the 2.9 percent projected growth rate is also way below the potential rate of 3.79 percent.
“While in percentage terms the difference may appear to be meagre, the loss in real income approximates over $3 billion for 2017,” Ali stated.
He said that the budget is devoid of any measure to rescue the ailing economy and improve the well-being of Guyana.
Ali noted that it was understandable that Minister Jordan carefully pointed out in his concluding remarks of the budget presentation that the ‘good life’ will not be realised during the first term of the coalition government.
“Whether the people of Guyana are prepared to risk their well-being for this hollow ‘good life’ promise is something that will be determined when we return to the polls in 2020. This is hardly likely, given the many broken promises by the government,” Ali stated.
He also noted that the projected outputs from sugar and the forestry sectors for 2017 are approximately $3.8 billion and $4.2 billion respectively, which is below that of the levels registered in 2014. Ali cited that the projected output levels from rice and bauxite for 2017 are approximately $740 and $792 million respectively, also lower than the value of output reported for these sectors in 2014.
He noted that the approximately 61,000 employees and their relatives who rely on the sectors for their livelihood – which equates to approximately 32.9 percent – would have suffered severe hardship.
Ali sought to point out that the poor performance of the sugar sector may be attributed to the ‘callous decision’ of the government to downsize the industry by closing the Wales Estate instead of injecting the necessary funds to revive the corporation.
According to Ali, the government’s decision to abandon the PetroCaribe agreement also retarded the rice industry. He accused government of making the environment so toxic that the ease of doing business ranking of Guyana slipped to 126 in 2017 from 124 in 2016.
The former Housing Minister noted that while the Finance Minister may find peace by confessing that the good life is a few years away from our reach, this confession will also fail to repair the damage inflicted on the economy by the government since it assumed office in 2015.
“The suboptimal performance of our economy is not accidental, but may be attributed to poor policy decisions and gross mismanagement by the APNU-AFC government that caused our traditional sectors to underperform,” Ali stated.
He said parents, especially single parent mothers, have been denied the $10,000 cash grant while being burdened with tax on educational services that approximates $342 million annually, and pensioners were denied over $1.5 billion because of the removal of the water and electricity subsidy.
According to Ali, private citizens and businesses were forced to pay $33.2 billion more in taxes over the past three years. He also noted the thousands of sugar workers who were displaced from the downsizing of the sugar industry as well as those who lost their jobs because of distress experienced by the ailing rice, forestry and construction sectors.
He said further burden has been placed on citizens due to increased prices for food, housing, transportation, medical and personal care, education, recreation, and culture. This increase, he stated, was markedly due to the tax measures introduced in the 2017 budget.
Ali noted that overall external balance of payments has deteriorated and resulted in significant depletion of gross international reserves and import cover, while the principal exchange rate depreciated by more than four dollars, even though the government instituted draconian measures to stabilize the exchange rates.
“Based on all the macroeconomic indicators, the economy is limping along and the average Guyanese is still waiting to see the good life as they battle with the good lies,” Ali stated.