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Noting the economic decline
Editor,
In a desperate attempt to deceive the electorate, leading up to the 2015 general election, the APNU/AFC coalition government propounded one the most vacuous and misleading manifestos ever. Three years later, a meticulous fact-check, finds reveal that the collation government failed miserably to deliver on some of their key policies.
According to the 2015 APNU/AFC coalition manifesto, the following measures and policies were supposed to take effect once the party gets into office. However, as outlined thereafter, the contrary was achieved.
Economic development has slowed significantly due to the underperformance of key traditional sectors such as rice, sugar, and timber. Contemporary growth in GDP is attributed mainly to high production level by the two major foreign mining companies.
With respect to the private sector, over the past three years, a slew of counterproductive policies have been unleashed by the government in their unstoppable attempt to boost domestic revenue. More than 200 tax measures have been levied on consumers, precipitating of the sharpest decline in private consumption by more than $32B in 2017, when compared to 2014.
Thus, from 2014 to 2017, aggregate private consumption contracted by more than $196 billion. When compared to 2014, actual private consumption in 2017 is $32 billion less. What this tells us is that on average, from 2014-2017, each household in Guyana has cut back on spending by more than $1.1 million or $30,500 monthly.
With respect to domestic credit, central government increased its share by more that 259% since taking up office, whilst the public sector got a mere 12% increase. The implication is a larger government, which is ostensibly seen in the huge increase in recurrent expenditure by more than $49B.
Moreover, the government continues to slumber in the development of the local content policy, a critical piece of legislation that is instrumental in insulating our future oil economy from the “resource curse”.
Finally, based on the latest report of prudential ratios for financial sectors by the Bank of Guyana, return on equity of the five major commercial banks, Republic Bank Limited, GBTI, Nova Scotia, Demerara Bank Limited, and Citizen Bank, contracted by 10%, 6.5%, 9%, 8.2% and 5.1%, respectively, during the first six months of 2018.
Thus these are all signs of an emasculated financial sector, one that is rapidly deteriorating. Given our burgeoning deficit, and forecasted low growth, Guyana may soon have to pursue restrictive fiscal policies: slashing of budgetary allocation to key sectors such as health, education and housing, et hoc genus omne.
Mohamed Irfaan Ali
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