The crisis of uncertainty

Mar 28, 2019 Features / Columnists, Peeping Tom

There is a political crisis. A no confidence motion was passed in the National Assembly and a crisis has erupted over its validity and the holding of elections in compliance with that motion.
Despite the fact that the Court of Appeal has now overturned the no confidence motion, there exists uncertainty since the Caribbean Court of Justice (CCJ) can overturn the decision of the Court of Appeal.
If the CCJ overturns that decision, then the crisis will deepen since it will mean that the government ought to have held elections by the end of March and did not do so. With the Guyana Elections Commission preparing for house to house registration, a process which can take more than one year, it means that if the CCJ overturns the Court of Appeal decision, GECOM will not be ready for elections this year and the government without a political agreement extending its life would be illegal.
The suspense which has gripped the nation since the passage of the no confidence motion has fed into the business community. Business has slowed since December and which has now slowed to a crawl.
This crisis has led to uncertainty in the economy and has led to a slowdown in business activity which the government is not denying. What the government is saying is that there is no political crisis. It is implying that any slowdown cannot be as a result of the political situation in the country.
The government may not feel that there is a political crisis. But the government is living in its own cocoon which is divorced from the realities which the business community is facing.
The business community has a long memory and it knows that whenever there are elections, and the PNCR is at risk of losing those elections, there is always a high possibility of violence and arson and looting.
Businesses therefore contract their inventories in the run-up to elections. Importation shrinks and therefore fewer semi-durable and durable goods are imported.
Consumers become more circumspect during elections. They invest more in food than in clothing and other items. As such, there is a contraction in business activity both at the import level and at the level of local demand.
The business community has been complaining that since December there has been a slowdown in business activity. This coincides with concerns over whether elections would have been held by April 30, 2019.
GECOM has indicated to the government that elections can be held by the end of November 2019. This is a wholly unrealistic timeline given that it involves the house to house registration.
If GECOM, without house to house registration had indicated that it needed five months to have an election, how come it is now signaling with house to house registration – a process which can take as long as 12 months – it can be ready in a mere eight months.
This unrealistic timeline also creates its own headaches for business because they cannot plan for the year without factoring in the possibility that elections may be held. The holding of elections is a consideration of which businesses have to take account.
The government therefore may not believe that there is economic uncertainty because of any political crisis. But the reality is that whether or not the government believes there is a crisis, whether or not it is a misperception, businesses are cagy about what will be the outcome of the case before the CCJ and its likely implications.
There is a crisis. It is a crisis of uncertainty. And that is sufficient to hurt businesses.
But is that the real reason for the slowdown or is the decline in business due to deeper problems with the management of the economy?
We know for a fact that there are problems in the foreign exchange markets. US dollar notes are in short supply and there has been a deprecation of the Guyana dollar against the US dollar. We also know that last year was one of the worst years for exports. We also know that net foreign assets are at its lowest for some time.
So what is the real cause of the decline in business? Is it only the political uncertainty or is the malaise much deeper and related to economic mismanagement?
The government and the private sector need to meet to discuss both issues: the state of political uncertainty and the state of the economy. The two are not unrelated.

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