To be in debt or not to be in debt?

Jan 31, 2021 Letters

DEAR EDITOR,

Given the following factors:

1. We have an escalation in the border conflict with Venezuela and an untrustworthy neighbour in Suriname as illustrated by the most recent conflicts.
2. An aggressive timeline for proposed current investments, a number of which does not show a clear return on investment nor improve the security of the current investments in the coastal plain.
3. The economic uncertainty faced by the world as a result of the pandemic and an increasingly unstable China and USA relationship.
It is necessary for the government to reel in spending and take a conservative position on debt. The current proposal places an uncomfortable percentage of our national earnings in play for the repayment of debt, while reducing the momentum to strengthen our currency. The percent of export dependence within the economy and the key earning sectors that support our high level of imports would benefit from a stronger currency position. As for National Border Security, there is learning to be had by observing Vietnam and how it manages its national defence.
The gold and mining sectors coupled with the oil industry are vulnerable to externalities over which our country has little control. The sugar and agriculture sectors should see a positive economic environment given the expected global shortages. These combined sectors do offer a positive outlook for earnings and ensuring that the level of spend increases our financial independence during these uncertain times is essential to our National Security. Key to achieving the goal of financial independence is the forecasted reduction in oil and gas imports. Becoming a net exporter in the sector will aid in reducing the pull on currency reserves and offer an opportunity to strengthen our buying power.
As mentioned in a previous submittal, the net present value of our project portfolio needs to be positive and show a clear level of returns within a timeframe that is manageable and does not leave our economy unnecessarily exposed to unforeseen and forecasted economic shocks. The world is currently in a very precarious economic environment and having a strong balance sheet and high level of Foreign Exchange Reserves is necessary to get us through these difficult and uncertain times. The upcoming budget debate is very important and will offer an opportunity to improve our Nation’s fiscal management.

Best regards,
Mr. Jamil Changlee
Chairman
The Cooperative Republicans of Guyana

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