Jordan and his critics must be fair and objective

Nov 13, 2021 Letters

---

Dear Editor,

Kaieteur News – Reference is made to the critique of former Finance Minister Winston Jordan on the PPP government’s external borrowing as well as management of the economy in report (KN Nov 8) and comments on his remarks (Nov 10, 11). Neither Jordan nor the responses to his remarks were fair and balanced. One must give some credit to Jordan as a budget technocrat although he did not excel as Minister of Finance.
A Finance Minister is the second most important post in any country after the head of government. When such a person speaks, even a former Finance Minister like Jordan, the public pays attention. Their views are carried in the media and are taken note of by NGOs and international lending institutions, among other entities. The Diaspora also takes note of the former FM’s remarks. But how credible and objective are Jordan’s comments and should they be taken with a pinch of salt? It is more of a political assault of the government rather than a serious economic critique of borrowing.

Inevitably, the ex-Finance Minister’s controversial remarks arouse comparisons of his handling of the economy during the coalition’s more than five years tenure. As I uncovered in my study of the economy during the coalition period, and several surveys conducted, there was widespread dissatisfaction of the coalition’s management of the economy – increased taxation and expenditures, unprecedented closure of businesses and economic decline reminiscent of what happened during the Burnhamite period, cries of racial discrimination, termination of workers never experienced in Guyana since the end of slavery in 1838, not even experienced during Burnhamism, among other problems. These were all expressed in the media during the coalition term in office. Neither Jordan nor the government made any serious effort to address these complaints.

Mr. Jordan’s management of the economy was not a stellar performance when objectively compared with his predecessors (Dr. Ashni Singh, Sase Kowlessar, Bharrat Jagdeo, Asgar Ali) or successors (Bishop Edghill and Dr. Ashni Singh) – at least from the views of people I interviewed, supporters of the PPP, PNC, and AFC and business persons, to assess his performance as a Finance Minister. Respondents were disappointed in his performance as Finance Minister. However, they praised his role as a Budget Director (during the long years of PPP tenure, post 1992 during which time he got the job done efficiently). But his management of the economy as FM was left much to be desired. As related to me, Jordan was an expert in balancing the books accounts but he lacked capacity to create wealth the way bankers and economists do. And this raised an important question of his educational training in the field. I did doctoral studies in Economics and from the little I know of the discipline, he has not come across as a serious economist in the same mold as say a Clive Thomas, Tarron Khemraj, Gobind Ganga, Ganga Ramdass, Ramesh Gampat, Maurice Odle, among others. He came across as a bookkeeper or Accounting economist. Economics and Accounting or Bookkeeping are separate subjects though accounting is important to an economist.

I will not address the issue of borrowing or debt financing and its consequences since I am not familiar with the conditions, terms, and purposes. Borrowing is both good and bad depending on the purpose and ability to repay the debt. Almost every country in Latin America, with Mexico at the head of the pact, ran into serious problems during the 1980s when I did my doctoral studies. Mexico borrowed money off future oil revenues and was never able to repay it. Greece, Spain, Portugal, Ireland, Italy, among other European countries, ran into huge debt problems during the 1990s and beyond. African countries also experienced serious debt.

Burnham and Hoyte borrowed over US$2.1 billion, turning Guyana into the second most highly indebted country per capita and was never able to repay it. When the PPP came into office in 1992, it took some 94% of the country’s earning just to service the interest on the debt. Not enough information is available in the public domain to make an informed assessment from an economist point of view on Guyana’s planned borrowing. From a bookkeeping or accounting point of view, the debt may be a problem, as Jordan asserts.
But from an economist perspective, the debt may be manageable. The deficit to GDP ratio for Guyana is not updated but is considered to be relatively high considering the amount of borrowing incurred by the Coalition Administration that has continued over the last fifteen months. Italy and several countries had a ratio as high as ninetieth percentile and they have managed to survive.

The debt under the coalition would have increased if it had the wherewithal to borrow more money. The loss of the no confidence motion ended the borrowing and reduced the spending binge. Countries, foreign banks, and lending institutions were unwilling to release money to Guyana from January 2019 until August 2020. Jordan should have known that one can’t spend money wildly on current expenditure, opening so many departments to create jobs, when money was not coming in to fund them. It was jobs for the boys, as one says in economics. Current expenditures led to huge deficits. Government raised taxes and fees to plug deficits, which created their own problems – decline in economic activities, loss of jobs, less tax receipts from traditional sources, and socio-economic challenges.

The PPP and coalition governments seemed to have different priorities in incurring deficit spending. The PPP has focused on capital and infrastructure work. The coalition was borrowing to fund current expenditures. Any economist would know that capital infrastructure is key to sustainable growth and future development in addition to creating temporary employment for the large swell of unemployed. The country has had a serious infrastructure gap in recent years. There has not been enough infrastructures and with the economy transitioning to oil and gas, modern infrastructure is needed especially new highways and bridges to maximise productivity. Unfortunately, Jordan, perhaps with instruction from his boss (es) did not focus enough on infrastructure issues. Guyana lacks capital for economic policy initiatives and must therefore seek financing albeit it should do so in the modern market-driven, globalised world rather than from closed banking systems. Thus PPP has to pursue deficit spending whether China or Islamic banks are the right avenues are altogether different questions.
There was also the issue of transparency especially on the $18M oil bonus under Jordan. When asked, Jordan was reported to have said he didn’t know about the money. Yet instructions were given to the financial secretary to open a Bank of Guyana account for the money. Who gave the instructions?
There were also problems with the National Resource Fund – although the Coalition had international help, there was little local Guyanese or Diaspora involvement. The way it was done was not practical. The former FM may have had people on a committee for the NRF. But how competent were they? How many were economists and or resource specialists? The former FM tried but he may have been handicapped by politics. He got caught up in politics. Instead of focusing on what was best for the economy and country, there were complaints that he became politically and ethnically biased – perhaps he was carrying out instructions from his boss (es).
One must be fair and objective of the performance of the former FM. Jordan did exemplary job when he was a Budget Director. Unlike his predecessors and successors, Jordan as FM did not measure up to the task. He did not show that he is a growth theorist the way Ashni Singh or Bharrat Jagdeo or Sase Kowlessar were under whose tenure the country experienced sustainable development.
Yours truly,
Vishnu Bisram (PhD)

---

---