Budget 2022 must be placed in the context of global challenges

Feb 05, 2022 Letters

Dear Editor,

Certain stories published in mainstream media recently caught my attention. Stabroek News edition of January 22, 2022, carried a Reuters report in which the UN Secretary General Antonio Guterres lamented the failure of global governance to ‘put humanity at the center of technology and bring peace.’

The UN Chief declared that many of “today’s multilateral frameworks are outdated and no longer fit for purpose.’ Guterres branded the global financial system “morally bankrupt” because it “ favours the rich and punishes the poor.” He called for reform to support the dire needs of developing countries. In a letter to the press on January 26,2021, headlined ‘ World Governments have failed us badly’ I referred to four area of failures by world governments as follows; the fight against domestic terrorism, the COVID 19 pandemic, climate change and the fourth area being poverty.

In respect to world governments’ failure to end poverty, I made reference to the roughly one billion people who live in extreme poverty while another 1.5 billion or forty per cent of humanity live in poverty. Jeffery Sachs in his book ‘The End of Poverty’ identified 2025 as the ‘year to end poverty’. To do so, he called for ‘collective action through effective government provision for health, education, infrastructure, as well as foreign assistance when needed, to underpin economic success.’

Sachs’ target year to end poverty is a mere three years from where we are now and given the magnitude of the problem in both industrialised and developing countries, it is highly improbable that the ambitious target he set will be achieved. The lack of political will coupled with a country’s internal political dynamics, poor governance and endemic corruption makes Sachs’ target well-nigh impossible. Take Latin America and the Caribbean; In its January 31, 2022 edition, Kaieteur News carried extracts of a virtual press conference held by Alicia Barcena, Sectary General of the Economic Commission for Latin America (ECLAC). Barcena stated that from ‘2020 to 2021 the number of people living in extreme poverty in Latin America and the Caribbean went from 81 million to 86 million’. That is an increase of five million in just one year. By Sachs’ 2025, extreme poverty in the region could reach 106 million!

Barcena went on to point out that ‘despite the economic recovery of 2021 the estimated relative and absolute levels of poverty and extreme poverty have remained above those recorded in 2019, which reflects the on-going social crisis.’ She claimed that in 2020 alone, extreme poverty reached the level seen 27 years before. The ECLAC Secretary General emphasized that poverty would have been greater in 2020 if the region’s countries had not implemented measures such as emergency cash transfers. She added that even though cash transfers amounting to $87.9 billion in the first ten months of 2021 was announced, only half amounting to $45.3 billion was actually spent.

Touching on the pandemic and its impact on the economies of the region, Barcena stated that the “ Pandemic is a historic opportunity to forge a new social compact that would provide protection, certainty and trust.” She went on, “Lower economic growth will mark the coming years, and if efforts to protect the population’s well-being are not maintained, there will be greater increases in poverty and inequality in the region.”

Closer to home, in a Kaieteur News story carried on February 2,2022, the Caribbean Development Bank’s Director of Economics, Ian Durant emphasized that “The CDB has recognized Guyana as a major force propelling the Region’s economic growth in 2021”.
Durant went on to point out that “The projected outturn is dominated by Guyana, which is expected to grow by 47.5 per cent as output in the oil and gas sector continues to build momentum.”

What is the significance of Guterres’, Barcena’s and Durant’s statements for the people of Guyana? First and foremost, for the sake of context their statements call upon us to think globally and act locally in our efforts to address the problem of poverty in Guyana. This brings us to budget 2022 which offers some insights to the measures contemplated by government to balance the interests of the nouveau riche and the poor and marginalised.

Budget 2022 must be placed in the context of global challenges expressed by Guterres, Barcena and Durant and the demands thrown up at the national level by the COVID19 pandemic as well as by government’s efforts to keep the economy open to facilitate growth and development.

During the budget debate questions arose whether the budget was pro-poor and people-centered or pro-business to allow the rich to get richer and the poor poorer. The opposition was accused of being ‘obsessed’ with the pro-business measures contained in budget.

At a press conference held on February 3,2022, Vice President Jagdeo addressed the pro-poor versus pro-business back and forth stating that “This budget seeks to balance addressing people’s livelihoods, concerns, creating jobs, expanding our economy, preparing for the future as well as enhancing the welfare of our people.” In other words, the interests of the patriotic capitalist class and the poor and dispossessed are all bound up in the measures announced by the Senior Minister of Finance.

The general thrust of and measures contained in budget 2022 are consistent with the economic features of a national democracy where the State is expected to represent the interests of all classes, groups and social strata.

In this regard, the economic strategy of a national democracy has as its key objectives; the eradication of poverty; fair income distribution through a process of social and economic inclusion, building a strong, modern economy so that the people’s essential needs are satisfied.

Under the conditions of a national democracy, the State is expected to put in place measures that would encourage and facilitate the private sector to play a leading role in the county’s growth and development but this must be balanced against the interests of the State as well as those of the poor and dispossessed. Budget 2022 seeks to address this challenge.

Moreover, with a medium level of capitalist development and having been categorized as an upper middle income country with a burgeoning oil and gas industry, Guyana nevertheless, should still be viewed as vulnerable given the vagaries of the global economy. Budget 2022 should be considered as another step aimed at addressing Guyana’s vulnerabilities.

In the light of Guyana’s current level of capitalist development, the economic and social trajectory envisaged in Budget 2022 is consistent with core principles of a national democracy.

Apart from the pro-poor measures such as investments in social and physical infrastructure, costal and hinterland roads, the allocation of $3.1 bln. for core Amerindian development programmes, the low-cost housing programme, the COVID19 cash grants and flood relief payments, increased old age pension and in monthly public assistance payments along with increases in uniform grants for school children and the ‘Because We Care’ cash grants removal of Withholding Tax, deduction from chargeable income for premiums paid for life and medical insurance, an increase in the monthly income tax threshold; the setting aside of $5 bln. to fund initiatives aimed at addressing the cost-of-living for those who are worst affected, must be viewed unquestionably, as a pro-poor measure.

Therefore, a close examination of Budget 2022 when viewed through the prism of statements made by Guterres, Barcena and Durant clearly show that the challenges and perspectives they adverted to are being addressed in Budget 2022.

Yours faithfully,
Clement J. Rohee