Jagdeo is confusing himself

Apr 12, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Bharrat Jagdeo is becoming a bundle of contradictions. On the one hand he is saying that government should be run as a business, yet many of his government’s decisions have no business logic.

 When Jagdeo says that government should be run as business he means that the decision concerning government’s involvement in state-owned enterprises must be premised on sound financial grounds. Operating government as a business implies that government should refuse to be saddled with loss-making enterprises.  The Guyana Sugar Corporation is one such money-losing enterprise. One former Minister of the APNU+AFC described it a black hole. The former Coalition government pumped almost 50 billion dollars into the sugar corporation during its five years in office from 2015-2020.

The government which Jagdeo serves continues its massive bailout of the corporation and is hoping that sometime the corporation would at least break even. This means that the government does not envisage the sugar corporation ever returning to profitability over the medium-term. Yet, Jagdeo is not putting the sugar corporation up for sale. He no doubt recognizes the important contribution which sugar makes to employment and to the rural economy even as a loss-making venture. So why then does he continue to insist that government must be run as a business when his government’s own position of GUYSUCO goes beyond mere business considerations?

If as he claims government should be run as a business then why is the government still holding on to the Guyana National Shipping Corporation, the Guyana National Printers Limited and the Guyana Post office Corporation? Jagdeo is a convert to neo-liberalism. As such it is believed that he subscribes to the view that government should not own and operate commercial enterprises which crowds out the private sector. Yet, in total contradiction to this economic philosophy, Jagdeo’s government continues to hold on to the Guyana Oil Company which is a highly-profitable public enterprise.

What then is the business logic that allows him to sell the Marriot which is now making money but not sell the Guyana Oil Company which is also making money in a sector in which there is competition? Perhaps he is trying to prevent foreign oil companies from enjoying a monopoly over the petrol industry. But does his government’s presence in the importation and distribution of fuels not go against the very grain of his argument that government must be run as a business?

The neo-liberal school to which he belongs argues that government should not get involved in sectors which can be better managed by the private sector. But was it not Jagdeo which crowded out private sector investment when his government went ahead and built the Marriot? Was his government not providing unfair competition to the other hotels in the country when it invested heavily into the Marriot Hotel using public funds to subsidize the hotel, including spending millions to divert the sewage lines?

If government should be run like a business then why should government sell a profitable concern? Why then does Jagdeo’s government want to sell the Marriot Hotel now when it is now turning a profit?

Suppose the hotel was privately owned. Do you believe that the owners would have sold it now and only because seven internationally-branded hotels are likely to come on stream? No, those owners would hold on to the hotel in order to maximize the return on their investment.

The construction of 7 new hotels will not undermine the profitability of the Marriot Hotel. The demand for high-class hotel rooms will still be high since these seven new hotels will only add about 1500 new rooms, far below what is needed. As such, there is no reason why the Marriot Hotel cannot continue for decades to turn a profit for taxpayers. If the government makes the investment into a casino, the Marriot Hotel would turnover a greater profit. And this will mean greater earnings, estimated at more than US$20M per annum for the taxpayers. This is far more that is being earned at present by the Guyana Sugar Corporation. But don’t tell that to Jagdeo! He is so confused by his own logic that he is does not understand the implications of his government’s decision to sell the profit-making Marriot Hotel.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Bharrat Jagdeo, Guyana National Printers Limited, Guyana National Shipping Corporation, Guyana Post Office Corporation, Peeping Tom

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