Jagdeo does not get it!

Dec 28, 2023 Features / Columnists, Peeping Tom

---

Kaieteur News – Kaieteur News recently published an article that irked Second Vice President, Bharrat Jagdeo. The article highlighted the high level of fiscal concessions – US$518M – given to the oil and gas sector and compared this to the 6.5 per cent wage increase offered to public servants.

At his most recent press conference, Jagdeo took umbrage to the article. He rejected the comparison or link between the fiscal concessions and the pay increases for workers, contending that the two were not related. At the level of superficial analyses, the two are not related. But the level of fiscal concessions offered to the oil and gas sector as compared to what is paid to workers in the form of salary increases, is fundamental to an understanding of who gets what in Guyana’s oil economy.

Determining who gets what is a function of the ideology of the government. If the PPPC government was a working-class government, there would have hardly been the need for complaints about the high cost-of-living or the intimation that the rich are creaming off the greater benefits from the country’s oil earnings and its spending. After four years, the working class is not much better off than it was before oil production began. Where have all the monies gone?

To better understand this issue, one must examine government expenditure since oil production began.  Central government wages and salaries were projected to increase by 47% over the 2020 levels. Actual wages and salaries, we are told, have only increased by 33%. On the other hand, the government’s capital programme was projected to have increased more than five-fold, that is by more than five-fold.  Who are the primary beneficiaries when government’s capital budget increases by more than 500%. It is the contracting class that benefits and this tells a story of who benefits from the country’s oil economy. Therefore when the government says that the concessions to the oil and gas sector have no relationship to the payment of wage and salary increases they are missing a key aspect of the distribution of the economic pie. They are overlooking who gets what in the economy.

Over US$500M in one year is foregone to attract and to reduce the cost of investment. The argument here is that without this investment there will be no jobs and thus no incomes for workers.  Despite all the investments in the economy since oil production began, a quarter of public sector employees are on welfare jobs – the government’s part-time jobs programme.

While workers contend with a 33% increase compounded in wages and salaries, there are sections of the business class that are receiving larger chunks of the economic pie. Public sector workers have to settle for 6.5% wage, investors and others in the oil and gas sector received US$500M in fiscal concessions in 2022 alone. Since then, the sector has expanded. Production has expanded. The figures for 2023 are therefore likely to be far higher. Very few persons, however, want to discuss or debate the issue of who gets what in Jagdeo’s neo-liberal economy. No one wants to discuss who benefits from the present oil and gas sector. No one even wants to discuss who benefits in the non-oil economy. To do so would expose the crass class inequalities in our society.

Nothing better exemplifies these inequalities than the share of fiscal concessions. Teachers are limited to a few hundred duty free concessions each year. But the oil companies have almost total waivers of everything they import and export. Workers are required to pay taxes, at almost one-third of their earnings above the income tax threshold. But the oil companies pay no taxes on their profits. The fiscal concessions offered by the government are prone to risks. Investors like to line up to meet officialdom to get concessions approved. The Guyana Office for Investment has become a factory for recommendations for fiscal incentive agreements. The politicians can find ways of exercising discretion as to who gets concessions and who do not. Years ago, forestry operators such as Barama were granted massive fiscal concessions under the PNC regime. This continued under the PPPC governments. Yet, one company had to park its equipment to rot in the jungle because it claimed it did not receive the same concessions which others enjoyed and to which it felt it was entitled to. The oil and gas companies, however, do not have to worry about lining up to meet politicians. They did their lining up a long time ago. They have a Production Sharing Agreement which grants them widespread fiscal concessions. In the meantime, somewhere in a government Ministry, an ordinary employee is trying to figure out why the paltry 6.5% salary increase for 2023 had to be taxed.

(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.)

---

• Bharrat Jagdeo, Guyana’s, Peeping Tom, Press Conference, Vice President

---