Jagdeo is wrong; Low is right

Jan 06, 2024 Features / Columnists, Peeping Tom

Kaieteur News – At his last press conference, Bharrat Jagdeo sought to disparage a young professional who is young enough to be his son. He launched serious broadside against young Elson Low, the economic adviser to the Leader of the Opposition.

Jagdeo was not content to attempt to dispute Low’s contention that the interest from the Natural Resources Fund could have allowed for a higher wage increase for public servants. He also took a low blow (pun intended) at the adviser to the Opposition Leader by suggesting that the Aubrey Norton would be doing himself a service by getting rid of Low or finding somebody else.

Jagdeo disgraced himself with his scurrilous and unnecessary attack on Low. Jagdeo, a grown man, opted to go after Low by making disparaging remarks about Low. It was unnecessary.

Low however should not be worried. He is far more academically accomplished than Jagdeo. He attended the top secondary school in the Caribbean, was an erudite scholar and proceeded to educate himself further at recognized universities overseas.

In terms of the substantive issue in contention, it is Jagdeo whose calculations are flawed, embarrassingly so. And Low is correct in his assessment that the interest from the Natural Resources Fund is more than sufficient to grant a sizeable increase in wages to public servants.

When Jagdeo sought to rebut Low’s postulation that the interest from Guyana’s oil earnings could have allowed for the payment of higher wages increases top public servants, he, Jagdeo made a rudimentary error that even a bank teller would not make.

He took what is the end of year balance of the Natural Resource Fund and calculated the interest on this to claim that the interest payments on oil revenues cannot cover the increase paid to public servants this year. Jagdeo argument is to the effect that the Natural Resource Fund has around US$274M and at an interest rate of 5% would only yield around US$13M or about G$2.7B which would be insufficient to finance the increase.

Jagdeo said that the 6.5% increase costs the government $7.9B. But he contended that the interest from the Natural Resources Fund could only provide about G$2.6B

But Jagdeo fails to appreciate that interest earned is not calculated on the end of year balance. Had he done his homework and were he familiar with the interest payments that his government has been earning from the oil revenues, he would not have made such a spectacle of himself.

The Natural Resource Fund, as at the end of 2022, had received more than US$1.7 B in inflows of royalties and profit oil. In that year, the fund accrued US$17.5 M in interest alone. From the inception of the fund to the end of 2022, the total interest payments for 2022 would have amounted to G$3.6 B.

Interest earned would have increased during the first 11 months of 2023. The government earned more than G$16B in interest for 2023, a sum that is more than enough to grant a 13% increase in wages and salaries to public sector workers for 2023.

Low obviously was doing his homework. Jagdeo was not. Jagdeo’s resort of basic math proved to be his undoing and now he is left embarrassed by a young man whom he sought to disparage during his recent press conference.

Jagdeo also sought to argue that the purpose of the Natural Resources Fund was not intended for immediate use in recurrent expenditure. No one is suggesting this. Interest earned should also be considered as investment income and should be retained under the Fund.

Public servants are paid by from taxes. But the fact that the interest earned from the oil revenues is sufficient to grant a larger increase to them should have given the government greater latitude in using tax revenues to boost the pay packages of public servants.

But do not tell that to Jagdeo. It may confuse him further.

(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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Aubrey Norton, Leader of the Opposition, Natural Resources Fund, postulation, service

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