It is an utter disgrace for Jagdeo to employ bluff and bluster in defending his economic record

Apr 27, 2024 Features / Columnists, Peeping Tom

---

Kaieteur News – Bharrat Jagdeo studied at a university, the People’s Friendship University, which is not considered a first-rate university. However, it is to the utter discredit of that institution from which he graduated for him to offer the sort of bluff and bluster in defending his poor economic record as President of Guyana.

Readers will recall that in a previous column, I had pointed to Jagdeo’s abysmal record as President. Economic growth, for example, between 1999, when he assumed the Presidency, and 2005 averaged a mere 0.7%.

Jagdeo, at his press conference sought to blame the PNCR protests and the politically-inspired crime wave for the decline in economic growth up to 2004. But this is not the explanation which his Minister of Finance gave to the nation in respect to the productive sectors during this period.

In 1999, sugar reached its then highest level of production, growing by 25.8%. No one complained then that the daily political protests were affecting sugar production. As it surely did not affect rice production either in that year which grew by some 7.6%.

Under Jagdeo’s presidency, growth plummeted to less than 1% in 2000. But the then Minister of Finance did not blame political protests. He blamed the weather which he said affected the second sugar and rice crops. Incidentally, gold production increased in that very year as did manufacturing. It is strange that the political protests did not cause a decline in manufacturing in that year.

Nor, was the marginal growth in 2001 and 2002 attributed, in the Budget speeches, to the outbreak of the crime wave.  In 2003, the excuse was that sugar and gold production declined. The crime wave could hardly have been the cause.

Jagdeo therefore must find new excuses. Correlation is not causation and the political protests and crime wave do not account for the dismal performance of the Guyanese economy during his tenure as President.

As previously explained, had the economy not been rebased to 2006 prices, the growth rate which was recorded during the latter part of his presidency would not have materialized. Without rebasing, Jagdeo would have left the presidency with one of the poorest economic records in the hemisphere.

The rebasing created an illusion of a growing economy. Professor Clive Thomas explained the effects of the rebasing on the country’s GDP as follows:

“This rebasing has made an enormous difference to the values of various components of the country’s GDP… it would be useful for me to indicate to readers the magnitudes of these changes, as the government’s intention is to use the new national accounts based on 2006 prices from this year.  To begin with, the largest sum, gross domestic expenditure, which for 2009 was measured as $357.5 billion based on 1988 prices increases to $514.8 billion based on 2006 prices. The more familiar GDP at factor cost, which was $202.3 billion in 2009 based on 1988 prices, is now increased to $359.5 billion based on 2006 prices.  This is now termed GDP at current basic prices in the new National Accounts data.  This is an increase greater than three-quarters.”

At his press conference last Thursday, Jagdeo sought to peddle this illusion caused by the rebasing of the economy. He urged the reporters present to google Guyana’s GDP for 1999 when he took office and then check it for 2011 when he demitted the Presidency. He told then they will find that it increased ten-fold or more than 1000% percent between 1992 and 2011.

Well, how is it that aggregated growth was not 1000% during the period 1992-2011, yet the GDP increased by more than 1000%. This is the magic of rebasing. It creates the illusion that GDP grew from US$373.6B in 1992 to 3.7B in 2011.  But Jagdeo can pull that stunt because the reporters may not have been familiar with the rebasing of the economy.

The rebasing also helped Guyana’s debt- to-GDP ratio. According to the IMF, apart from increasing Guyana’s GDP by 65% in 2009, rebasing also led to a significant decline in Guyana’s debt-to-GDP ratio.

To put this into context, this is what one of Guyana foremost economists wrote on the effect of rebasing on Guyana’s debt, “The reported debt of Guyana at the end of 2009 was approximately US$1.37 billion. Of this US$933 million was external debt and US$435 million was internal debt.  Based on the national accounts’ series used in the 2010 National Budget (1988 prices), this represents about 125 percent of the country’s GDP. However, using the rebased 2006 prices, this would be substantially reduced to about 75 percent of GDP!

In his quieter moments, Jagdeo needs to accept that his economic stewardship was a grand failure and instead of trying to defend it, he should try to understand what went wrong. As impossible a task as this may appear to him!

(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, Economic, People’s Friendship University, political, President

---