Refrain
Except for the drums being beaten by the administration itself, the budget announced for the 2011 fiscal year is not producing any bacchanal. With Mashramani approaching, not even Bacchus, the God of Wine and Song, appears ready to celebrate the sizable increase in spending by the administration. The budget priorities of infrastructure development, security, health, education, energy, low carbon development and social services are very important to the advancement of Guyana and the wellbeing of Guyanese. They have become the refrain on the budget song sheet of the administration and were lustily presented again this year to the nation. Despite their efforts, Guyanese are unable to reconcile the condition of their lives and the public space that they occupy with the vast amount of money that the administration has spent since in office, and plans to spend again this year. The constant refrain and systematic increase in spending by the administration have not enabled Guyanese to overcome the trauma and consequences of the floods of 2005 and 2006. They are unable to shake off the millstone of the Value-added Tax hung around their necks by the administration since 2007. They cannot avoid the ghastly sight and disturbing stench of the Mandela landfill and the stagnant water in the gutters and canals coursing through critical and sacred real estate of the country. They seem unable to escape the unprofessional conduct of the police and the painful memories of domestic abuse.
LUCAS STOCK INDEX
After four weeks of trading in 2011, the Lucas Stock Index (LSI) is down about half of one percent. Stocks continue to trade lightly and slowly. This week the stocks of Banks DIH (DIH), Demerara Distillers Limited (DDL), and Republic Bank traded with DIH showing no change and DDL increasing by 1 percent. The stock price of Republic Bank Limited (RBL) increased over four percent from last week to help move the index closer to positive territory. The index currently lags behind the yield on the risk-free Treasuries that will mature in December 2011.
Cynicism
Guyanese can probably guess by now after 12 years of this administration that it is not for want of trying on their part that life still seems the same as when the administration took over the reins of government. They have come to realize that the amount of money spent by the administration has no bearing on the quality of life that they live. So, the 13 percent increase in this year’s budget means nothing other than more pain in the pocket. They see no point in spending billions on laptops and schools and roads and wharves and police vehicles and women and children if at the end of the day they remain dissatisfied with the condition of their lives. The budget of 2011 offers a good example for their cynicism. Before the ink has dried on their New Year’s resolutions, Guyanese workers and consumers have been told through the budget that they would be responsible for funding 60 percent of the administration’s spending in 2011. They are mandated to do this, yet they cannot expect the administration to keep its promise. The disbursements that Guyanese will make to the administration through the course of the year will come from their paychecks and from the VAT they will pay on the goods and services that they need to live.
Gaps
After underperforming for another year, Guyanese have no reason to believe that the programmes and spending articulated in the 2011 budget will not fall short of expectations again. The administration was anxious to point out that the economy grew for four straight years. What it neglected to acknowledge was that the money that was spent never fulfilled all the promises that the administration made. Guyanese would recall that they were told in 2008 that the economy would grow by 4.8 percent, but it only managed to expand by 3.1 percent. They were told in 2009 that the economy would grow by 4.7 percent, but it grew by 2.6 percent. In 2010, the administration boldly claimed that the economy would grow by 4.4 percent and as disclosed in the budget, it only grew by 3.6 percent. The gaps between promise and reality reflect not only missed opportunities, but also a waste of precious resources because money was spent but Guyanese never got all that they expected. The failure of another year comes on the heels of Guyanese households holding a G$184 billion debt accumulated over the last six years. Sadly, the G$60,000 exemption of income only represents an eight percent recovery of that debt.
Market Reaction
The imperceptible reaction of the market to the budget news is another indication of the true mood of the country to the prospects for 2011. The private sector, despite the utterings of the Chairman of the PSC, has not shown any real satisfaction with the 11 percent decline in the corporate tax rate. In its first trading session after the announcement of the 2011 budget, the Guyana Stock Market barely stirred. The stocks of only three companies — Banks DIH, Demerara Distillers Limited and Republic Bank Limited — traded in the week. The stocks of Banks DIH and DDL are the heartbeat of the exchange and neither of the two reacted with any vigour to the news coming out of the budget. The stock price of DIH remained unchanged from a week ago while the stock price of DDL went up by less than one percent. Apart from the disconnection between the market and the economy, there seems to be a disconnection also between the Private Sector Commission and its constituency. Beyond a reduction in the corporate tax rate of five percentage points, the budget does not do much for the business community.
Myopic Vision
The administration will eventually come to the realization that spending substantial sums of money on its projects of choice does not guarantee that the desired outcome would be achieved. It should have known a long time ago that results that are relevant to the people are what matters. Instead, it has opted for a myopic vision of leadership, one that is miniaturized by arrogance and a penchant for petty politics. The administration claims that democracy has been on display through its tenure yet it has failed to make good use of the diversity of opinions and available talent that could have made democracy in Guyana stronger. So, except for the PSC which helped craft the budget anyway through its joint consultative arrangement with the administration, there is very little euphoria among Guyanese about the value and benefits of the 2011 budget.
