Introduction
In my two previous SN columns I have endeavoured to present to readers a basic, but relatively robust macroeconomic accounting framework, from which one could demonstrate how economists would seek, in principle, to account for, or decompose the slippage that has occurred in the government debt to GDP ratio for Guyana over the past five years. To be frank, I was quite surprised at the number of readers who have been urging me to continue with this type of analysis of the budget. As one reader puts it, this provides a “learning moment” for them by offering richer insights to the inner workings of the Guyana economy.
The effort so far represents the first of two tasks, which as I have previously indicated I must attend to, before concluding the analysis of Budget 2012 in regard to its macroeconomic challenges. In this week’s column turn to the second task, which is to indicate the root causes (or basic political economy) driving the macroeconomic challenges. This task will continue into next week as before I begin I need to respond to a few readers’ queries about the accounting framework.
Readers queries
The first of these queries is whether reports in the financial media to the effect that the crucial dynamics of debt accounting centre on the combined behaviour of government’s fiscal effort, the
