Challenges and threats to economic stability

Part 5

Aftermath

In last Sunday’s column I considered the overhang of poverty (extreme and moderate), inequality (consumption), and vulnerability as constituting challenges and threats to macroeconomic stability.  This week I will assess the social-political risks in the aftermath of the November 28, 2011, national elections.  However, I wish to make it clear I do not intend to engage in an extended political analysis.  Other commentators and analysts who proclaim their expertise in this field have already been engaged in public dialogue on this subject. Instead, my intent is to identify for readers’ benefit a sampling of the increased political downside risks, which should be incorporated into this assessment.

I have identified four items in the sample, namely:

1.  The consequences of the PPP/C’s loss of majority control of the National Assembly.

2.  The pernicious, persistent, and now accelerated deconstruction of the local government system.

3.  The loosening of the lid on corruption (along with waste and mismanagement), consequent to (1) above, and

4.  The dearth of tension-easing laws and institutions designed to avoid political disputes, particularly as they relate to “alleged” discriminatory actions and “perceived” irregularities in economic actions undertaken by the state.  Each of these items will be addressed briefly in turn below.

New minority

The shift from majority to minority status of the PPP/C in the National Assembly comes against the background of two decades of its more-or-less continuous majority control.  During that long period, several unfortunate features have become characteristic of national economic governance. Two of these are indicated below:

First, Members of the National Assembly (particularly those in the ruling party) have, in the main, become passive, subsidiary, and even subservient ‘creatures’ of the executive presidency.  This has created an accommodating constitutional and legislate path to mis-practices and executive lawlessness in the management of the country’s economic affairs.

Second, in the course of this outcome, the legislature has failed to strengthen existing and potential restraints on executive-overreach into its legitimate domain and oversight functions.

As a result of both observations, the new configuration in the National Assembly has become, both through choice and necessity, an arena of political contestation between its past behaviour and a new more broad-based and open approach to the management of the nation’s economic affairs. In these circumstances a credible risk assessment of the challenges and threats to macroeconomic stability over the near to medium-term must take on board these considerations.

Deconstruction

As in the case considered at (1) above, the challenges and threats posed by the accelerated deconstruction of the country’s local government system, have had a long gestation.  Its main roots rest in the decades-long absence of local government elections and the political degeneration this has fostered.  Regrettably, in the wake of this there has been recently a rash of “arbitrary removals” of what the authorities describe as “ineffectual and/or non-elected regional administrations” and their replacement with Interim Management Committees (IMCs).

Without engaging the merits or demerits of this, the concerns for a risk assessment centre on the risks to good economic governance, which this presents through:

1.  severe limitations on efforts to promote “development from below”;

2.  minimal public (citizen) involvement in policy formulation, programme-design, project implementation and monitoring;

3.  persistent lack of transparency and accountability in the development process; and

4.  limited capacity development (in the widest sense) for individuals, organisations and/or businesses rooted in local communities.

Readers are aware that political wisdom decrees “all politics is local.” From this readers can well imagine that the present situation compounds social-political risks. I might add parenthetically that, the recent tragedy in Region 10, has its origins in large measure in the structural weaknesses of its local administration.

Corruption

Like the two previous observations, corruption is by no means new to Guyana.  Indeed its roots go far back into the past. Noteworthy, the loss of the PPP/C’s majority control of the National Assembly raises the spectre of further exposure of executive misconduct, lawlessness, waste, and mismanagement. Sadly this will intensify the risks of economic instability.

There is already a profusion of evidence of unfortunate and illicit happenings in major projects under implementation, including, to name a few: the Skeldon sugar modernization, Enmore sugar packaging, Cheddi Jagan International Airport modernization, Marriott Hotel, GPL modernization, Amaila Falls and the road to Amaila Falls projects, drainage and irrigation schemes for the ECD and EBD areas, as well as the dubious activities of NICIL and the government’s Privatisation Unit.

Tension-easing

Neither the Constitution nor the National Assembly provides robust mechanisms for tension-easing and the avoidance of political disputes generated by government discrimination and executive irregularities.  Here I shall be very brief and confine my comments to reminding readers that, during the 2000s, I made repeated calls for four such mechanisms. I repeat these below for the information of readers:

1.  Following the example of Jamaica in Caricom, the establishment of a Commission of the Contractor General (an anti-corruption agency) responsible for monitoring and investigating government contracts, licences, permits, concessions and divestments.

2.  Legislation requiring compulsory racial impact assessments to accompany all state expenditures, policies, programmes and projects (as is done elsewhere)

3.  In similar manner legislation for gender impact assessments

4.  The establishment of a non-partisan Budget Office in the National Assembly

It goes without saying, but I repeat it nevertheless, all tension-raising political disputes have the potential for disrupting macroeconomic stability.

Next week I shall turn to the discussion of the last grouping of downside risks, which I describe as economic-structural.

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