Where is the money coming from?
Grief and anguish
The budget debate might be over but not the grief and anguish of the Guyanese people. At least, so it would seem from the ever-widening gap between their income and expenditure, a gap that has been increasing by an average of 11 per cent annually since 2007. Their grief and anguish will continue also as they ponder the slower growth in income and the many necessities and comforts that might remain out of reach. Last week it was observed that the rate at which gross national disposable income increased in 2013 was far slower than in any period over the past five years. This was true also at the household level where disposable income rose at half the rate of one year ago. Indeed, the decline was dramatic and opens the question as to how Guyanese will make ends meet in the circumstances of a tightening revenue situation. More importantly, it also raises the question as to how households in this nation are able to afford the level of expenditure that substantially exceeds their reported income and outstanding consumer debt.
A decline in the rate at which income increased means that it was hardly likely that Guyanese could buy much more than they did in the previous year. Yet, contrary to expectations, private consumption spending rose substantially in 2013. The event is no anomaly since Guyanese consumers have been consuming far more than they have been earning for several years now. Sustaining such spending for long periods indicates that the story of Guyanese consumers and their expenditure behaviour is therefore more complicated than the mere appearance of spending beyond their means.
Insufficient earned income
As this column seeks to reveal, spending has been increasing on an annual basis in the face of insufficient earned income. For spending to increase, households had to obtain additional money from elsewhere. The immediate reaction to that finding is to see if the difference between income and expenses is …..To continue reading, login or subscribe now.