Dear Editor,
The Financial Times reported on January 4 that remittances which Mexican emigrants sent home to their families from the US dropped by 16 per cent year-on-year in 2009. This led me to consider this important point with the desire that it is given greater attention in the 2010 Guyanese annual budget. The Ministry of Finance in Guyana will have to seriously evaluate our likely remittance contraction and what strategies we can use to compensate for the remittance contraction of 2009 and the impending contraction in 2010.
In the Bank of Guyana (BOG) Half-Year Report, the Balance of Payments listed Current Account transfers which are mainly driven by remittances as declining from US$145M to US$120M, a 17% decline when comparing 2009 to 2008 (January to June period). This correlates with the annual decline of remittances from Mexico and thus is another spanner in the validity of the 2% growth figure being postulated as Guyana’s growth rate.
We must acknowledge for planning purposes in 2010, that a realistic figure for the decline in remittances in 2009 would be 18%. In the 2008 BOG Annual Report, remittances were tagged at US$274M and a sensitivity analysis of this number in 2009 at a contraction rate of 16%, 18% and 20% to reflect the most optimistic, most likely and most pessimistic positions, is revealed in the table below:
If we follow through with the most likely outcome, Guyana should be reporting a US$50M decline in remittances in 2009, almost the size of the F/X earned from the entire forest sector. That is $10 billion less to help folks in need build houses and support their disposable income. This obviously has fed through, and thus the 3%-6% salary increase was a knife in the back of the workers. These people are losing from all directions and thus a significant salary increase in 2010 is the only way to go to ease the pressure on the working class in Guyana.
A proper state analysis should be done by the Ministry of Human Services of the lifestyle changes in Guyana to assess the impact of the decline in the remittances, especially in areas like Berbice where there is a heavy connection with non-resident Guyanese communities (not discounting other areas of Guyana with a connection). This should then drive social programmes to help people who have seen their income stream decline significantly.
A good bit of news I read over Christmas was that Minister Nadir’s retraining programme seems to be making headway. Is mobile training being carried out in the rural communities, eg, going to Black Bush Polder to help housewives in the preservation of food and other life skills and even more academic skills like basic Maths?
My caution: 2010 is not going to be better for remittances and we must plan for this and not be caught off guard if they do not improve. Remittances to Guyana in 2009 are expected to be exceeded only by the combined mining and forestry sector which is expected to generate US$420M in export earnings and is under threat as a result of greater regulation in order to comply with the REDD+ initiatives and LCDS. Not even king sugar and rice individually will generate more income than remittances for Guyana in 2009, and thus a strategy to entice NRG to save more in Guyana and remit more to Guyana must be devised by the government.
The government has rejected criticism it is not doing enough to stimulate growth. But the truth of the matter is not enough is being done to really make the private sector the true engine of growth so that more jobs can be generated. The 2010 budget must offer some concrete investment stimulus to the private sector to entice investments since the government cannot sustainably drive the PSIP as the international fund-flow dries up. This explains the no holds barred attitude for accessing the Norwegian Funds, but the PSIP should not be the primary strategy for growing the economy out of recession. It should be part of a menu of measures that critically involves the private sector.
Initiatives such as the direct facilitation of rice exports to Venezuela are commendable, and more of these initiatives can be taken. Why not facilitate an opportunity to export rum, coconuts, non-traditional agricultural produce, completed furnishing from our furniture manufacturers, and certified jewellery to Venezuela? The President of Guyana can lead an investment mission to Venezuela to pursue this agenda in 2010.
The time has arrived for us to take direct action and intensify our thinking out of the box mentality. Here in the UK, the Department for Trade on a monthly basis is taking business people all over to share ideas and arrange network connections between business people, and on many occasions real deals are signed. Our internal market in Guyana is small and thus we must aggressively pursue geographically sensible locations to grow our trade. Some effort should be made to provide governmental (both Jagdeo and Chavez’s government) cash incentives to a small direct flight between Caracas and Georgetown. Maybe both governments can fund seats based on affordability (Guyana will fund 1 seat, while Venezuela can fund more based on their wealth situation) on a trial basis to make it feasible for the Venezuelan national airline to send one of its small carriers to Guyana once a week. The opportunity can be explored if a possible stop in San Félix can be done where thousands of born Guyanese are now naturalized Venezuelans.
This scenario can be repeated for the Brazilian state of Roraima by encouraging a second flight with META with the associated support in seats. I have done the rough computation and these two initiatives are expected to cost the government less than $7M for 2010 and would result in more Venezuelan, Brazilian and Guyanese business people interacting, making deals and contributing to Guyana’s economic diversification and growth.
Yours faithfully,
Sasenarine Singh
