Recent follow-up discussions on how we in the Alliance for Change (AFC) will continue to prepare to correct the economic wrongs being perpetrated by the PPP government have sharpened our focus on the large current account imbalances that the PPP continues to saddle us with and how we plan to definitively reduce it to below 5%. For the readers who remain unclear on the term ‘current account deficits,’ it is an indicator of how much more our citizens, businesses and the Government of Guyana borrows from foreign governments, businesses and individuals than they lend. After more than 30 years of deficit spending, it is the duty of the next AFC government to confront our current account deficit since neither the PNC nor PPP did adequate justice to the Guyanese people with their economic management of the nation’s balance sheet. Credit must however be given to Carl Greenidge (post-1989) and Asgar Ally who did much heavy lifting to improve our macro-economic conditions, but their efforts still were not enough to mitigate the present-day economic tsunami. Actually the current account deficit of 8% that President Jagdeo inherited in 1996 has deteriorated.
The PPP’s chief economist, President Jagdeo, always likes to pontificate that the Americans have a large deficit to support his failed economic positions. Let stick to the facts. The Americans in 2010 had an average current account deficit of US$470 billion on top of an economy that was sized at US$14,700 billion, which translates into a current account deficit of only 3%. Over the last decade under Mr Jagdeo’s stewardship, there is a current account deficit averaging 14%. This basically means that Guyana has borrowed 14% more from the world than it has lent over the last 10 years. The source of my information is the Bureau of Statistics and Bank of Guyana.
For poor countries like Guyana, running a current account deficit to this extent is most irresponsible. One must concede that a poor country must have a temporary current account deficit to invest in long-term productive capacity, but these liabilities to the rest of the world must be paid back with future production. Where is our future production capacity? Have we built a functional alumina plant or an efficient sugar refinery or an ethanol plant or developed a globally certified jewellery manufacturing industry or reclaimed our rightful place as the breadbasket of the Caribbean by filling their supermarkets with Guyanese packaged fresh foods and meat? This is the crux of the matter; the PPP exported US$891 million and imported US$1,417 million in 2010. The Jagdeo regime under exported and over imported and this is fundamentally where the AFC differs from the PPP. The AFC Action Plan is all about creating the value added industry to increase exports and stabilize imports by switching to alternative energy.
How is this PPP deficit funded? The answer is foreign direct investment and loans in the main. The Jagdeo government borrowed US$384 million in new debts between March 2007 and December 2010. The government borrows G$4.7 million every day or G$195,000 every hour and what do they have to show for it in the form of new industries, new productive capacity, new jobs? If a country fritters away its borrowed funds on spending that yields limited long-term productive gains, the ability to repay comes into question. Yes we have new road, but does new road create long-term jobs for the workers? Ethanol plants will, an alumina plant will, country wide agro-processing facilities will. I have nothing against roads, but alongside building these roads there should have been the development of value-added industries to create the jobs to pay for these loans that built these roads. Can we say that many of the projects such as the blue elephant called the Skeldon Sugar Factory have justified their existence? Can we say that the multi-billion dollar IT trunk main from Brazil that is another pet project is worthy of taxpayer dollars when GT&T just landed a brand new cable to provide new bandwidth into Guyana? Can we say the investment by a state company Atlantic Hotels Inc in the new Marriot Hotel is worthy of taxpayer dollars?
Our people must re-ignite the traditional Guyanese ethic of hard work by enhancing their productivity, but that can only be done when they see their leaders as morally upright, accountable and transparent in their actions. That can only happen when the PPP leaders cease misleading them from the truth behind their matrimonial status to their commitment to public policy for the betterment of the people.
What is also very important is our competitiveness as a nation state. Our main competitiveness bottleneck continues to be GPL buying more fossil fuel-guzzling generators rather than a national commitment to hydro-power, wind power and to a lesser extent, solar power. Cheaper electricity is just not possible under a PPP government since it is clear they have inadequate skills to close this financial deal on the hydro project. President Jagdeo in 2006 promised us hydro-electricity by 2010. I think the Guyanese people have gotten hydrocele instead.
In a nutshell, this is what the AFC plans to do to enhance our competitiveness and our productivity. To improve our competitiveness and create the new jobs, we plan to engage in public-private partnerships in industries where we have a competitive advantage – ethanol production, sugar refining, alcohol production, sugar packaging, rice cereals/pudding manufacturing, jewellery manufacturing, refined coconut oil manufacturing, packaged meat production, pasteurized milk production, processed and packaged cash crops and fresh fruits, alumina production, building material using the lateritic bauxite material for the local housing industry and local road building sector. We plan to attack corruption frontally by strengthening our national institutions such as the police and the judiciary to sanction those who perpetrate rent-seeking behaviour in relation to the treasury as if their ‘pappa left wan’ transport for them giving them legal claim over the people’s money. We will review and revise that unholy multi-million presidential package.
We plan to lead in a transparent manner to motivate the people to work harder for a greater share of the nation’s economic pie. We commit to better distributing the nation’s economic pie to more of our people, especially the workers with more tax breaks – $50,000 tax free pay and a reduction in the PAYE tax rate to 25% in our first year in office. There is so much more in our revised Action Plan which will be launched in July/August 2011 but I encourage all to read our first draft at www.voteafc.com
I rest my case.