The debt inherited by the PPP/C in 1992 also reflected borrowing by Dr Jagan’s governments; some debts were rescheduled because of the work of the PNC government

Dear Editor,

On Thursday August 11, the PPP/C held an Impress Youth Conference, under the theme ‘Making our Mark.‘ This was one day before the expiration date of International Year of Youth. It was an opportunity for the nation to focus on a vision of the future of Guyana in which young people could live their lives in a society where corruption, bias, prejudice and backward politics are at a minimum.

According to the Guyana Chronicle and the Stabroek News of August 12, President Bharrat Jagdeo addressed the Impress Youth Conference on Thursday.  He could have let the youths know that Guyana could be better and that our young people do not necessarily have to inherit a broken, unequal, race obsessed, corrupt and divided society, where drug dealers are role models. For reasons which are clear to a majority of Guyanese he could not take this high road. Instead, he chose to address a number of contentious issues including debt and police action in relation to smuggling.

Guyana is approaching the next general and regional elections, which will have an important bearing on its future, the public, and the young people in particular. Increasingly we are being made aware of the extent to which corruption, facilitated by the PPP/C government, is embedded in the very fabric of our society. In spite of signing the Framework Principles on Combating Corruption at the Commonwealth Heads of Government meeting in Durban, South Africa in 1999 and undertaking to put in place rules on the funding of political parties, the PPP/C government uses state resources to hold cabinet outreaches and parade their presidential candidate, Mr Donald Ramotar, across Guyana. It uses lottery funds and other unaccountable funds to buy support.  It uses NICIL to pass state assets to its friends at less than market values and to avoid inconveniences such as tendering or reporting financial transactions. It uses the contract arrangements in the public service to employ persons to undertake political work.

In the 2011 budget provision is made for an 11% increase in the public service wage bill when there is no provision for any across the board wage increase that could account for such a jump. It is in this context that we all, including youths, need to view events such as this Impress Youth Conference, namely the link between campaign financing and corruption.

These shows with their captive audiences are a vivid reflection of what is rotten in Guyana.  Like the conference they are even explicitly intended to promote PPP/C interests and spread their propaganda. The cost of transporting all these persons to the Conference Centre would not have been small and would have been borne by taxpayers. Ultimately, it would add to the budget deficit. The same applies to the enormous sums being spent on the ‘Hits and Jams’ events. Money cannot be found to pay for youth training and remedial education, or to afford teachers a decent salary but it can be found to ‘entertain’ African youngsters, in particular. Presumably, it is hoped that it will help persuade them that the PPP/C government has their interests at heart. It is a common perception of Africans: just give them music and they will forget the serious matters and begin dancing. President Jagdeo seems to share this view. The money spent on job training programmes for the unemployed, and inadequately educated, such as the National Training Project for Youth Empowerment can only help a few hundred youths each year out of the ten thousand coming onto the job market and the thousands already unemployed. NIS contributions data suggest that over the last 5 years the number of employed persons increased by 2,623 and the number of self-employed persons by 2,052!

Where President Jagdeo has found funds for programmes ostensibly directed at youth interests those funds have been wasted. The Youth Choice Initiative, for which Mr Odinga Lumumba was named Coordinator, spent $800M. A year after it was launched a Stabroek News’ review based on visits to projects and interviews, concluded that there was little evidence of any meaningful activity on any of the projects. In fact, most were closed.

At the same time, we see dozens of new warehouses going up, mostly in residential areas. Many of these are probably cloaks for the money-laundering business and importing  items illegally or duty-free concessions have been obtained from the government in a process that lacks transparency. It is widely alleged that one foreign embassy is also the illegal beneficiary of a duty-free arrangement. Such activities like the NICIL transactions undertaken by Mr Brassington (the sale of land at Pradoville 2; the sale of properties to politically-connected business persons and to others; and the controversial and contested award of the Amaila Falls Road contract to Synergy Inc) represent revenue foregone by the Treasury and explain why there is not enough money for the job training and other programmes for our young people. Similarly, the benefits obtained by the President, ministers and party members from grants of state lands for private housing at Ogle, Pradoville 1 and 2 or the areas along EBD behind Diamond, Mocha and the Providence/ Stadium, represent significant revenue losses for the Treasury.

Those losses have implications for the level of debt Guyana incurs and our capacity to service the debts the PPP inherited as well as those it has been so casually accumulating since 1992. However, instead of addressing these issues President Jagdeo and his ministers try to divert the attention of the public with a number of falsehoods and nancy stories about Guyana’s situation and the alleged horrors of living under the PPP/C’s predecessor administrations.

A classic example of this is the President’s off-colour comments on the politicization of employment. Prior to 1992, President Jagdeo’s first, and only, paid employment in the area of economics was at the State Planning Secretariat, where he was employed from 1990 to 1992 as a Junior Planner. During his presentation to the youths, without any concern for the truth, he claimed that unlike that PNC era, people do not have to belong to a political party to obtain jobs today. President Jagdeo should produce his PNC membership card for the period 1990-1992 or withdraw the statement.

He was never required to join the PNC and was employed although he was a known and paid up PPP member. So he would only have the temerity to make a statement like that because he assumed that the youths are too stupid to check what he says.

Luckily, the youths are more discerning than he believes. Most would still recall the pictures of the brutal torture by the security forces of a number of persons including a child. Such torture is now a feature of law enforcement in Guyana under the PPP and in the case of the GDF, is being undertaken by a new unit established during President Jagdeo’s watch.

Most of those youths would also be aware that in Guyana, prospective employees may not have to join the PPP to get jobs but they have to be perceived as belonging to an ethnicity favourable to the PPP or a supporter of its politics. What is more, they would be aware that if a member of the PPP/C administration erroneously thinks that a government employee is critical of the PPP, the government will seek to have them fired. Those who believe that they are safe from such actions in the offices of multilateral and international agencies will soon find, as have Ambassador Noel Sinclair, Dr Janette Forte and Mr Clarence Ellis, that this is an illusion. Sad to say, Caricom has proved itself to be the most easily bullied institution in this regard as the recent cases of myself and Henry Gill show.

Why then would President Jagdeo make a claim about PPP tolerance of criticism? The answer has to be his contempt for the young people of Guyana. He has assumed that they are too stupid to realize the difference between reality and PPP election rhetoric.

In fact, President Jagdeo is so contemptuous of the public that he routinely says things that are untrue and relates conflicting stories to different audiences. He is not ashamed in the least by the exposure of his misrepresentation of the legitimacy of the fiscal concessions granted under a Memorandum of Understanding and incentive agreements with Queens Atlantic Investments Inc, and about the computer projects, OLPF and the award of a contract to the Digital Technology Group of Companies of a contract valued at $223M plus US$70M for the supply of over 1,400 desktop computers to 70 schools across the country when the company was in breach of the Companies Act.

It is astonishing that the President of a modern state could treat the public with such contempt that he would publically also feed young members of the community with a diet of lies and half truths simply in order to persuade them to vote for his party. They audience would have no doubt preferred to know how a 17 year old could have been among the Directors of the DTG Companies. He did not satisfy their thirst however.

According to the GC and the SN he returned to the question of Guyana’s debt in his address to the conference.  President Jagdeo complained of having had to repay international debts accumulated by the PNC. Professor Helleiner of the University of Toronto correctly dismissed in 1994 President Jagdeo’s absurd claim about 94% of current revenues being paid out in debt service until he came along. Yet he repeated it to the audience.

There are four noteworthy points which he should have mentioned about the international debts of Guyana: which parties contracted them, who renegotiated them, to what ends the funds were put, and why was the debt so large when we only borrowed a fraction of what we finally had to repay.

First, the debts were accumulated by all post-war governments. That means that the debts were also the result of borrowing by Dr Cheddi Jagan’s governments between 1957 and 1964 as well as after 1992.  So it is only proper that Mr Jagdeo, a PPP Minister of Finance and later President, should have sought to have them rescheduled. Secondly, some of the debts were rescheduled and written off directly as a result of the PNC’s efforts between 1989 and 1992. In fact many of these efforts were unprecedented and innovative initiatives. The international and multilateral agreement to help Guyana with its debt was based on the PNC’s track record of success with the Economic Recovery Programme (ERP) and the conclusion and implementation of the Paris (and London)  Club Agreements (1989, 1990 and 1991) negotiated by the teams led by myself as the Minister of Finance. The HIPC disbursements were based on later performance.

As mentioned, a significant proportion of the debt in question was accumulated by the PPP/C governments under Dr Jagan between 1957 and 1964. The money obtained by the PPP was spent on secondary and primary schools, mostly in PPP areas. The debates of the time attest to this behaviour which legitimately angered the bulk of African voters. The other loans were for sea defences, Atkinson Field and the Black Bush Polder Drainage and Irrigation Project (BBP), where 90% of the beneficiaries were Indian supporters. Both of these projects were subsequently rehabilitated by the PNC notwithstanding the beneficieries, when I was the Chief Planning Officer. The construction of both predated President Jagdeo’s birth but he has no excuse for not knowing that they were linked to both political parties.

In the same vein it needs to be said that most of the capital infrastructure of Guyana  – roads, drainage and irrigation (D&I) schemes, stellings, sea defences – was constructed with the loans underlying the debt. We would not expect Mr Jagdeo to admit that most of this work was undertaken by the PNC. But he could have been magnanimous; he is supposed to be the President of all Guyana. Most of the country’s 740 miles of paved roads were built between 1964 and 1985. The construction of some of that infrastructure, such as the Corentyne Road, was vehemently opposed by the PPP. The PPP writers and apologists find it convenient not to mention such things now because such positions were clearly not taken with the country’s best interest in mind. But he should have mentioned this because it is not a sin to make a mistake.

Grants and loans obtained by the PNC also funded the University of Guyana and Teachers’ Training College campuses, and more rice mills than were built during the PPP tenure. The monies borrowed by the PNC built the MMA D&I Scheme, Guyana’s largest ever capital project outside of the corporations, the Corentyne Highway, the Georgetown-Linden Highway, the West Demerara and East Bank Berbice Roads, Rural Electrification (GEC), T&HD pilot launches, the second Education Project, Georgetown and New Amsterdam water projects, the Rural Water Supply Projects, and the Demerara Harbour Bridge. The same applies to the productive sector, where the monies were used to nationalize Demba, Reynolds, Bookers Bros and Jessels, the forerunners of DDL and GuySuCo. These activities enjoyed PPP support and they were built during the period when the PPP was giving “critical support” to the PNC government.

Thirdly, there was demonstrated waste of some of these funds. Under Dr Jagan there was the infamous Del Conte Scheme to build a road on the East Bank of the Essequibo and the establishment and construction of Prashad Nagar. In the Del Conte case not a single mile of road was built although the funds were spent.  In his second term there was the stone scam involving the Ministry of Finance even as Mr Jagdeo was there. Most people will recall the cases of –

* The floating wharf which disappeared into the Pomeroon River shortly after construction and

* Further sub-standard works delivered by the very same contractor awarded contracts within months in Wakenaam, and Essequibo Islands

* The koker door at Garden of Eden, East Bank Demerara, which collapsed after construction

* Monies borrowed by the PPP-built British Guiana Rice Marketing Board but under this entity millions were siphoned off to party supporters and an impending investigation was brought to an abrupt halt as a result of a mysterious fire. Nothing has actually changed since the 1960s. No Minister has ever been fired by the PPP for corruption since 1992 and indeed, with the exception of Dr Henry Jeffrey, nearly all ministers removed from their posts have found a home at the Office of the President.

Few of the PNC projects gave rise to corruption on the scale of those built with funds borrowed by the PPP, The party is proud to note that when the PNC encountered problems with the Global Agri Scheme, the Minister responsible, and one of the most powerful figures in the PNC, was fired. As Mr Kwayana was obliged to point out, during its first ten years in office the PNC fired more ministers and prosecuted more officials than the PPP has done in all its 26 years in office.

The fourth point the President could have drawn to the attention of the youths is the need for care in prosecuting national policies. There are legitimate questions raised about the size of the debts and the related terms under which the funds were borrowed.  In fact the debts due to be repaid far exceeded the amount borrowed.  In 1989 when US$1.7B was owed, only US$0.6B had been borrowed. Over US$1B constituted arrears and penalty interest from 1985 when we joined Peru and Dr Jagan in their calls to stop repaying!

The arrears that built up when the interest rate crisis of the 1980s struck was a problem that affected Latin America as well as Asia. Our problem was made more acute by the fact that our borrowing had been linked to Libor, until then a historically low and stable international interest rate.

The debts and the decision to borrow on that basis were the responsibility of Premier/President Jagan and Prime Minister/President Burnham’s governments, inter alia. So it is appropriate that they have had to be renegotiated by both the PNC and PPP governments whose predecessors accumulated them. I should mention however that they were not alone in this failure of foresight and they acted on the basis of the best advice available, including that of the British. Is this something that the youths should know?
Current debt

As mentioned earlier it was quite in order for a PPP/C administration, led by President Jagdeo, to also seek the rescheduling and write-off of the national debt because some of that debt was accumulated by the Jagan governments. In this regard, it should have been worth mentioning that in the PPP’s 19 year tenure, Guyana’s debt stock has again risen to levels that may yet prove to be unsustainable. Since 1992 the PPP has borrowed more than the PNC and old PPP combined. The external stock of debt in 1992 stood at US$1.97B. It has been estimated that over the years since 1994 the international community wrote off the equivalent of an estimated US$2.2B. However, due to subsequent borrowing, Guyana’s total external indebtedness now stands at US$1.04B. This build-up has taken place at a time when the international interest rates have not been exceptionally high. The rate of its expansion has exceeded the actual and projected rate of expansion of exports, which is the basis on which we will service the debts.

Could the President not find it helpful to explain to the youths the reason for such rates of borrowing? What can we say about the use of these latest funds? They were used to refurbish the airport and the East Bank, road and to straighten out the East Coast and West Coast roads. Much of those funds were however negotiated by the PNC for facilities originally constructed under the PNC. PM Hinds covered himself in PPP glory by calling on the IBRD and IDB to cancel the loan for rehabilitating the Linden-Soesdyke Highway. We are still living with the consequences.  The cricket stadium was built amidst many complaints about the transparency of the award and the terms of the Indian loan. The Berbice Harbour Bridge which the PPP built was located deliberately away from New Amsterdam, the key entrepôt for East and West Berbice, in defiance of technical advice. The intention seems to have been to ruin the town for not being sufficiently enthusiastic about PPP governance.

During the PPP’s tenure, especially that of Mrs Jagan and Mr Jagdeo, Guyana has become one of the most corrupt countries in the world (number 126 to be exact). It has been so classified by Transparency International based on what has happened to some of these projects such as the laptop and desktop projects. There have been problems between the PPP/C Government and several multilateral financial entities over procurement practices and tendering. Furthermore, some of the money has been poorly invested and incompetently used. The loan for the Skeldon Sugar Factory, is one such example.

Under the PPP we have borrowed even when external reserves and fiscal effort have been good. This excessive borrowing is reflected not only in the rapid rise in external indebtedness but also domestic debt. The latter debt has been rising sharply especially in the last four or five years. At the end of 2010 it stood at US$100.5B. President Jagdeo never mentions this fact. The PNC accumulated external debt but the indebtedness was made worse by penal interest rates on arrears. But the PPP which inherited domestic debt of $1.8B in 1992 has accumulated an additional $81.7B, some 400% more than the PNC and, in far less time.

Yours faithfully,
Carl Greenidge

Around the Web