Part 6
Introduction
The last grouping of challenges and threats to macroeconomic stability over the near to medium-term which remains to be covered, is a miscellany of items which I term economic-structural. I shall consider a sample of these: the underground (phantom) economy, remittance flows, economic bubbles, the tax system, the NIS (social security), financial contagion, natural disasters and other ‘exogenous shocks.’ The first three items (underground economy, remittances, and economic bubbles) will be treated today. I shall argue these are sectors where crime, and not economics, is the main driver of performance.
Phantom economy
A longstanding feature of Guyana has been its huge illegal underground economy. During the 1970s and 1980s, when a commandist state-owned and state-directed economic regime prevailed, this underground economy was characterized by widespread black markets, particularly for foreign exchange. Regulations proliferated to restrain the black markets that had developed out of acute scarcities. Estimates at the time (including my own) put the underground economy at a greater size than the official economy! A norm of illegality prevailed, driven by regulatory non-compliance and tax evasion.
With the ERP’s post 1991 liberalisation of currency, goods and services markets under the guidance of the IFIs, the underground economy did not disappear as was anticipated, but it
