We need to change course and personnel in the Ministry of Finance

Dear Editor,

This 2017 Budget has caused me to reflect on an idea that I have toyed with all my adult life – why can’t truth and politics go together?  I have just read an excellent academic piece called The Political Economy of Public Policy in contemporary India which strengthens my resolve that you actually can bring the two together. Only politicians who have a shallow commitment to politics need to resort to falsehood, subterfuge, and deception. If your commitment to people and politics is deep, the truth is your best armour.

What happened this week in Guyana?  Where should the people stand on this Scud missile of a budget?  What is the medium range projection for the poor and the working class?  What impact will this have on the 2020 elections?

Winston Jordan unveiled a $250 billion budget aimed at “building a diversified green economy”.  But what he has really forgotten is how to protect the existing economy to generate the resources that can feed and fund the diversification process.  Instead, he is using the model of taxing and borrowing more, to spend more.  But the operative question is who is being taxed more and why?  The answer remains that the poor and working class and the business class are being asked to pay more into the treasury by way of these VAT charges on electricity, so that the politicians in the Granger administration can spend more.  This entire game plan is all about the bigger pensions, bigger perks and the future mansions for the new political class.  Ask Mr Hamilton Green.

One of the principal documents within any budget is the Statement on the Central Government Financial Operations.  This statement confirms how the government intends to fulfil its mandate over a year through its financial activities. It basically gives you a summary of the total expected cash inflow into the Treasury v the total expected cash outflow.  Any householder can connect with this document since it reconciles to the same realities of every family – what they earn v what they spend.

If it is in deficit, it means that the government is spending more than it earns, and irrespective of how respective ministers attempt to window-dress this number, a deficit is a deficit.  When there is a deficit, it clearly means that the government will be borrowing more money in the name of the newborn children of Guyana or taxing the people more in order to satisfy this increased spending. This is exactly what Minister Jordan has done in 2017.  Irrespective of how we twist it and turn it, the people are being taxed more so that the Granger administration can spend more.

In 2017, the non-financial public sector is expected to record a deficit of $42.6 billion (5.6 per cent of GDP) in 2017, versus $30.4 billion (4.3 per cent of GDP) in 2016.  This translates into a new need for cash of some $12.2 billion in 2017.

So while there will be a decrease in some taxes like income tax because of the increase in the tax threshhold, there is a rapid expansion in VAT by almost $10 billion because of the new punitive tax on electricity and water which will affect the poor and the working class the most, and will also make many Guyanese businesses more uncompetitive.  Then there will be an expansion of the so-called fuel tax (Excise Tax) by another $5 billion.  The Environmental Levy is back which is expected to rake in another $1 billion and the taxes on the small man in the form of miscellaneous taxes like penalties on the horse-cart man and such people are expected to rake in an additional $300 million.  So this budget is nothing else but financial ‘murderation’ of the small man.  He gets hit on the light bills, the water bills, the minibus fares, the licences on all the small shops and draycarts and so on and so on.

Why all this financial pressure?  Check the 2017 Budget carefully; there is enough evidence to expose an executive travel budget of some $1 billion for 2017.

It is clear that these politicians do not care if they have to borrow more, because the Minister clearly outlined that he is prepared to pay some $1.5 billion more in interest payment for the national debts in 2017 compared to 2016.  There is no end to this financial insanity.  The growth rate is plummeting, but we are paying more interest on the debt and we continue to borrow more and more to what end?  Economic bankruptcy?

But I question the depth of economic knowledge of President Granger, since even Burnham would not have allowed such a budget to fly.  Why is he not seeking more advice from his economic advisor Dr Clive Thomas?  I have challenged Dr Thomas on his work on GuySuCo because clearly he is not a businessman or a business strategist, but if there was any job Dr Thomas was born for, it was to be an economic presidential advisor.  He is a very talented economist who is a million times more skilled than the Minister in structuring an economy.  So why is his mind not being tapped more on the economic front by the President?

It was Christopher Ram who skilfully advised us that Dr Ashni Singh should structure a budget of around $175 billion in 2013.  Mr Ram was correct then. Since then, nothing significant has happened in the Guyanese economy to cause any Minister of Finance to want to bolt on $75 billion in additional expenditures without a clear roadmap of how we can create rapid economic growth.  So it is either the Minister is playing politics with the economy or is guessing his way through this entire process.

Some commentators will say to me “same old PNC” but I continue to reject that comment.  I still think that Carl Greenidge would have been a greater asset to the Granger administration as the Minister of Finance. He has the experience at conceiving pro-growth economic models as we saw in 1990-92.  So the PNC does have talent in its ranks just like the PPP.  But this PNC talent is being stifled because of human insecurities and petty small men with small minds who continue to put self first instead of Guyana.

Unless we change course and personnel at the very top in the Ministry of Finance, the small man must batten himself down for tough times as the clueless continue to be given the baton to lead on the economic front.

Yours faithfully,

Sasenarine Singh

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