Date First Published January, 23, 1987

Guyana devalues $

Greenidge Presents A Ten-To-One Is Murder Budget

By SHARIEF KHAN

FINANCE Minister Mr. Carl Greenidge labelled his 1987 $3.4b Budget as a “down to earth approach” and a “bold and purposeful prescription for economic adjust­ment” but the linchpin, ten-to-one de­valuation of the Guyana dollar against the US dollar he announced, drew the public tag of ‘Ten to One is Murder.’

The sweeping devalua­tion of the Guyana dollar, which analysts said is the highest in the history of the Caribbean, was the most dramatic aspect of Greenidge’s presenta­tion and it immediate­ly sent up the cost of airline tickets. The move would also im­pact adversely on the prices of imported com­modities including food items and on the gen­eral cost of living. Busi­ness and trade union sources said the de­valuation would sky­rocket the cost of building materials, al­most all of which are imported.

The full extent of the devaluation ‘blues’ was still to be deter­mined as ‘Stabroek News’ went to press this week, but pro­perty values are also certain to rise. As the public tried to assess the impact of the mea­sure, Sparrow’s old calypso ‘Ten to One is Murder’ found im­mediate revived popu­larity in the streets of Georgetown and elsewhere.

PRICES

Government’s ration­ale for the devaluation was to cut imports, boost exports and try to balance its public sector accounts. The hiking of the exchange rate from $4.40 to $10 for one US dol­lar, Greenidge said, should “act as a dis­incentive to import… in so far as import­ed commodities are substitutable for do­mestic products.” He did not expect the devaluation to adverse­ly affect prices of many imported commodities which he said were al­ready being sold at “inflated prices” but acknowledged “some prices” would be af­fected.

He disclosed that Gov­ernment had promised the Trades Union Con­gress (TUC) it would review the 1987 wages package because of the impact of the mea­sure on some prices and said discussions on this would “begin as soon as possible.”

TUC Treasurer Mr. N.K. Gopaul, also Gen­eral Secretary of the National Association of Agricultural, Commer­cial and Industrial Em­ployees (NAACIE) declared shortly after the budget presentation, that his union would demand “immediate renegotiation of wages and insist the TUC call for indexation of wages to the cost of living” in view of the surprise devaluation.

Labour sources said Gopaul’s position is likely to be followed by other trade unions and the TUC could find , itself divided again as factions take different sides. Leader of the People’s Progressive Party (PPP) and Honorary President of the Guyana Agricultural and General Workers’ Union (GAWU) Dr. Cheddi Jagan declared: “If the TUC has any self-respect, it should come out on the streets now and oppose the budget.”

Mr. Greenidge however contended that the impact of the devaluation will “be considerably alleviated by the very generous package of tax measures” he outlined in his budget speech. He said “arrangements…to cushion” likely price increases were made and these included electricity tariffs, cooking fuel and transport costs.

He did not outline any moves to contain electricity tariffs but said the Consumption Tax on cooking gas and kerosene would be removed. It was not made clear if the prices of cooking gas and kerosene would be lowered.

BUS FARES

The cost of wheat flour would not be “unduly affected,” he  added and while he announced that the Consumption Tax on fuel used by the State-owned Guyana Transport Services Limited (GTSL) would be remitted to the corporation, did not state if bus fares would go up or down.

A further sop Government offered to “cushion” the effects of the devaluation was a supplementary daily feeding programme of milk and biscuits to over 26000 nursery school children, under a United Nations pro­gramme. A pilot pro­gramme has also been established in some regions to provide nutri­tious meals for some primary school stu­dents.

Caught in the imme­diate grips of the de­valuation also were some companies with funds in the Bank of Guyana-controlled External Payments De­posits Scheme (EPDS). These companies had deposited amounts with the bank to eventual­ly clear debts to over­seas suppliers when the bank’s foreign exchange holdings allowed this. The devaluation meant the local funds for old debts have increased by more than 100 per cent and Greenidge said the bank ‘‘will cushion the exchange losses of cer­tain categories of com­panies.”

He did not elaborate except to announce the bank would use a me­chanism to provide in­puts to selected ex­porters “making con­structive efforts to ad­dress the problem by way of expanding ex­port earnings.”

DISINCENTIVE

Greenidge also claim­ed the devaluation was “necessitated by the loss of our competi­tive edge or advantage in the Caribbean and international mar­kets.” Government, he said, had been faced with calls for special exchange rates for exporters and disclosed the State had been operating “a regime which has progressively provided a disincentive to official exporters.”

Government’s review of the factors deter­mined that the new rates would enable “reasonably efficient producers to export their commodities at competitive prices un­der which they would be assured of normal profits,” Greenidge said.

The devaluation was also part of the State’s move to restrict the thriving blackmarket in foreign currencies and imports. It is to be matched by the open­ing, within another week, of a “free foreign exchange ‘window’ at the commercial banks.” The ‘window’ would allow individuals and companies who do not now get foreign ex­change from the Bank of Guyana, to buy or sell foreign exchange at “competitive rates,” Greenidge said. Speci­fics of the operation are to be issued by the Bank of Guyana and it was not imme­diately known what are the “competitive rates” the Minister referred to.

CURRENCY

Exporters, he said, will be allowed to sell their currency at the ‘win­dow’ if their export production inputs were bought from the ‘win­dow.’ Buying from the ‘window’ would be gov­erned by “high prior­ity purposes” including imported inputs and spares for manufactur­ing or agriculture other than sugar; for mining other than bauxite and for some timber opera­tions.

Individuals could also buy currency to provide funds for main­tenance of students, business travel, pay­ment of reinsurance premiums, freight, and airline tickets.

Government hopes the measures would pull current blackmarket transactions in foreign currencies into the offi­cial fold.

 

THREE SISTERS— ONE BIRTH DATE

HOSTING a birthday party for your child is always a pleasant occasion — but when you have several chil­dren, it does dig into your budget.

Wouldn’t it be real nice if all of your children were born on the same date? Then you could have one bumper party for all of them.

Well, here is one mother who can do just that.

Mrs. Eslyn Jeffrey, of 3180 Congress Drive, South Ruimveldt Park, Greater Georgetown, has three girls and they were all born on the same date.

Allison, 8, was born on January 18, 1979; Rhonda, 7, was born on January 18, 1980 and little Jennel, just two years old, came into the world on Jan­uary 18, 1985.

Allison and Rhonda are attending Stella Maris school.

Mrs. Jeffrey, who is employed as a Confi­dential Secretary with the Guyana Pharmaceu­tical Corporation, said her husband, who was a former Building In­spector with the City Council, came over from the US special­ly to attend the big party last Sunday. And there was quite a sur­prise for the girls.