What is really amazing is that protests have been successfully organized against the parking meters affair and VAT on private education but no such efforts have been placed behind the immediate bread and butter issues affecting the entire nation: the VAT on water and electricity. Admittedly, the poor are exempted from the direct application of this tax, but they will have to bear the ultimate burden of its imposition as businesses raise their prices to recover the costs associated with paying VAT on these inputs. It is entirely possible that businesses will roll back their cost increases once the VAT on water and electricity are removed.
But within the context of all the hullabaloo generated over VAT and the parking meters, the real tragedy is that President Granger doesn’t appear to have a sufficient grasp of economics to know that Finance Minister Jordan has done the coalition great damage with the 2017 Budget. To compound all of this, enough discussions have been made available in the public domain to facilitate clarification of the issues, but the matter has turned into a showdown between the Minister of Finance and the Opposition.
The private sector understands the situation clearly, but aren’t willing to play ball. The stark fact is that the coalition’s problems on account of VAT are going to get worse because the budget has pitted the government against the entire country. The private sector with whom the government was supposed to be collaborating has recognized the futility of dealing with the coalition and the Minister of Finance. They have buckled down for the long haul as they navigate the well-known territory of inflation and eroding exchange rates.
President Granger has to think about surviving 2020 if he wants his party to survive at all, because there is no Burnham after him to hold the PNC together. There has to be some tactical engineering to regain the confidence of the private sector. And this business of monitoring foreign currency accounts and controlling imports is the road to hell, because we’ve come from there already. What is needed is some radical decision-making to recover the government’s image and the country as a destination for FDI. And an anti-business Finance Minis-ter and an uncontrollable run on the exchange rate is not going to help this. President Granger has some decisions to make. The time for dallying is long past.