The current APNU+AFC regime seems bent on a policy of reversing the economic and social gains made by the previous PPP/C administration. The recent budget has demonstrated that this so-called caring government is really heartless. It has resorted to propaganda and political chicanery. A 3-card trick is done to deceive, and all the pre-election promises made by coalition have now vanished in thin air.
Perhaps the most punishing and heartless was the decision taken by the administration in the last budget to place the Value Added Tax on water and electricity, which apart from the burdens faced by the consuming public would also have an indirect impact on the overall cost of living. Water and electricity are two unavoidable inputs in the production of goods and services which will invariably be passed on to consumers by way of higher prices. And as if these were not enough, the regime has now extended the VAT to private school students, which understandably has generated protest action by private education providers and affected parents and students.
It is not that the administration inherited an economy that was in bad shape. On the contrary, it inherited a robust and growing economy which was among the fastest growing in the region.
The rate of growth averaged five per cent in ten consecutive years prior to 2015, which catapulted the country from low income to middle income status. The debt burden was reduced to a mere five per cent.
My fear is that unless something dramatic happens to arrest this precipitate decline in the foreign exchange reserves and for that matter the performance of the economy as a whole, there is a real danger of the country reverting back to the days of a sliding exchange rate, rampant inflation and the hoarding of foreign currency not to mention currency flights out of the country. This will further weaken the local currency and result in inflation and a situation where an increasing supply of money is chasing fewer goods. Put in a different way, the purchasing power of the local currency will decline and the basket of goods and services will get smaller.
The Granger administration inherited a good wicket from the previous PPP/C government and it therefore has no one but itself to blame for the current unsatisfactory state in which the economy has now found itself in. The two main sectors of the economy, namely rice and sugar, are underperforming, which is already impacting adversely on the economy. Gold production buoyed by favourable market prices have saved the day, but with fluctuating prices for the commodity and high levels of undeclared gold, the prospect of gold mining hangs in the balance.
The current administration has clearly embarked on a denial mode by creating the impression that the economy is doing well when the whole of Guyana knows otherwise.
The structure of the economy is already moving in an unfavourable direction from the productive to the non-productive sector. Agriculture, the backbone of the economy and major source of employment and foreign exchange is de-emphasized in favour of the service sectors.
A recent attempt by a Stabroek News reporter to get a small amount of foreign exchange from the banking system that was published in that paper exposed the lie that there is no shortage of foreign exchange on the market.
The current regime will in a matter of a few months complete two full years in office.
The balance sheet is not looking good, and if present trends in the economy persist, the future of Guyanese looks bleak.