The new round of debate on the state of the country’s economy, has been fuelled by concerns of an apparent shortage of foreign exchange in Guyana and its effects on the banking system. The government and central bank’s official response is that the reports of shortage are false and they point to attempts at manipulation of the system and an artificial demand which have been created by speculators and racketeers. In spite of the differences on the foreign exchange situation there seems to be a consensus on all sides that the economy is not performing in a desirable manner.
While some critics of the government have been vehement in their arguments that there has been no growth in the economy, the latest report out of the IMF contradicts this position. The IMF team which visited the country recently, stated that there was a 3.3% increase in the country’s growth rate for the period 2016 and projected the economy will grow by 3.5 % in 2017. This assessment of Guyana’s economic performance can be treated as objective, since it came from a politically neutral observer, neutral in the sense that the IMF is not driven by partisan interests and does not care which party is in office.
It should be remembered that the visit of the IMF occurred at a point in time when there were predictions of gloom and doom in the economy, and the extent to which the Guyana dollar would depreciate. It is therefore in that context that the significance of the IMF report must be viewed. The IMF report is particularly significant since it concurred generally with the view of the Finance Minister and the government that the economy is being managed in a responsible manner. In response to the IMF endorsement of the government’s handling of the economy, a daily newspaper close to the PPP carried an article which quoted the opposition party as saying, “…IMF report validates its position that the local economy is in trouble”. That statement like a number of others, was erroneous and underscores the lengths the PPP is prepared to go to in order to undermine the coalition government.
Politically, the IMF visit to Guyana was timely and to some extent, knocked the wind out of the PPP and the Private Sector Commission’s (PSC) sails, and helped to cool the temperature by forcing the PPP and the PSC to retreat and to rethink their propaganda on the economy. The big loser in this credibility issue is the PSC. This organization was caught with its pants down. It was forced to put its tail between its legs and subsequently expressed public support for the IMF report and findings, which gave the government high marks for its handling of the economy. The PSC’s public endorsement of the IMF report was, if nothing else, a painful embarrassment for its leadership. Their strategy of playing politics with the economy in support of the PPP backfired. In the process it exposed the PSC’s hypocritical claim of being non-political. The PPP’s position, characterized by its reckless opposition tactics is understandable, since that party’s leadership is only concerned with its narrow partisan interest of returning Jagdeo to the presidency at all costs. However, the PSC on the other hand, has a moral duty to be more objective and ought to represent its members’ interest in a non-political, non-partisan way.
A keen observer will not fail to note that the consensus that the economy is underperforming collapses when it comes to the reasons for the present situation. The opposition PPP and other government detractors are accusing the APNU+AFC government of mismanagement of the economy and the country. Their accusations range from witch-hunting to the inability of the coalition to govern the country. To the government’s credit it had, in the 2016 budget presentation, conceded that the economy had slowed down and pointed to external and internal factors that were responsible for this state of affairs. The decline in the global economy and a reduction in remittances have had negative effects on local economic activity. Additionally, in the domestic sphere the decline of the sugar and rice industries have been draining the public purse. The reduction in the price of gold on the world market, adverse weather conditions and opposition machinations ‒ social, economic and political – have all contributed negatively to the economic life of the country.
It is important to look at some of the political challenges which have contributed to the slowdown of the economy. Even before the coalition came to power the economy was in decline due to the political situation in the country. Not least among these was the decision of the Donald Ramotar regime to prorogue parliament. The pending general and regional elections created great uncertainty, resulting in reduced investments by the private sector and a sharp reduction in government spending. The full effect of this development was only fully realized after the 2015 elections were held and the APNU+AFC emerged as the government.. These are undeniable facts which the opposition and government detractors conveniently choose to forget.
There is no secret that the pseudo-economic boom of the Jagdeo era was driven by the underground economy. Added to this is the deeply entrenched corruption in the government procurement process and the theft of state assets. This ‘wealth’ helped to create questionable economic activities that boosted the growth rate. Now that the David Granger-led government is clamping down in these areas, the unavoidable consequence is reduced economic activity. Another important factor is the deliberate sabotage of the economy by the supporters of the PPP who are the major players in the formal and informal private sector. This is the price the nation has to pay to restore the economy to genuine economic growth.
Based on the above evidence, any talk of giving the government an F grade for its stewardship of the economy is misplaced and not rooted in the economic realities. As the IMF report did not support such a grade. I will not hesitate to award the regime a grade B plus.