Guyana’s economy remains very fragile in 2017

Despite the 2016 upswing in production from the two gold mines, which were incubated under the PPPC Administration, the opening wicket for the Guyana economy in 2017 is not looking good. The Guyanese economy in 2017 does raise major concerns. Anyone who seeks to invest in Guyana today will face some of the worst long-term returns in the entire 51 years of Guyana’s independent existence, and the scenario would be very comparable to those horrible days under Burnham’s regime — in the early 1980s.
For many years, Guyana had insane house prices, and the economy was hotting up so much that businesses were prepared to borrow beyond their capacity to expand. But those opportunities have evaporated since 2014, after that silly “prorogation” call by the Ramotar Administration. But what started out bad in 2014 has, all of a sudden, gotten multiple times worse, because of the mediocre management of the economy under this Granger Administration. Any investor with any common sense would metaphorically run for the hills when it comes to committing to any new investment under this clueless Granger Administration. It make so much better business sense these days to go to places like St Lucia or Grenada to invest.
If one were to look at the Bank of Guyana’s First Quarter Report for 2017, one would observe that a growth rate could not even be attached to the quarter. That is a clear sign that the economy is not where it was projected to be in the 2017 Budget. All eyes will be on the Minister’s Half Year Report to Parliament, when he would catalogue the state of the economy. From unofficial sources, I was advised that the first quarter experienced negative growth, and thus the reluctance of the Central Bank to release the figures. If one were to read the Bank of Guyana Report, one would see that agriculture is flat (rice up, sugar down); forestry is down by 21%; gold is clearly not doing great; bauxite contracted by 17%; and all other sectors continue to record lower-than-expected activities. The state of the economy under President Granger is a disaster so far in 2017, and there is no silver lining on the horizon to make it any better anytime soon.
Soon we will be hearing from this Government that the bad performance in the economy under Granger’s watch is because of the weather, because officials have now run out of excuses after 2 years. In true PNC style, they will now label the state of the economy as an “ACT OF GOD”, as one of their earlier leaders did way back in the days; but financial analysts and informed thinkers will see past such bunkum.
But of more concern to the analyst community is the creeping pinch on the Guyanese consumers. As I revealed last week, the cost of living is rising faster than disposable income, and more Guyanese are finding themselves having less money available for critical essentials like food. Real wage growth under this Granger Administration has slowed to a crawl, while household indebtedness is increasing. In April 2014, household indebtedness was G.7 billion; and in April 2017, it was G.2 billion — an increase of G.5 billion. But the evidence is proving that more people are failing to pay their debt installments on time, leading to a deterioration of the quality of assets at the banks. The share of the non-performing portfolio to the total loan portfolio was 11.4% at the end of March 2017, compared to 4.8% in March 2014. This is a clear sign of where the economy is heading.
The people are struggling financially, and consumer spending is under severe pressure. That matters to investors. If the consumers cannot buy, then those who dare to invest in Guyana will struggle to sell their products on the local market, unless they are producing for export. But with Guyana having one of the highest costs of electricity anywhere in the Caribbean, even competing on the international scene is not feasible in 2017. This is the real challenge; and yet, even after the Guyana Power and Light (GPL) had secretly overcharged the population since 2016, there is no inclination by this Granger Administration that the rate of electricity would be lowered, even with cheaper Bunker C fuel on the market. This financial deception and skullduggery has resulted in GPL amassing a handsome sum of cash of more than G billion in its bank account. Is this part of the new parallel Treasury for the PNC boys?
This “grab and spend on self” attitude of this Granger Administration will land it in some really hot economic mess very soon. Even with the promise of oil, it will take at least 2 to 3 years after first flow to reverse the damage done to the economy in the last 2 years. But if the first flow is expected in 2022, what should the Guyanese people expect between now and 2020? Did someone say guava season is here? This Granger Administration wants to plant guava and reap sugar apple. Good luck to this administration!