Will take a while to trickle down to ‘man in the street’ – Business Minister

A reduction in Guyana’s underground business has led in part to reduced spending in the local economy but the recent ‘final offer’ of one – ten per cent for public servants will in fact serve to boost spending power of ordinary Guyanese and this, coupled with a bounce back in the national economic performance, will soon lead to greater economic prospects for the nation.

These were among the notions raised on Friday by Minister of Business, Dominic Gaskin, who believes that Government has managed to stabilise the nation’s economic decline and has in fact suggested that the projected growth rate for 2016 will be realised — despite only achieving a two per cent growth rate for the first half of the year.

Gaskin was at the time addressing a section of the local media corps during the Alliance for Change’s (AFC) resuscitated bi-weekly press engagements to give party perspectives on national issues.

Regional context

According to the AFC’s Minister of Business in the coalition Government’s Cabinet Council of Ministers, Guyana’s economic performance also has to be viewed in a global and regional context.

He pointed to a recent report from Trinidad and Tobago, whose government has recently warned of a possible retrenchment of public sector employees as a result of that country making unsustainable salary increases.

Gaskin said too that the AFC also notes the sliding currency value in Suriname, “and the severe shortages being experienced by our Venezuelan brothers and sisters.”

The Business Minister pointed too to contractions in the Brazilian economy and suggested that the, “AFC wishes therefore to commend the Minister of Finance (Winston Jordan) on the prudent initiatives implemented thus far and the general overall management of the economy in ensuring that Guyana avoids these stresses.”

The Business Minister posited on behalf of the AFC that the Guyana economy has gone through a period of consolidation, which he blamed on lowered commodity prices on the international markets along with Government’s efforts to curtail illicit activities such as narcotics trafficking, smuggling and money laundering.

 “Our party believes that the reduction in the rate of growth has been stabilised and is optimistic that the targeted growth rate of approximately four per cent for the year 2016 will be achieved,” said Gaskin.

The AFC’s Business Minister was however unable to concretely correlate the relationship between the reduced spending power of Guyanese and the reduced illicit acts of narcotics trafficking, smuggling and money laundering, and instead pointed to anecdotal evidence.

Speaking on the economic downturn, Gaskin said “we do recognise that there has been a slowdown in spending…What we are saying is notwithstanding that there has been economic growth.”

He was adamant there has been no decline in the economy—the economy he said, is still growing albeit at a slower rate.

Pressed on the fact that the growth that he insists on has not been reflected in the spending power of the ordinary Guyanese and the local business sector, Gaskin sought to cast blame largely on the lower commodity prices and the economic slowdown that started about two years ago.

He pointed to declines in the gold and rice prices, bearing in mind that those two sectors are responsible for a large percentage—some 60 per cent—of the nation’s foreign earnings.

“That decline began about two years ago, I think it was compounded last year by the period in which there was no budget and therefore very little government spending in capital works and I think we are now on our way out of that decline but it does take a little while to trickle down to the man in the street.”

Informal sector

Speaking on the issue of spending still not rebounding in part because of the reduction of illicit trades, Gaskin said “it is hard to measure the impact of an informal sector; it’s not a documented trade.”

He was adamant that there is some evidence to support the notion that there is in fact a large informal sector operating in Guyana, “some in the narco-trade, some in smuggling, many just not registered formally and because of some of the measures that are being implemented where greater compliance is requested all around and there is a lot more scrutiny, there is less spending in those areas.”

According to Gaskin, it cannot be accurately documented, “but certainly, if we note overall that there is less spending, if retailers are saying there is less spending and we know that we have a large informal economy, I think it’s logical to conclude that a lot of that reduction in spending is occurring in the informal sector also.”