40% projected growth depends on having legitimate Govt, Parliament – economist
Today marks five months since elections were held and over eight months since Parliament was dissolved. According to one economist, only the installation of a legitimate Government and the convening of Parliament can save Guyana from rapidly approaching disaster.
Economist and Executive Director of the Guyana Budget and Policy Institute, Dhanraj Singh warned in a letter to the editor that the more than 40 per cent growth rate quoted by de facto Finance Minister Winston Jordan to defend his handling of the economy is actually misleading.
He noted that this 40 per cent does not translate to creating jobs in job retentive economic sectors or reducing poverty, but rather is dependent on the value of oil. In addition, Singh explained that these growth estimates depended on a number of things such as a legitimate Government and budget.
According to Singh, the 40 per cent growth that Jordan is referring to is almost entirely the value of oil that will be produced this year. “…has almost nothing to do with the rest of the economic sectors, job creation, household income, and poverty reduction. Both the World Bank and the IMF (International Monetary Fund) forecast economic growth of about 50 per cent because of oil and gas production.”
These estimates, however, are based on many assumptions including the existence of a legitimate Government, a Parliament, and a national budget, he said, adding that the absence of these institutions not only undermine these projections, but it also spells unimaginable economic disaster and hardship for the country,” Singh wrote.
Indeed, the Inter-American Development Bank (IDB) itself, which previously estimated that Guyana would see 86 per cent growth, is now projecting that Guyana’s oil exports could lose as much as half of its expected US$2.4 billion value and a sizeable chunk of its Gross Domestic Product (GDP) growth with it.
Previously, the IDB had projected that for 2020, Guyana could see oil exports worth US$2.4 billion and approximately US$230 million in Government revenue. However, in its recently released Caribbean region quarterly bulletin report, the IDB has drastically slashed these projections.
The IDB used the assumption of oil prices remaining between US$20 and US$35 a barrel to do their calculations. According to the new numbers, it is estimated that the value of Guyana’s oil exports will drop by 40 to 60 per cent or approximately $1.2 billion.
Not only that, but Government earnings are expected to decline by 15 per cent to US$195.5 million. All of this is expected to affect Guyana’s GDP, with the bank projecting much lower growth than the original 86 per cent it expected.
Singh also contended that it is disingenuous for persons to cite total imported consumption goods as proof that consumption spending is not in jeopardy. Singh instead referenced total private consumption to show that all is indeed not well.
“It is no secret that since 2015, the Granger Administration has spent extravagantly. But whether those spending lead to higher consumption in households is a separate question to which the answer is a resounding no. Total private consumption at the end of 2019 is the second-lowest in almost a decade; it declined by more than $63 billion or 12 per cent from 2015.”
“In other words, while the Government spent lavishly over the last few years, those spending did not trickle down to ordinary families. The impact of COVID-19 pandemic and the ongoing election crisis would undoubtedly make the situation memorably worse in the months, quarters, and possible years ahead,” Singh stated.
The economist also made an urgent call for statesmanship to prevail and for the Government to do the right thing, rather than run from accountability.
He made it clear that the A Partnership for National Unity/Alliance For Change (APNU/AFC) has brought Guyana to the economic problems the country now faces. In fact, Singh noted that it was APNU and AFC, then separate parties, whose antics of cutting allocations and starving the economy combined to sabotage it.
“I will end once again by sounding the alarm, an immediate end to this democratic siege, followed by the swift installation of a Parliament and a legitimate Government is the only path to avoid the worse of the disaster that is rapidly advancing.”
“With each passing day, the window of opportunity to help the economy and save families is closing while the pain and hardship are becoming unbearable. History will account for the decisions we make at this moment,” Singh added.
With five months elapsed since General and Regional Elections were held, a winner is yet to be declared by the Guyana Elections Commission (GECOM). While a recount has shown that the opposition People’s Progressive Party (PPP) won the elections, APNU/AFC has made a concerted effort to delay the transition of Government.
During this time, the country has been in a standby mode amid the COVID-19 pandemic. Government has provided no stimulus package for the economy and little help for those who have lost their jobs.
The situation is compounded by the fact that since there is no Parliament or fully functional Government, oil monies held offshore Guyana in the United States (US) Federal Reserve cannot be accessed. The US has also led the push for sanctions on the Government for ignoring the will of the people. (G3)