Jordan trumpets oil-fuelled nominal growth

…while rest of economy and standard of living have collapsed – Jagdeo

Opposition Leader Bharrat Jagdeo has taken de facto Finance Minister Winston Jordan to task after he boasted about Guyana’s projected growth rate despite the devastating impact of the COVID-19 pandemic which has decimated global economies.

Both the World Bank and the International Monetary Fund (IMF) have revised the country’s economic growth for 2020 to be just over 50 per cent due to the novel coronavirus.

Last year, it was projected that Guyana would see more than 80 per cent growth as a result of its oil production offshore –

which started in December 2019 in the Stabroek Block.
In a recent interview, former Minister Jordan boasted that even with the revised projections of Guyana’s Gross Domestic Product (GDP), it would be the country’s “best-ever growth rate”.
However, Jagdeo, at his recent virtual press briefing, pointed out that this projected growth is because of oil production and does not reflect the debilitation the other economic sectors are currently facing because of the COVID-19 pandemic.
“So yes, we increase GDP because we’re producing oil but what has happened to the economy. All the sectors are down, all the other sectors and those employing majority of people,” he posited.
According to Jagdeo, the oil and gas sector employs about two thousand persons maximum but the other labour-intensive sectors are having to lay off workers or pay them half of their salary/wages or even send them off on leave without any pay.
“There are tens of thousands of Guyanese who are now suffering. They’re not getting an income, economic activities have shrunk traumatically in these sectors and [Jordan] takes solace in the fact that a number has changed in our national accounts…,” the Opposition Leader stated.
He noted that while the GDP is growing, the country’s revenue has practically collapsed, with fewer people being employed and not many economic activities occurring. This is also compounded with the loss of revenues from tax relief measures put in place for essential items such as the removal of VAT on medical supplies and testing kits as well as on water and electricity.
Meanwhile, Jagdeo further pointed out that even though Guyana’s economy will grow from oil production, the global petroleum industry is currently in trouble with oil prices falling less than US$1 per barrel.
He noted that it has been forecasted that these low prices will persist for a while.
“First of all, the demand fall is outstripping the cut in production. And even if you have a return to demand in the near future and that depends on the future of the recovery… even if you have a quick rebound in the demand for oil then what will happen is, because of the inventories that have been gathering up, several billions barrels of inventory that people had to store oil, they’d have to work out the inventories and then resume production,” Jagdeo noted.
Moreover, the Opposition Leader related that there is no data right now to show how much of a decline there has been in terms of economic output and jobs in the country during this global pandemic.
In fact, he lamented the absence of any relief package given that majority of the country is on pause due to the lockdown imposed by the Government to curb the spread of the novel coronavirus locally, which has infected more than 70 persons, killing eight of them.
While a number of countries have implemented stimulus packages for businesses and its citizens to stay afloat during the coronavirus pandemic, Jordan had stated that the country’s scarce resources have to be prioritised for other purposes ahead of a stimulus.
“Some people have suggested that the worst is yet to come… So more and more our resources, slender as they are in the best of times, will have to be reprioritised to fighting this virus frontally. So, our attention is turned to that. We are looking for resources to assist in the public health sector,” he posited but noted that the caretaker Government is working on establishing a database of the vulnerable people including those who have lost employment and the self-employed.
But according to Jagdeo, who is a former President and was in office during the 2008 global recession, economic relief for both households and companies is needed.
He explained that households need assistance now to survive during the pandemic, while measures will have to be put in place for companies to make sure that as soon as this is over, they can resume operations.
This, he added, would require the necessary support, such as tax measures, fiscal measures including monetary policy and direct interventions through loan and loan guarantees, provision of working capital for companies and payroll support.
The Opposition Leader noted that these and many other measures were recently outlined by Presidential Candidate of the People’s Progressive Party/Civic (PPP/C), Dr Irfaan Ali.
“So, we have to tackle those things, we’d have to put people back to work and boost their Government revenues so that you can support public expenditure and not have to borrow too much…,” Jagdeo asserted.