A clear threat to Guyana’s economic wellbeing (Pt 2)

Dear Editor,
Recent revelations confirmed in Budget 2018, have shown that the debt has grown significantly, by more than $85 billion since 2016 alone.
The A Partnership for National Unity/Alliance For Change (APNU/AFC) is clueless about sustaining and promoting economic growth. Budget 2018 exposes Finance Minister Winston Jordan and his colleagues of being clueless on tackling the anaemic growth rate that presently plagues Guyana. The average growth rate for 2011, 2012, 2013 and 2014 was above four per cent, even with an overt attempt by APNU and the AFC to sabotage the economic plan in Parliament. The People’s Progressive Party (PPP) in office for 23 years, had growth rates in 19 of those years and those growth rates varied between three per cent and seven per cent, even with the People’s National Congress’ “slow fyah, more fyah” subterfuge to make Guyana “ungovernable”. Those years without economic growth were years in which Guyana experienced major disasters, such as the 2005 great flood. By their own admission, the 2017 growth rate will be even less than their revised projection. Budget 2017 had projected a growth of 3.4 per cent and this was revised in their mid-year report to 3.1 per cent. Jordan now projects 2017 will end with a GDP growth rate of 2.9 per cent. The International Monetary Fund has already pronounced that the actual growth rate for 2017 is about two per cent.
The graph below using figures directly from Budget 2018 illustrates how rapidly the economy is declining. Yet Budget 2018 appears unconcerned and does not cater for any economic growth initiatives. The PPP was able to stay above for per cent growth rate, after 2011, even with the crushing cuts in the PPP budgets by the then combined APNU and AFC in Parliament. Recall they massively gutted the PPP 2012, 2013 and 2014 budgets, with cuts to significant growth-oriented projects, such as the airport expansion, Amaila Hydroelectricity, interior air strips, the Amerindian Development Fund, the Specialty Hospital, etc. In spite of this massive sabotage of the PPP budgets, the PPP maintained stable and reasonable growth of the economy. Nothing in Budget 2018 gives assurance that Guyana can return on the road to economic growth.
FIG. 1: Growth in GDP 2009-2017
Source: Government of Guyana, Budget Speech 2018
To make matters worse, APNU/AFC, as shown in Budget 2018, is comfortable in ballooning the debt. Budget 2018 confirms that the economic ideology that stirs the APNU/AFC pot is borrowing to finance their expensive forays while sugar workers, farmers, vendors and others are left without food on their kitchen tables. The national debt stood at US$1.143 billion at the end of 2015 and Jordan himself now tells us he expects national debt to increase to above $1.3 billion by 2018.
Budget 2018 confirms that APNU/AFC intends to continue the trend of borrowing to support the growing and greedy appetite of APNU/AFC. Budget 2015 was funded through one per cent borrowing, reflecting a PPP ideological and good fiscal management practice of keeping fiscal deficit low. In contrast, Budget 2017 was financed by 22 per cent borrowing. More than $85 billion has been added to the national debt since 2016. When we examine Budget 2018, with its almost total lack of revenue-generating initiatives, other than more taxes, borrowing in 2018 will exceed 25 per cent.
Governments around the world often used heavy borrowing to support their growth initiatives, intending to grow the economy and “borrow themselves out of economic morass”. But this government is not borrowing to stimulate growth.
More borrowing means expansion of fiscal deficits. Jordan admits that the fiscal deficit is growing. Taken directly from his speech, the fiscal deficit is set to grow again. This is another of the elements that characterised Burnhamism which Granger has promised to strengthen again in Guyana. Recall that by 1992, almost the whole Government expenditure was funded by borrowed money.
Budget 2018 exposes APNU/AFC for what it truly is – a political machinery bent on using the State for its personal gains, returning Guyana to a state of backwardness. Budget 2018 is simply a disaster.

Sincerely,
Dr Leslie Ramsammy