– In the context of the no confidence-motion against the sitting Government
In today’s article, the author seeks to present an analysis of a number of key macroeconomic data over a ten years’ period from 2008 to 2017 as illustrated in the table below.
Key economic indicators
G$ Billions unless otherwise stated
Source: Bank of Guyana Annual Report, 2017
Starting with the fiscal deficit position over the period, the data has shown that the fiscal deficit position stood at $15 billion in 2008, and a record high of $35 billion in 2014 for the period. In 2015 however, this position dropped to a record low of $9.3 billion after which it went back up to the $30 billion region in 2016 – 2017. It should be noted however, that the record low fiscal deficit for 2015 was on account of the change of Government in that year which resulted in the budget for fiscal year 2015 presented until August 2015 to the National Assembly. Moreover, to understand what fiscal deficit is, a fiscal deficit occurs when a Government’s expenditure is greater than its revenue which means that the deficit then has to be financed by borrowings. This explains why government’s total borrowing over the period is almost the same level as the fiscal deficit position which stood at $15 billion in 2008 and $33.4 billion in 2017.
On the international reserve front – held with the Bank of Guyana, total international reserves stood at US$298.8 million in 2008 and a balance of payment position of a surplus of US$5.6 million for the same year. Notably, international reserves reached a record high of US$825 million in 2012 and a balance of payment of US$33 million surplus. Thereafter, international reserve balance started to dwindle in 2013 to US$751 million, balance of payment recording a deficit of US$119.5 million; in 2014 it went down by another US$100 million to US$652 million while balance payment position recorded a deficit position of US$116 million. In 2015 to 2017 the international reserve position continue to deteriorate in 2015 – 2017 to a record low of US$584 million from its high of US$825 million in 2012.
Focusing on the macroeconomic outcomes for the period, real GDP growth rate averaged 4.2% for the period 2008 to 2014 with the highest level of 5.2% for the years 2011 and 2013, while, notably for the period 2015 to 2017, GDP growth rate averaged 2.8 % with the lowest recorded in 2017 of 2.1%, while inflation remained stable below 2 % from 2013 onwards.
Finally, if one were to observe from the data presented, the Central Government’s balances held with the Central Bank for the period 2008 to 2014 were always recorded at a surplus from $40.9 billion surplus balances in 2008 to $21.4 billion in 2014. This means that the current Government would have inherited an economy to manage in a sound macroeconomic position after which from 2015 to 2017 racked up a deficit balance in those fiscal accounts to $26.4 billion which is indicative of reckless spending egregiously poor and imprudent economic governance of the economy. Should this trend continue with climbing deficits and sovereign debt, a dwindling foreign reserve and poor economic growth, these are indicators for an economic crisis despite the prospects of oil revenues in the medium-term.
