Attempts to distort economic data to disseminate flawed analysis would not change facts

Dear Editor,
My attention was drawn to a virtual programme hosted by the APNU/AFC hosted by Mervyn Williams, with Guest, Mr Rawle Lucas. The analysis therein put forward by Lucas and the statements made by the host were all based upon a disingenuously flawed analysis, by way of distortion of economic data, and factually incorrect statements about Guyana’s economic history.
The host stated that the PPP/C Administration inherited a buoyant economy in 1992 and had continued the “Hoyte Economic Recovery Programme (ERP)”, which ended in 1997. Thereafter, the economy’s performance was bad under the PPP/C. This (paraphrased) statement by Williams is far from the truth. And fortunately, the target audience of the programme, the younger generation of this country, can independently conduct their own research and analysis (correctly) to ascertain the facts and truth for themselves.
The touted Hoyte ERP was imposed upon Guyana by the International Monetary Fund (IMF), which was adopted by the late and former President Hoyte. It was not crafted by the Hoyte’s Administration; the Hoyte’s Administration approached the IMF for help after the economy was plunged into bankruptcy by his predecessor, the late L.F.S Burnham. And Guyana did not exit the IMF programme in 1997, it was in 2006 that Guyana exited that programme.
The APNU/AFC continue to mischaracterise the ERP as an economic development strategy; it was not. The ERP was basically a two-pronged strategy whereby: (1) it imposed austerity measures… this was where the size of the public service shrank because that involved terminating public servants as part of the austerity measures (cutting costs). This explained why free university education was no longer free as it was part of the cost-cutting measures, inter alia, the ERP. And (2) the economy was a socially planned economy to the extent where more than 80% of the economy was owned and controlled by the State. Hence, the privatization of State assets became necessary. In other words, liquidation of State assets aimed at generating liquidity, which aided the commencement of a long journey of economic recovery. As such, the ERP could NOT have singularly achieved full economic recovery and stability.
The PPP/C Administration did not inherit a buoyant economy in 1992; what they inherited was a bankrupt economy and this is easily verifiable. Although the ERP had commenced by then, economic recovery from a state of bankruptcy was a long, painful journey. The fact is that the economy did not fully recover to economic stability and financial viability until 2006―that is, nearly two decades following the implementation of the ERP.
Guyana’s full economic recovery to economic stability was aided to a large extent by the successful negotiations for debt forgiveness from Guyana’s external creditors amounting to over US$2 billion. This was led by the then former finance minister, Dr. Bharrat Jagdeo, which he continued after he became President of the Cooperative Republic of Guyana in 1999―2011.
By the end of 2011, the economy’s debt-to-GDP was reduced from 900% in 1992 to less than 50% in 2011; the debt service to revenue ratio was reduced from over 150% to 30%; inflation was reduced from 87% (1992) to 2% (2011); interest rate was reduced from a high of 30% (1992) to 11% (2011); the exchange rate stablised at G$200/US$1; the foreign reserves stood at US$750 million representing 5 months import cover from zero in 1992; the GDP moved from US$300 million to US$3.7 billion (2011); GDP per capita increased from US$500 to US$4,900.
Furthermore, from inheriting a bankrupt economy with practically zero savings in the bank, by the end of 2011, the PPP/C Government had accumulated a total of G$101 billion liquid cash in the Government Deposit Accounts in the banking sector. This amount, when adjusted for present value (PV) is worth G$150 billion. Resultantly, the sum total held in the Government Deposit Accounts together with the foreign reserve balance of US$750 million, would give rise to a total of G$252.5 billion (2011 value), with a PV of $348.5 billion. Of key note, this remarkable achievement was accomplished with zero oil money and zero oil discovery more than a decade ago.
Moreover, what was worrying but not surprising, was that Mr. Rawle Lucas did something that was very disingenuous. To show that the Granger Administration, that he was a part of, managed the economy better than the PPP/C Government, he used the average GDP growth rate data for the period 2000–2014 (14 years), which was 2.66% and compared that with the average GDP growth rate for the period 2015-2019 (4 years), which was 3.75%. This was a deliberate distortion at best to deliver a false story. Thankfully though, anyone who has a basic knowledge of statistical analysis would know that it is incorrect to compare datasets of two different time periods as Lucas did here (14 years versus 4 years). The correct method would have been to compare the immediate preceding four years period (2010-2014), and the result would show that the average growth rate for that period under the PPP/C Government was 4.72%. Clearly, a higher average growth rate than what was obtained by the Granger Administration.
Of note, Lucas particularly used the economic growth rates for the period 2000-2014, although it was not a correct and fair comparison with the four years under the APNU+AFC, because he wanted to point out the negative growth attained in the years 2000, 2003 and 2005. The contraction of the economy in those years accounted for the lower average growth rate. In those years, however, the economy contracted not because of bad economic policies or contractionary fiscal policies, per se; but were due to factors that were out of the Government’s control. For example, in 2005 there was the massive flood that resulted in economic losses that equated to about 60% of GDP.
Notably, Lucas did not address the fiscal mismanagement under the Granger Administration that he was a part of. To this end, contrary to the contentions of Lucas and Williams, the Granger Government inherited G$81 billion (2014 end year balance) in liquid cash sitting in the Government’s deposit accounts held in the banking system. By the time the Granger Government demitted office in 2020, the Government deposit accounts held at the Bank of Guyana recorded a massive, illegally accumulated overdraft balance of G$128 billion.
It must be noted that the manner in which the Granger Administration operated the Government deposit accounts, were in gross violation of the Fiscal Management and Accountability Act (2003) (FMA Act). Section 60 (1) of the FMA Act states that…” the Minister may approve the use of advances in the form of an overdraft on an official bank account to meet cash shortfalls during the execution of the annual budget”. In other words, the Act provides for the deposit accounts to be overdrawn. However, Section (2) of the FMA Act states that…” the Minister shall repay in full all advances in the form of an overdraft on an official bank account on or before the end of the fiscal year during which that overdraft was drawn”. The overdraft balances were never cleared for the entire five years period (2015-2020) until the PPP/C Government assumed office in 2020 and made the necessary provisions to regularize those overdrafts in accordance with the FMA Act.
In the final analysis, no amount of distortion of economic data, misrepresentation of facts and figures, and misinformation peddled by the likes of Lucas would change the historical economic facts.

Yours sincerely,
Joel Bhagwandin