Dear Editor,
Reference is made to Elson Low referring to a debate between myself and him organised by the student society and economics students of the University of Guyana, held on July 5th, 2023, and which was live-streamed on social media.
In typical APNU/PNC style, my opponent declared self-victory in the same manner his political party declared victory at the 2020 General and Regional Elections and more recently, the Local Government Elections.
My opponent’s main argument that dominated his presentation was on poverty?referencing an old report that states Guyana’s poverty level is 43%. When I pointed out that according to the latest labour force report by the Bureau of Statistics (2021-Q3), Guyana’s labour force participation rate of 49% is among the lowest in the world, my opponent questioned the credibility of the report. Effectively, I sought to illustrate the correlation between the non-participation of half of the working-age population in the labour force?to the perceived level of poverty. This means that 51% of the working-age population are not interested in being part of the labour force for whatever reason. From this data, it is reasonable to extrapolate that in half of the total number of households (approximately 250,000), one person is the breadwinner (average number of persons per household is three) per household despite having at least two persons per household of working age. Conversely, in the other half of the total households, at least two persons are generating household income.
The global average labour force participation rate is about 60%. Notably, low-income countries’ participation rate averaged 70% according to a recent study by the International Labour Organisation (ILO). This explains why countries such as Canada, the United States of America and Singapore were built by immigrants. The country with the highest labour force participation rate in the world (historically) is China with a rate of 80% in the 1980s which is now down to 70%.
It is for this reason that the Government of Guyana, in confronting the skills shortage in the labour market, is seeking to integrate more women into the labour force. Thus, the labour market constraints that the country is currently experiencing are not on account of a shortage of human resources, per se, it is on account of a shortage of skills coupled with the lowest labour force participation rate.
Moreover, my opponent failed to recognise that the level of poverty in Guyana was much higher, almost 100% when his political party was in Government in the pre-1992 era that pushed the country into bankruptcy. And those very policies he and his political party continues to advocate, are the very policies that are not sustainable?and that will push the economy into bankruptcy, if implemented, once again. With this in mind, the fact is that under the stewardship of the current Government, extreme poverty has been eradicated and more than half of the population lifted out of poverty over the last three decades.
In my presentation, I argued that Guyana’s development path is a journey that began three decades ago under the current Government and that development is not an overnight process. In so doing, I highlighted Guyana’s economic history, how the economy evolved, and some of the key developmental challenges and needs. In this regard, reference was made to the 1996 National Development Strategy (NDS), which was not prepared by a United Nations intern, but, by over 200 Guyanese stakeholders, including the political Opposition.
Guyana was once a central command State where more than 80% of the productive sectors were controlled by the State. In the post-1992 era, Guyana transitioned from a central command and bankrupt State to a mixed-economic system with more predominant features of a free market economy. Guyana’s debt-to-GDP stood at over 900% at one point in time. During this period, Guyana recorded the highest inflation rate of 89.7% in 1989, the highest interest rate (prime lending rate for the period) of 37.5% in 1989, negative growth rates were recorded in 1988-1990, the exchange rate devalued from G$4.25/US$1 in 1985 to G$27/US$1 in 1989, G$112/US$1 in 1990, G$138/US$1 in 1994, G$178/US$1 in 1999, G$200/US$1 by 2004.
Despite all of the inherent development challenges which I pointed out, by 2014, Guyana achieved macroeconomic stability from a bankrupt State in 1992 with the following macroeconomic outcomes:
· Real GDP stood at US$4B from US$200M,
· Per capita income moved to US$5000 from less than US$300,
· Net International Reserve stood at US$652M from US$15M,
· Exchange rate stabled at G$208.5/US$1,
· Prime lending rate (weighted average) down to 11% from 37.5%,
· Debt-to-GDP Ratio down to 40% from a high of 900%,
· GDP growth rate of 4%, and
· Inflation rate 1.2% down from 89.7%. Guyana is projected to experience sustained double-digit growth over the next decade with continued oil production and exploration. The Government is pursuing an expansive economic diversification and transformative development agenda. The medium-term focus areas are an investment in public infrastructure sector, agriculture/agro-business/agro-processing, and transforming the energy landscape with cheaper and more reliable energy supply. Other key focus areas include education, health and digitising the IT infrastructure of the public sector to aid in improved efficiency in delivering public service.
More important to note, is that the projected earnings from the oil and gas resources are modest when juxtaposed with the massive development needs of the country, and the need for climate-resilient development within the Low Carbon Development framework. It is important to note that macroeconomic stability, high investors’ confidence?and from a global perspective, perceived low-to-moderate political risk?are the hallmarks of achieving the transformational development that the Government is advancing.
Unfortunately, my opponent demonstrated the shallowness of his and by extension his political party’s thinking where public policy administration and economic stewardship of the country are concerned. Especially given the portfolio he holds as Economic Advisor to the Leader of the Opposition and considering that the Leader of the Opposition has no formal training in economics or finance.
Yours respectfully,
Joel Bhagwandin
