Economy eroding at alarmingly fast rate – former Minister

Mid-year financial report

BY SAMUEL SUKHNANDAN

Even with increased production in the key traditional sectors, data compiled in the recent mid-year Finance Ministry Report has clearly showed that the economy is eroding at a fast rate.

This is according to former Government Minister, Irfaan Ali, who said it therefore

means that the local Guyanese economy could experience some challenges going forward.

Ali pointed out that as foreign exchange tanked, imports will become relatively expensive. “Overall, imported goods would become relatively expensive, hence stoking inflation in the process,” he contended.

Ali noted that net foreign reserve plummeted from US$633 million in June 2016 to US$574 million in mid-2017; the lowest ever recorded in over seven years.

“In other words, the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government destroyed in two years what the PPP/C [People’s Progressive Party] took to amass in 7 years. Even more worrisome, external debt increased by US$53 million to US$1,200 million,” he added.

The Opposition Member of Parliament said it is also worthwhile to mention that net foreign revenue to external debt ratio had increased from 172 per cent in mid-2016

to 207 per cent in mid-2017.

Opposition Leader Bharrat Jagdeo had also bashed the APNU/AFC coalition Government, saying that it remains clueless and hapless, even as the country’s economy continues on a downward spiral.

The former President had also called out the Government for refusing to concede to advice and recommendations, which could in effect help to put the country back on the road to recovery.

He accused the Administration of taking a laid back approach, while Guyanese continue to feel the brunt of a dilapidated economical structure.

Under the PPP/C Administration, Guyana had the fastest growing economy in the region. And from 2006 to 2014, Guyana’s economy experienced continuous, positive growth. This was the longest period of uninterrupted growth in the history of Guyana. The average growth rate was 4.5 per cent per annum.

In 2014, the last full year of the PPP/C in office, Guyana’s GDP was US$3.1 billion. That was up from US$1.4 billion in 2006, an increase of 121.4 per cent. The country’s Gross International Reserve held at the Bank of Guyana at the end of 2014 was US$665.6 million, which was equivalent to 3.6 months of imports. It was up from US$251.4 million in 2005, an increase of 164.76 per cent.

The PPP/C administration had drastically reduced the huge debt it had inherited from a previous PNC regime. And the PPP/C reduced the external debt to just 39.5% of GDP. That was also a reduction from 2006 when the debt to GDP was 71.8 percent. This has been described as a good demonstration of the prudent financial management by the PPP/C and the dynamic growth of the economy.

In this year’s mid-year report, it was stated that the overall balance of payment recorded a deficit of US$46 million during the first half of 2017. According to the report, key traditional products such as sugar, timber, rice and even gold have all recorded a decline in export earnings from US$518.7 million in mid-2017 to US$503.5 million in 2016 during similar period.

At the end of the reporting period, exports stood at US$685.1 million and imports at US$808.9 million. To offset this enormous deficit, Government turned their attention to the Bank of Guyana net foreign assets, where US$18.3 million was expended.