If there was ever an argument for going ahead with the suggestion that Guyana needs a separate Ministry for “economic planning and development” it was Finance Minister Winston Jordan’s riposte that cited the commendation of the International Monetary Fund (IMF) on Guyana’s economic growth, which is projected to be four per cent this year.
Jordan’s contention that the IMF’s report should not be doubted or challenged, since it was already established that the body was “neutral”, only emphasised his confusion on the difference between “growth” and “development” and indeed on the premises the IMF functions. Almost the entire world has admitted that the IMF has failed spectacularly in the last three decades after it foisted the “Washington Consensus Model” for generating growth in economies. Guyana under the PNC government of Desmond Hoyte, was forced to sign on to the IMF’s “Economic Recovery Programme”.
The neo-liberal premises of the “Consensus” are to accept the “market” as the only determinant for economic policies, which would focus on “stabilisation”, “liberalisation” and “privatisation”. The “stabilisation” directive homed in on “macroeconomic fundamentals”, such as “budgetary deficits”, “inflation”, and “growth”. This is the line that Jordan is still parroting and maybe it comes naturally to him as a “numbers cruncher” man rather than an “economic policy maker”.
The “liberalisation” prong demanded a complete opening up of our financial system, including capital controls to prevent a country’s currency from stemming massive capital outflows. And finally the fallacy of the “mantra of growth”, which Jordan invoked that simply and mechanistically touts total GDP – total economic activity. This misses the very glaring anomaly posed when a large chunk of the GDP is derived from a narrow sector and the gains do not circulate widely in the populace. This is the present case with gold production up but rice, sugar, timber, etc all down. Even its founder Kuznets rejected it as a measure of “welfare”.
This brings up the poignant point that Guyana is presently experiencing with its “four per cent growth” but which Jordan insists on averting his eyes from: unemployment is in very high double digits and for youths, the situation has reached a crisis point. “Development” is a much wider concept than “growth” and in fact it was adopted by the UNDP in conscious contradistinction to that metric proposing instead their more nuanced Human Development Index (HDI). The HDI is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living.
As one of the most trenchant critics of the IMF, former World Bank Chief Economist and Nobel Laureate, Joseph Stiglitz pointed out: “The stance of the IMF is not only a betrayal of the ideas underlying the IMF’s inception, but it is simply bad economics. The underlying belief at the creation of the IMF was that, in times of crisis, the IMF should foster expansionary economic policy – for instance, encouraging or enabling increased expenditures, lower taxes, lower interest rates – in order to stimulate the economy. In short, a country’s populace would have more money available and so increase their purchasing, thereby stimulating the economy.”
A Ministry of Planning and Development would be responsible for crafting an economic PLAN for Guyana that takes into consideration both Stiglitz’s critique and other models of development. While the Washington Consensus, for instance, rejected a direct role of government in the economy, in favour of simply providing an “enabling environment” – and which government spokesmen regularly regurgitate in Guyana – the fastest growing economies of the Far East (dubbed “The Eastern Tigers”) demonstrated that government’s can play a much greater role in fostering both growth and development. For instance, they have worked with banks and industry to direct cheap funding to strategic production of goods that can be exported.
Unless Guyana either transforms its Finance Ministry and brings in some high-powered developmental economists, our label as a “developing” country will simply be ironical.
