Guyana has a cash-flow problem – Minister Jordon should resign

I wondered if the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government is broke when, a few days ago, public servants were advised that salaries for November and December will be late. This followed late salary payments for hundreds of public servants in October. Simultaneously, many contractors are complaining that they are owed hundreds of millions and their payments are being deferred. Meanwhile, sugar workers who have been owed severance for at least one year and even for more than two years are still awaiting payments, even after the President promised them more than two months ago that they would be paid. Parliament approved payment more than one month ago and a Judge ordered immediate payment for sugar workers about a month ago. Are these late payments coincidences or symptoms that APNU/AFC have a cash-flow problem?
The suspicion of a cash-flow problem was heightened on Monday after the Finance Minister presented Budget 2019, a budget of more than $300 billion, with a record-breaking deficit. Budget 2019, reveals a $58 billion (US$288 million) current account deficit in 2018 and expected to increase to $93 billion in 2019. This is in spite of collecting more than $88 billion more in taxes in 2018 than the People’s Progressive Party (PPP) Government collected in 2014. Tax revenues in 2014 under the PPP amounted to about $135 billion. In 2018, tax revenues, under APNU/AFC, amount to more than $223 billion, largely because of more than 200 increased or new taxes. Jordon plans to increase tax revenues by another $31 billion in 2019. Even with the largest revenue-base in history, Guyana is also now running record-breaking deficits. Something is amiss.
Even after collecting record amount of taxes from people, APNU/AFC have binged-borrowed and the Minister is adamant that APNU/AFC must borrow even more. In Budget 2019, Minister Winston Jordan recklessly urged Guyanese not to worry about the huge, record-breaking deficits because he plans to draw down even more of the foreign currency and gold reserves at the Bank of Guyana and to increase borrowing and taxation. Already, the foreign currency reserve is depleted by more than US$260 million, falling from US$650 million in May 2015 and the gold reserve which stood at $25 billion in May 2015 is now standing at $3 billion. Given Minister Jordan’s cavalier attitude about the reserve and borrowing, we can now expect further deterioration in the foreign currency and the gold reserves at the Bank of Guyana. It is nothing short of a reckless assault on Guyana’s financial stability.
Jordan plans significant domestic and international borrowing in his reckless financial malfeasance, heaping further risks on the fragile financial stability. The Minister shamelessly bragged that domestic borrowing increased by $34 billion in 2018. In fact, since May 2015, APNU/AFC used up the total of $11 billion in deposits and has borrowed another $55 billion from the Bank of Guyana. In the meantime, the Government’s international debt has increased from US$1.1 billion in May 2015 to now US$1.68 billion, an increase of more than 53 per cent in less than four years. Guyana’s national debt is now increasing faster than our economy. Between 1992 and May 2015, Guyana’s national debt progressively decreased, while the economy grew. Under the PPP, Guyana’s national debt reduced from more than 900 per cent to less than 45 per cent GDP. Since May 2015, APNU/AFC has squandered this commendable record, with debt increasing faster than the economy again, approaching 60 per cent. Debt servicing increased to almost US$78 million this year from about US$40 million in 2015.
There is no mystery why APNU/AFC is dependent on Guyana’s reserve, borrowing and taxation. The economy is struggling. Local businesses complain everyday about “business slow bad”. Many small businesses are closing their doors, going out of business. Vendors are struggling to put food on the table. More than 30,000 jobs have been lost. Traditional industries are desperate. Guyana’s exports in 2018 will earn US$168 million less than in 2017, US$200 million less than 2014. Sugar’s export earnings will be US$50 million less this year. Rice, the lone bright spot in the economy since May 2015, will be US$16 million less in 2018. Forestry will lose US$38 million and bauxite US$87 million in export earnings for 2018. No wonder Minister Jordan had to confess the economy will not achieve the projected 3.8 per cent GDP growth.
Minister Jordan spent almost five painful hours trying desperately to paint a positive picture. In the end, Minister Jordan only heightened the suspicion of experts and ordinary citizens that Guyana is, at the minimum, experiencing a serious cash-flow problem, or more seriously, the country is broke. Either of these possibilities means that APNU/AFC has managed our country’s economy and finances recklessly. The Local Government Elections 2018 showed the Guyanese people know this. President Granger must ask Minister Jordan to resign.

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