Given the complexity of a national economy, it is important that the broad indicators are consistent, in order to give a fair sense of the impact of the public policies being rolled-out. One such type of policy is fiscal policy. This policy is the use of government spending and taxation to influence the economy. Competent governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.
Any government can do this directly and indirectly by influencing aggregate demand. Economic activity (GDP) is induced by controlling government expenditure (G) directly, and by influencing private consumption (C), private investment (I), and net export (X) indirectly. This is mainly done through changes in taxation policy, government transfers, and government spending. So, in the final analysis, a collection of fiscal policies can increase aggregate demand and reduce poverty.
One of the most important indicators of the state of an economy is the overall fiscal balance. This indicator assesses a government’s financing requirements and fiscal vulnerability. In the case of Guyana, according to the data from the just concluded IMF consultations, the overall deficit worsened in 2016 to negative 2.9 percent of GDP, compared to negative 0.2 percent in 2015. But what is most concerning is that the IMF projects that, in 2017, the overall deficit is expected to further deteriorate to negative 7.2 percent of GDP (see graph below). This basically means that this Granger-led PNC regime is spending way more money than it is earning. They are filling this hole in the budget by borrow more. Such a reality could also mean additional taxes being imposed on the public in 2018.
In a small country of only 750,000 people, it is utterly reckless and irresponsible of any government to saddle the nation with so many high-maintenance ministers and expensive presidential advisors when we have such a large fiscal deficit.
Based on information at my disposal, the average upkeep cost of this Granger “coterie” of retired generals is estimated at G$158 million in 2016. And it has gotten worst in 2017. There are many other glaring cases of financial abuse of the Treasury, with the imposition of many square pegs in round holes since President Granger assumed office. For example, let us consider the untrained Tacuma Ogunseye, who is now being passed off as an expert investigator in SARA. Here you have an individual who, over the last 2 years, has burdened the taxpayers for G$17 million in pay, perks and privileges, but when you ask for the record of achievements — to illustrate value for money to compensate the taxpayers for this fiscal burden — the evidence trail runs cold, save and except for a few letters to the press from this individual, singing the praise of the Granger triumvirate. This is when one realizes that what is happening under this Granger-led PNC regime is nothing but financial “murderation” in the Land of Many Waters. How are these bills being paid? More borrowing and more taxes.
That is why the IMF can reveal that, from a low of 48.3 percent of GDP in 2015, the total government debt is set to skyrocket to 55.1 percent of GDP by the end of 2017. At this rate, the national debt is expected to be around 66 percent of GDP by 2020. This is a clear reflection of the same old PNC attitude of borrow and spend thoughtlessly, with no care for the people. The end game was Guyana being saddled with a stock of debt that it could not service, resulting in the international community branding Guyana in the 1980s as “financially uncreditworthy.” In layman’s language, worse than junk bond status.
That is why we can report that at the end of April 2017, the International Reserves have reached their lowest level in 9 years, all because of the reckless manner in which the economy is being managed by President Granger. Can you imagine that, today, the oil price has hit the lowest level in one and a half years, literally halving the oil bill from three years ago, yet Guyana is experiencing a deterioration in its current account deficit in 2017? You can visit any of the supermarkets in Georgetown and they will boast at least three different varieties of tinned pigeon peas, none of them homegrown despite Guyana having more arable land than Switzerland or Israel.
Guyana has everything: fertile land, great natural wealth, an abundance of intelligence and ingenuity (if the diaspora and the locals are aggregated), and enough physical wealth between the diaspora and local business community. But yet the Guyanese society remains poor after 50 years of independence. These facts beg the question: Has Mr. Granger, the historian, learned any history at all?