… as country review unmasks grim economic straits
The coalition Government has for over two years now, consistently blamed the now Opposition People’s Progressive Party/Civic (PPP/C) for the country’s current dismal economic performance but a review completed by the International Monetary Fund (IMF) has found that the coalition Government is in large part to be blamed for the stagnation as a result of its failure to effectively spend its annual budget.
The information was laid bare this past week when the IMF released the findings of its review on Guyana as part of its obligations under Article IV of the IMF’s Articles of Agreement.
According to the findings of the review team, the total expenditure by the David Granger-led coalition, the A Partnership for National Unity/Alliance For Change (APNU/AFC), increased by 2.8 percentage points of nation’s Gross Domestic Product (GDP).
The IMF found however that the increase was lower than budgeted due to delays in capital expenditure by the Administration.
Such a distressing situation it was that the world decided to turn to turmoil.
Real economic activity locally expanded by 3.3 per cent in 2016. This was as a result of subdued agricultural commodity prices, adverse weather and delays in public investment.
According to the IMF, the overall non-financial Public Sector deficit widened to 2.9 per cent of GDP in 2016 from 0.2 per cent in 2015. This simply means that the deficit expanded or got larger, or is no longer sustainable.
“Despite slower-than-expected economic growth, fiscal revenue increased owing to improvements in tax administration and higher mining royalties.”
Growth is projected at 3.5 per cent in 2017, supported by an increase in public investment, continued expansion in the extractive sector, and a recovery in rice production.
Again the IMF has pegged its responses on the public investment programmme. Such as problem it is that the Government this past week intervened.
Minister of State Joseph Harmon this past week reminded that “assessments, adjustments and achievements in relation to the Public Sector’s work programme was the main focus at this month’s Ministerial Conference as the Government commences preparations for the new budget cycle.”
He was at the time speaking at a conference convened at State House, for the heads of government agencies including Permanent Secretaries, Heads of various agencies and high-level technical and financial officers in a bid to assess and review, ministry by Ministry, the status of Public Sector Investments Projects (PSIPs).
According to the IMF, Government is woefully behind in its spending.
Twelve-month inflation is expected to remain low at around 2.6 per cent by year-end. The fiscal deficit or the national debt is projected to widen up to 7.2 per cent of GDP in 2017, due in part to delay capital spending from 2016.
The macroeconomic outlook is positive for 2017 and the medium-term, according to the IMDF which projects growth for the next year as upping a few marginal points up to 3.5 per cent in 2017, supported by an increase in public investment.
The concerns over the Administration’s inability to spend its budget looms. The former Administration has been complaining about the excesses now seemingly validated.
The fiscal deficit is projected to widen to 7.2 per cent of GDP in 2017, due in part to delayed capital spending from 2016. The shares of current and capital spending in GDP are projected to increase by 0.6 and 1.8 per cent, respectively.
The current account deficit is projected at -3 per cent of GDP, financed by investment inflows and donor-supported investment.
Overall, the IMF raps Granger’s Government inability to spend its annual Budget even as country review unmasks grim economic straits.