The investment rate in 2015 for public infrastructure was a pathetic 60 per cent of the 2014 level. In 2016, it was 92 per cent of the 2014 levels and this was mainly because of a financial crutch. I was reliably advised that there are several instances of advance payment done for work not delivered. For example, I have been advised a sum of G.65 billion was advanced to the Chinese as at the end of 2016 for works not delivered upon at the Airport. This is a huge risk if the Chinese default on this project. How can the David Granger Administration operate this recklessly with the taxpayer’s money?
But in spite of all these financial gymnastics to prop-up the national figures surreptitiously, there is still that important question of the state of the portfolio of infrastructure in the nation? It would be wonderful to be able to benchmark where we are as a nation; infrastructurally. Why does Guyana not have a ‘Public Infrastructure Report Card’? This Report is one that highlights where a nation is infrastructurally and where it ought to be when compared to other countries with similar sized Gross Domestic Product (in Guyana’s case – Suriname, Malawi and Barbados).
Such a Report can capture progress on areas such as road and bridges, electricity, energy projects (hydropower and so on), public parks, drainage and irrigation facilities and so on. I am sure a bank like the Inter-American Development Bank would fund for free since it also helps them progressing financing opportunities. The record will show that the spending on capital projects funded by the budgets between 2009-2017 has been dwindling during the Granger years compared to the People’s Progressive Party years. This is not great news for the economy. Compared to the period 2009-2011, the actual capital expenditure during the period 2012-2014 increased by some G$11.8 million (eight per cent). (See table below).
However, if one fast-forward to the Granger years, the record of performance on the Public Sector investment projects will illustrate nothing but a pathetic performance on the infrastructure front. Paving a Lombard Street here and a Sussex Street there are important but are not transformational infrastructure projects. To really flesh out this disaster happening in the Public Infrastructure Ministry, one only has to look at the capital expenditures surgically. During the period 2015-2017, capital expenditures are expected to decline by some G$26.5 billion (almost 20 per cent wiped off the capital budget from the previous period) and there is no real large transformation project in progress.
Although the economy expanded in 2015 and 2016 and is expected to expand by a paltry two per cent in 2017, spending on these transformational capital works has literally dried up. Rather there is an obsession with cosmetic projects that add no real new wealth to the nation.
It has been proven empirically by Professors Bom and Lighthart in their revolutionary work, “How Productive is Public Capital” that a one per cent increase in the stock of public infrastructure will grow the economy by 0.08 per cent. The payoff is there and therefore much of this economic decline under the Granger Administration is self-inflicted because the Finance Minister is out to sea on how to grow an economy.
According to the International Finance Corporation (IFC), the Private Sector arm of the World Bank, the infrastructure spending needs of a poor country like Guyana should be at least eight per cent of its GDP. Under this Granger Administration, we are at a quarter of this rate. The strategy should not be an obsession with short-term projects like the D’Urban Park Ponzi Scheme, but major long-term projects such as the Amaila Falls Hydro Project or any hydro project for that matter. These transformational projects have all of a sudden become back burner projects since May 2015. The message from Team Granger is when oil production starts, Guyana will become the land of “milk and honey”. But that will happen after 2020, so what will they do for the people between 2017 and 2020? There is an urgent need for a mega project in 2017, to really kick-start the economy but it is clear that the Granger Administration is in a zone of “narcolepsy” since May 2015.
So where is this evidence of this “A” Grade performance?