No “ands, ifs and buts”, the PNC are obsessed with voodoo economics, and are mathematically challenged.
Truth cannot be perverted, no matter what fancy spin we concoct. Whenever there is a PNC-led Government, Guyana is always on the verge of bankruptcy, with unsustainable foreign and local debt, local and foreign currency and gold reserves at all-time lows, zero or in overdraft. In stark contrast, whenever there is a PPP-led Government, Guyana’s debt status, foreign currency, local bank and gold reserves are all improved, and are among the best in Caricom and in the region.
When the PPP Government announced a 6.5% salary increase for public servants for 2023, the PNC-led Opposition, through its economic czar Elton Lowe, quickly denounced the pay increase as shameless. Their argument for a larger pay increase for public servants is that the interest from the Natural Resource Fund (NRF) can adequately fund a larger pay increase. This PNC argument explicitly exposes why a PNC-led Government always threatens Guyana with bankruptcy. The 6.5% salary increase amounted to an annual cost of almost $8B.
But there will also be additional cost to fund the 2024 and 2025 public service pay increases, which are likely to be larger than the 6.5% for 2023. This means that in addition to the almost $8B that the 2023 pay increase now adds to the budget, there is also a likelihood of no less than another $10B for 2024 and even more than that for 2025. Thus, for 2023, 2024 and 2025, the amount needed to fund increases that are just around the 6.5% vicinity would cost about $8B for 2023, about $18B for 2024 and about $30B for 2025, given that annual pay increases are costs that are carried forward every year forever.
That is about $56B for the three years, if pay increases remain around the 6.5% vicinity.
The interest earned under the NRF in 2022 was $2.7B, just about 33% of the overall cost of the 2023 salary increase of 6.5%. The interest earned in 2023 is likely to be about $12B, and in the vicinity of about $15B in 2024. The NRF interest over the 2022, 2023 and 2024 period is likely to be about $20B. The interest for the NRF, if used to fund the pay increases for 2023-2025, would always leave a growing deficit of more than $30B for just this period.
This is just one example of the macroeconomic cluelessness of the PNC, their obsession with voodoo economics; yet another example of why they are always bankrupting Guyana.
In 1992, at the end of the PNC disastrous rule, Guyana had almost no international reserve; debt was almost 800% the country’s GDP, one of the most indebted countries on earth at the time; debt servicing was far more than our national earnings; foreign, local currency and gold reserves were zero, and throughout the 1980s, our country dug more holes in order to pay public servants. Trinidad and Tobago helped with loans to pay public servants, together with the infamous sugar and rice levies, and raiding of GuySuCo. Outside of minimal pay increases, salaries for public servants for several years were frozen at zero increases.
For those who remember well, all local industries, such as sugar, rice, bauxite collapsed because the PNC-led Government squandered the resources. Public servants’ salaries had fallen to be among the lowest in the world. In 2015, when they returned, the reserves in the bank amounted to more than $50B, with almost $25B in gold reserves. By the time they were sent packing out of Government by the people in the March 2, 2020 elections, in familiar fashion, they had squandered all the currency and gold reserves, accumulated an overdraft of more than $25B, had increased the debt, and had hidden away an US$18M EXXON bonus. They had closed 4 sugar estates and had not invested in any drainage and irrigation infrastructure to support agriculture. Adding salt to the open wounds, they heaped untold burdens on people by increasing more than 200 taxes.
In spite of almost 2 trillion dollars expended during 2015 and 2020, the large increases in public sector salaries and benefits and the 20% pay increase for sugar workers they had promised during the 2015 elections campaign never materialised. Outside of the usual pay increase for public servants, they froze the wages for sugar workers.
But they did give themselves pay and benefits increases amounting to between 60% and 100%. The uproar that followed saw them making some asinine explanations, such as that the Government was bankrupt; public servants time will come, they must be patient. Then President Granger sunk deeper into the asinine territory, explaining that ministers had to be paid better so they were not tempted by corruption. What followed was a period of unprecedented corruption, such as the MOH’s warehouse fiasco, paying overall $15M per month for an old house which they called a warehouse, payment of more than $605M for medicines costing less than $100M, single-sourcing of feasibility studies for the Demerara River Bridge, and single-sourcing drainage pumps that were delivered with the wrong pumps, etc.
Since coming back to the Government, the PPP has increased public servant salaries by almost 25%, and it still has two years more before the next election. In addition, more than $10B in transfer through various one-off payments have been made to public servants and non-public servants to ease cost of living. Moreover, many public servants had their salaries and positions adjusted, and that also created a huge jump in salaries. Given the PPP’s track record, without bankrupting the country, it is likely that by end of 2025, salaries of public servants will near 150% of what it was in August 2020 when Dr. Irfaan Ali assumed the presidency, without incurring annual debts.
