Existing business operators, whether private or public, are candidly aware that the accurate forecast is critical to stability in the existing financial and economic framework. It lends to decision-making informing their profitability, adjustments to threats or sometimes-mere survival. For those involved in trade and other tax-related activities, the alarm bells have been sounded in the statements of de-recognition and exclusions by the ABCE countries, OAS, Caricom, the Commonwealth the European Union to name a few. There has emerged a most potent threat in Guyana from the position justifiably taken by these states, aside from the Covid-19 virus.
Although local corporate or public agencies have not said much recently, one could feel their discomforting apprehension in their fiscal relationships. This relates to the threats of real international sanctions should the Guyana Elections Commission (GECOM) swear in Mr Granger as President without properly adhering to transparent and credible electoral procedures. I will address some of the likely effects for a few key public and private agencies, given the political scenario as another critical factor in the framework.
Notably, overwhelming facts in the public domain confirm that APNU/AFC, while in Opposition (2011 to 2015) used their one-seat parliamentary majority in excessively undermining the PPP/C development trajectory. They persistently disrupted the economy which would have long crumbled, were it not for the strengthened foundation of the PPP/C’s developmental policies. When they governed following the May 2015 Elections, their uncaring actions served as pivotal underdevelopment tractions making it difficult to crawl out from the self-created holes.
In essence, the current political environment is characterised by globally observed dubious and fraudulently aligned decisions from GECOM, with President Granger and APNU/AFC on one side, and the political Opposition together with the rest of the world including our largest trading partners and donors on the other, following the March 2, 2020 Elections. There are obvious and significant consequences that at this point have drawn overwhelming condemnation.
In the inherently clear power-grabbing attempts through sickening and undemocratic approaches, the situation exacerbates the level of self-created volatility which when coupled with possible sanctions, will ascertain Guyana’s swifter developmental regression. A look at a few of the expected changes at the Guyana Revenue Authority as the Government’s main revenue-collecting agency and their relationship with the tax base including the private sectors paints a picture.
This is given that taxes collected and paid into the consolidated fund by the GRA for use by Government, has a correlation with imports in terms of the applicable customs duties, excise and value-added taxes imposed. For statistical purposes, the Guyana Bureau of Statistics (GBS) categorises imports into Consumer, Intermediate and Capital Goods. In this regard, however, the USA and Trinidad and Tobago account for over 65 per cent of our imports followed by China (6.9 per cent). It is of note that the top ten countries with whom we do business account for over 89 per cent of the goods imported overall.
On the export side, local manufacturers and producers utilise imported goods in the GBS intermediate category to produce finally consumed locally or exported products informing the basis for local individual and corporate income taxes. In effect, these mechanisms have a direct relationship with job creation that has been woefully wanting in all sectors under the APNU/AFC’s approach. According to the data provided by the Guyana Bureau of Statistics over 90 per cent of our exports were made to nine countries, most of whom have or are parts of international groups that expressed disgust regarding the approach of President Granger and his supporters in these elections.
It follows that in the event of President Granger and GECOM’s actions forces our trading partners and these countries to de-recognise the Guyana Government, a few of the short and medium-term hard impacts would be as follow:
1. Immediately, revenue collections that currently exceed 85 per cent of the total Government’s approved budget are likely to reduce by less than half based on the lack of availability of materials. In the medium-term, major exporters can expect to become unprofitable due to the loss of international markets forcing total shut down and loss of jobs.
2. In public sector organisations like the GRA, it will become inefficient to maintain the high volume of staff to address, monitor and collect lower levels of taxes. Ultimately, there would be massive retrenchments and job losses.
3. In cases where some countries may not support a fully imposed trade embargo or economic sanction by the developed countries, the costs associated with transferring finances are likely to increase exponentially, coupled with significant increases in freight. This obviously will result in unaffordable goods and medicines.
4. International aid received from donor agencies and trading partners currently equates to more than 10 per cent of the national budget. The associated projects are likely to be withdrawn as public sector priorities shift.
5. The situation will force current foreign investors conducting business in the country to withdraw, realising fewer taxes and higher levels of unemployment. On the other hand, the Government will not be able to attract further investments in the medium-term.
6. Developed scarcity of basic commodities will encourage higher levels of smuggling and intensity of other criminal behaviours.
7. The alternative mandatory turn to agriculture will also be a significant challenge due to the lack of the usually imported fertilisers, herbicides, and pesticides.
8. Citizens who have completed university programmes will become an exhaustive resource as everyone tries to leave for want of better opportunities overseas.
9. The promise of significant profitability may not be sufficient to keep a productive partnership with ExxonMobil in the event of an embargo. Even with a greater level of investments in Venezuela, this company did not stay operating under the currently imposed sanctions. Consequently, there would be no oil money but significantly greater levels of inflation and hardships.
10. Overseas Government assets are likely to be frozen.
Although the foregoing is by no means exhaustive, the inherent and inexorable breakdown in acceptable social strata would naturally be counter with increased militarisation establishing the pariah/Police state.
If the foregoing is not instructive enough to allow our citizen’s votes to be counted in a truly transparent and democratic manner, it follows that all other options would have to be considered in driving a corrective revolutionised front against the looming dictatorship. Mr Granger, you have the call to make.