By SASE Singh; MSc – Finance, ACCA
Many of my friends living in Guyana are telling me that policy paralysis is at an all-time high today especially on the investment front. I would not have believed it if I did not see it for myself in October 2018. Nothing significant is moving forward today under President Granger because decisions in support of businesses are much delayed and the rampant need to grease the machinery to advance your cause is a prevalent feature. To add to that situation, investors are very concerned about the infantile political environment which is unpredictable and which materially contributes to the weakening of public institutions that support investments. When ineptitude drives us into a structure that not much progressively gets done, the outcome will be poverty augmentation. Isn’t this what has been happening in Guyana since 2017?
Thus I was not surprised when the majority of the representatives of the people, expressed their NO CONFIDENCE in the now embattled regime in the National Assembly. This political development is a manifestation of a gross rejection of Grangerism with it associated attitudes of ethnic supremacy, wanton and wasteful spending and policy immobility.
As a clear example of their incompetence, one only has to look at the state of investments deeply. Nothing has changed since 2014. Actually, it has gotten worse. Guyana is having one of its slowest years ever for corporate deal-making, as investors continue to evaluate the risks and continue to invest their cash in other jurisdictions leading to one of the most intense periods of capital flight ever experienced in its history. If one is to discount the oil investments, the Guyanese investment profile is estimated to have declined by more than 5% per year since 2017, which would have made it into second worse economy in the entire Western Hemisphere (only the Venezuelan dictatorship would have done worst). In spite of the oil investments, Guyana remains in the bottom quarter when it comes to economic growth, in the Western Hemisphere.
Other than the oil investors, other companies and investors alike are going to wait out this period of political uncertainty. That very act will bring great harm to the nation. As expected, Guyana is degrading into a bureaucratically sclerotic situation. The longer we delay the elections, the less attractive the investment climate will become, which brings great harm to the poor and the working class.
If one is to study the graph below they would realize that since 2016, Guyana’s total investments have been flat. What is of key note is that public sector investments have been crowding out private sector investments as the Government continues to borrow in your name to spend on projects that have no chance of generating the required income to pay back these debts. Thus the only policy option left for the next Government is to divert the oil revenues to pay for these debts or tax the people more. Can you see the options clearly now? DO NOT COUNT ON THE OIL REVENUE BEFORE 2025, because this Granger administration has already committed it to pay off the debts that they have incurred. If there is any reason to reject Team Granger this is it.
On Page 22 of the APNU/AFC 2015 Manifesto, President Granger and his Team promised this nation that they will “stimulate higher levels of savings and investments”. THEY DID NOT! The graph above illustrates, if it was not for the borrowing and spending by the public sector, the investments in Guyana would have tanked. If you take away the oil investments in the sea, private investments would have also declined markedly. So do not let them fool you?
Since Mr Granger came to office he and his Team has done a lot of foreign travels but very little of it was to spearhead efforts to deepen the diversification of the economy and drive the new investments as they promised in 2015. Actually, they found time to waste days at jaunts at the World Mercury Conference in Switzerland and World Tamil Conference in India with zero investment returns for the nation. As the financial evidence reveals the collective travel related cost of Team Granger since 2016 increased by more than a billion dollars each year. These people enjoyed the GOOD LIFE at your expense. Unless future Governments of Guyana find new ways to expand the economy and pursue multiphase strategies to reposition the private sector today, the working class will never feel the GOOD LIFE.