– a revelation of Public Sector inefficiencies, complacency, and lack of professionalism
The recent ban imposed upon some of Guyana’s fish products by the US is one that should not have occurred in the first place; and, as such, could have been averted a long time ago. In light of the circumstances leading to the causation of such a consequence for Guyana, it is quite an embarrassment to the Public Sector agencies responsible; and is a reflection of complacency, and a lack of professionalism and a proactive approach in executing their functionalities. While this columnist has cited no empirical evidence in support of this assertion, this is nonetheless the reality of the Public Sector – a very sickening phenomenon, or a chronic disease in Guyana’s Public Sector organisations – which could be deduced by mere observation and general knowledge of the Public Sector organisations in Guyana’s context.
That being said, the author wishes to explicitly state that the Government should not be blamed per se, as would be the natural tendency for the politically-minded persons to do; rather, blame should be apportioned to the persons who are directly responsible for these agencies, together with their employees.
What would this outcome cost the economy?
US$ millions
NB: 2017 export figures / BOG, 2017 annual report is not published as yet.
The data illustrated in the table above tells a very interesting story as regards the US fish ban in particular, and the potential ‘compound’ adverse economic effect on the Guyanese economy. One would observe that export earnings from fish and shrimp products increased by 33.11 per cent – or US$20.60 million from US$62.20 million in 2014 – to US$82.80 million in 2016. This means that the fishing industry in Guyana is a relatively rapidly growing industry, which is nothing short of commendable. Therefore, the US ban on this commodity would further reduce export earnings, which are already dampened with the loss of exports from sugar through the downsizing of the sugar industry, thereby losing US$70 million in export earnings from sugar.
Export earnings from fish and shrimp in 2016 were US$82.80 million, representing 5.6 per cent of total exports; thus losing some amount of fish exports is undoubtedly a serious problem for the economy, especially for the livelihoods of those who are directly dependent upon this industry and are affected by this particular ban.
Additionally, there has been a steady decline in the country’s foreign reserve by a negative 15.2 per cent from 2014 to date – by US$100 million, from US$652 million in 2014 to US$552.8 million in 2018 – and therefore losing export earnings from sugar of US$70 million and now fish, which accounts for another 5.6 per cent of total exports, will further deplete the foreign reserves held with the Bank of Guyana. This outcome could lead to some negative economic consequences; for example, as a rule of thumb, a country needs to maintain a minimum import cover of three months.
In Guyana’s case, this minimum benchmark is adequately maintained, wherein there are just about three months’ import cover. Import cover refers to a country’s ability to import goods and services; and to do so, there needs to be adequate availability of foreign currency to pay for imported goods. As such, the minimum level of foreign reserve a country needs to maintain to accommodate this is three months. Countries like India and China have more than nine and 12 months’ import cover respectively.
A worst case scenario is: if a country is unable to maintain the minimum benchmark of three months, it means that imports would become more expensive, to the extent where the country would be unable to import any goods or services, given that there simply would not be enough foreign currency to pay for imports.
International reserves held at the Bank of Guyana have been declining steadily, which is not a good sign. This, coupled with the fact that critical industries like the sugar industry are literally being destroyed, and there are currently no sound national economic policies to incentivise and create a much more competitive and strong, diverse agriculture sector, is worrying such that it could lead to economic devastation. For example, there is lack of export markets for agricultural produce, there is an inherently uncompetitive framework to promote and enable value-added creation in the manufacturing sector, and to ultimately export value-added goods, thereby bringing in foreign exchange and stabilising and strengthening the domestic currency and so forth.
These are just a few of the potentially negative consequences to mention; there are other far-reaching consequences – more or less a domino effect – including a devaluation of the domestic currency against the US dollar.
*The author is the holder of a MSc. Degree in Business Management, with concentration in Global Finance, Financial Markets, Institutions & Banking from a UK university of international standing.
