By: SASE Singh; M.Sc. – Finance, ACCA.
The economic collapse of the Guyanese economy in 2018 did not happen because of some natural disaster or civil war, but rather by the colossal economic mismanagement of the state of affairs by Team Granger. In just a few years, Team Granger did enough damage to the export capacity of the nation to cause 2018 to be the year with the worst export performance in our recorded history.
We measure the efficacy of the export sector by a ratio called “Exports to GDP”. In layman’s language, this translates to the value of exports measured as a percentage of the size of the economy. Exports at the end of 2018 were US$1.372 billion, compared to US$1.435 billion in the previous year (a decline of US$63 million). The reason– massive decline in sugar exports, followed by gold and timber.
Using figures pulled from the World Bank and the Statistical Bureau, I was able to compile this time series on Exports-to-GDP from 1960 to 2018. In 2018, the Exports-to-GDP ratio was 40.3 per cent, the worst performance in our recorded history. Guyana has gone backwards since 2016, and is now worse off with respect to the export sector than at independence. In 1966, the Export-to-GDP ratio was 54.9 per cent.
The key ingredient for economic buoyancy remains the expansion in the export sector, but Guyana seems to be sitting on a “KANGALA” with Team Granger. The worst three-year period of Exports-to-GDP occurred between 2016 and 2018 (averaging 43.5 per cent). The second worst was the period 2013 to 2015 (the Ramotar years) and then 1983 to 1985 (the back end of the Burnham years). The best three years occurred between 1992 and 1994 when Guyana was exporting goods and services that were valued at an average of 115.1 per cent of its GDP, more than double the performance in the Granger years. That was followed by the period 1995 to 1997 (the Jagdeo years) and then 1998 to 2000 (again the Jagdeo years).
If one were to compare average Export-to-GDP performance in the PPP years vs. the PNC years, the information is quite revealing. Under the PPP years, the average Exports-to-GDP was 75.6 per cent compared to the PNC years, which averaged out at 59.8 per cent. If the horrible Ramotar years were extracted from the PPP performance, it would show that the PPP’s average exports-to-GDP were over 80 per cent. In 2017, there were only 12 countries in the world that had a better performance than what the PPP produced from 1992 to 2011.
Clearly, under the PPP, the economy was exporting more; the economy was more energised, and it was generating more foreign currency to satisfy the needs of the private sector.
If one were to reflect on the Jagdeo years, the Exports-to-GDP were 79.8 per cent, which meant that the Jagdeo team contributed to the greatest sustained period of economic growth in the entire history of Guyana. No other President has done this good for Guyana when it came to exports growth and economic growth.
In the final analysis, the Guyanese economy has some major structural defects that are not getting the type of attention they deserve because Team Granger is too focused on an elusive witch-hunt. Over the last 80 days, this Team was even more distracted by the need to stay in power using subterfuge and deception, which clearly leaves them with little thinking time to focus on the key policy needed to aid the required economic transformation.
What Guyana needs is leadership and a team that understands the big issues confronting the nation, like the underperforming export sector; and a menu of measures to deal with them. Guyana continues to face low technological adaptation and a grave absence of technology-intensive foreign direct investments ON LAND. What is happening in the oceans will bear fruits for Guyana, but the human impact, especially on those in the poor and working classes, will remain negligible. Thus we must focus on value-added adaptation ON LAND.
The world is not interested in raw sugar, raw gold, and raw logs anymore. The world today demands a value-added version of these products; and, over the last three years, there were minimal investments in these sectors to really position the export sector where it needs to be – at 80 per cent of the GDP. Today, in spite of the economy expanding, it is a book figure that is not backed by large increases in new, hard wealth trickling down, and therefore there is less to go around in an environment where the few at the top, especially the politicians, grab the most. This is no way to drive long term human development.