People’s Progressive Party/Civic (PPP/C) point person on the economy, Irfaan Ali predicts a bleak year ahead characterised by a stagnant economy, increasing inflation (and high levels of unemployment, known economically as stagflation).
During the PPP’s first weekly press conference of the year, Ali said the low performance of economic sectors which are known for generating foreign currency was a major contributor to the current state of the economy – which he believes would worsen throughout the year given Government’s track record and the 2017 National Budget.
Further, he outlined that the sugar sector saw a 19 per cent decrease in performance, rice, a 14 per cent drop; forestry, a whopping 33 per cent decline and the manufacturing sector, a 7 per cent fall.
These declines in performance, he stated, contributed to the apparent shortage of foreign currency in the country, which businessmen continue to complain about, but the Central Bank continues to deny exists.
“You cannot argue that supply is not drying up when you have drastic decline in these sectors that earn foreign currency… Ultimately, there must be an impact in the supply of foreign currency on the market,” he emphasised.
Moreover, Ali said the year ahead would experience stagflation as the economy would basically be stagnant owing to lack of stimulus activities to jump start it, while inflation rises beyond the projections made by Finance Minister Winston Jordan.
Ali said this is compounded by the fact that income across the board has remained consistently flat in the face of drastically increasing expenses.
He alluded to the introduction of the Value Added Tax (VAT) on water and electricity, the removal of VAT exempt and zero-rated items, and the introduction of paid parking across Georgetown.
Ali highlighted that food prices have increased as have transportation costs and oil prices, compounded with a low growth rate, currency depreciation and high levels of Non-Performing Loans that would discourage loans for the Private Sector which would ultimately affect domestic investment.
Additionally, he said the under-performance of the various Ministries in 2016 contributed to the low growth the economy experienced last year.
In moving forward, Ali recommended that the Government do a number of things including examining the various economic sectors and determining how best it could assist in boosting their performance.
With regard to the rice sector, Ali urged Government to implement the nine-point plan the PPP had submitted previously.
He further recommended that Government “look at the forestry sector and look at restrictions to see how we can get the sector going to bring in foreign currency, look at subsidy given to sugar to bring up back production so we can earn foreign currency, incentive in housing sector for new development, rely less on Government utilising local capital to fund itself and give incentive for banking sector to lend more to Private Sector”.
More significantly, he advised Government to put an end to the negative rhetoric which he believed has had a dire impact on the economy. (Guyana Times)