By Sasenarine Singh
Guyana has failed to take its first tentative steps towards rebooting this stalled economy, because of political and administrative inaction by GECOM and the de facto regime. A steep drop in oil prices, combined with COVID-19 and the political crisis, has created a human development “Molotov cocktail” for Guyana.
What is vitally needed is a legitimate Government, which has the power to engage the people and the international community in crafting a comprehensive support programme, coupled with a national stimulus package to restart economic expansion. Such a programme must be aided by a 10-year national development strategy that would actively contribute to economic progress. That is why Dr. Irfaan Ali’s message this week on his economic strategy was reassuring, since it planted a menu of policy actions that are geared to guiding us through this dark economic tunnel.
It is unfortunate that the de-facto President, Mr. David Granger, could not have offered any menu of measures in these last days of his regime.
Initially, the IMF had projected in 2019 that Guyana was going to have an overall growth rate (including oil) of 86%, with oil revenues projected at US$230 million (using an assumed oil price of US$64/barrel). Growth rate in the non-oil economy was projected at 4.7%.
Oil revenues were supposed to play a lead role in the Guyanese economy in 2020, but the world has changed drastically over the last 3 months. At the end of March 2020, we are now expecting an annualised meltdown in the no-oil economy measuring no less than minus (negative) 9.3% based on the computations I have seen using public economic data from the Bank of Guyana. If we are to look at the projected oil revenues for 2020, we would be lucky to get US$105 million at an average oil price of US$20/barrel. That is a 55% decline in oil revenues payable to Guyana this year. This translates to an overall GDP growth rate at best of 26% for 2020, and that is before capturing the economic drain from COVID-19.
Based on preliminary estimates being worked on by a technical team analysing these issues, we are seeing computations that are reflecting a 6% – 8% growth in GDP for 2020, after including these preliminary COVID-19 charges.
But GDP is not GNI. To really assess more accurately how these three major human development activities (oil prices, elections, and COVID-19) are adversely affecting the Guyanese people in 2020, one must evaluate the GNI computations. For the record, GDP is the total value of goods and services produced by locals and foreigners in a country during a year, but not all of it is injected into the local economy. GNI, on the other hand, refers to that portion of the wealth created in a country that stays in that country. So GDP is not the most accurate assessment of what would happen to the Guyanese people, it is more an academic statistic. GNI, on the other hand, is a more pragmatic assessment of the economic reality for the people.
Based on the computation using the publicly available data sourced from the Bank of Guyana, the annualised GNI for 2020 is expected to decline by minus (NEGATIVE) 5.3% in 2020. This is mainly driven by a 70% decline in oil prices since January 2020. If we tack on the COVID-19 related economic costs, we are seeing a computation that concludes that the economy would contract by minus (NEGATIVE) 17% – 19% in 2020.
Every day that this de facto Granger group continues to ignore these issues and kick the bucket down the road, we are losing foreign direct investments, which is the key to our economic turnaround. If one is to assess what is happening in the local private sector, we can clearly conclude that confidence in the economy is at its lowest for 36 years in 2020. And to add salt to the people’s injury, we have a menu of incoming international sanctions which will instantly recreate “GUYLINES” from the Burnham era. There will be a dire shortage of foreign currency, and the exchange rate will slide, which would drive up the cost of living for our people. This will bring immense hardship to the Guyanese people.
Some 18,000 persons have lost their full income over the last 4 weeks, especially people like the Regent Street sales staff. Today, many of these people are dependent on food handouts to survive. Medical analysts have said lately that Guyana’s lockdown has slowed the spread of the pathogen, but the economic impact is catastrophic as the number above revealed.
Guyana needs to get back on track with a legitimate Government recognised by the international community, and every day Madam Claudette Singh fails to conclude the recount process is one extra day we do not have. I trust good sense will prevail.