[www.inewsguyana.com] – The Granger Government continues to stumble on an economic strategy. The main cause, I believe, apart from beginning to govern without a sound economic strategy in place is the fact that they are listening to all the “academic economist advisers” they have appointed who have never in their lives put theory into practice.
When one hears rice farmers, who contribute a large segment of our GDP, saying that they will not plant the next crop because of the failure of government to fulfill basic promises, then the harsh rippling effects on our society will be imagined.
Much continues to be said about where Guyana’s economy is today and the dramatic drop in activity, both from the consumers and suppliers perspective. This economic immobilism is on a wait and see basis, especially in the business community. Former President Ramotar said it best “Stop governing with hate and spite”. This is another reason why I believe we are in this immobilism economic state.
Whilst on one hand we have witnessed a massive increase in government spending (Billions) in areas such as the Commission of Inquiries, high level unqualified advisors being appointed and paid, spending on non-economic initiatives, on the other hand we are experiencing the decrease in government spending on major projects which has slowed the demand in the economy; add to that the private sector slowdown in production and construction. These actions have resulted in the decline of profits, less hiring and business investments. The many layoffs by the current government of the previous administration’s personnel and the hiring of their party followers will not result in a one to one swap of expertise, knowledge and technical abilities instead it ushers in a period of loss of ‘institutional knowledge” and muddling through whilst learning on the job. Many experienced people are now on the breadline, without new opportunities to provide for their families.
The local business cycle continues its downward movement, now in the last quarter of the year. The real-estate sector, which previously accounted for a significant portion of our economic growth, is facing an outright contraction. Farmers in the rice industry which had seen a rapid increase in production over the last two years and with that rapid expansion and major investments will now find difficulty in sustaining themselves at current market price and more so because of the loss of the Venezuelan market. The rice farmers now have a greater problem to deal with, how to get out.
In addition, business owners’ number one complaint is that they do not trust how the government is handling economic policies and approaches. This lack of confidence is causing them, as one businessman told me “to lacking up of funds” meaning, holding on to their money until there is evidence as to how the tax reform and other policies will shape up. Many businesses are also tightening their belts by lay-offs of staff.
Riding the Business Cycle:
Business cycles do fluctuate and I assume, after the hate and spite approach goes away, things may take time to get back to some normality. While I support any infrastructure improvements, they must be done in conjunction with an economic and social focus. Water taxis versus the Berbice Bridge is not an infrastructure solution, it may be an option, but the bigger picture of P3, (Public Private Partnerships) will be tested for future projects. In addition, targeting businesses from an ethnic point of view by the APNU government is and will continue to have grave consequences for our economy. For the business cycle to get out of its contracted state an integrated economic policy must be re-instituted.
Business will need to take time to plan. While major changes in operations have always been required, many of us in the private sector see it as an exception and not the rule. In the past, businesses have been content to “muddle” their way through a change effort because they knew they would have a period of stability for some time ahead.
There is an urgent need for an integrated economic plan to be presented to our parliament where it can become public and be debated. This may not be a requirement in law, but an environment should exist where we as citizens can contribute to the development through a new concept of “lobbying” our parliamentarians to become more engaged in developing Guyana than developing politics. The private sector should be controlling the economy but we can’t because we are unable to debate and discuss parliamentary legislation on the economy that severely impacts on our business models.
Businesses, I would opined take this time to evaluate their current revenue stream and a further period to look at new opportunities. The effect of the current failed fiscal policy as we saw in the 2015 budget is gaining notoriety, the negative results we all had expected.
The fact that the Granger Government halted major transformative projects that were part of the previous administration plan to ensure economic growth, because we had predicted that commodities prices will fall, has left us “up the creek without a paddle”! One main option to revive the economy is to slash corporate and personal taxes drastically and introduce public spending in major infrastructure projects including the road to Brazil and a deep water harbour and rethinking alternative energy solutions.
I believe the longer economic action is delayed, the greater the risk that the worsening imbalance will end in catastrophe. Guyana need not be in this situation, especially at a time when we are on the world stage tackling the Venezuela issue. #end