Despite setbacks Guyana’s economy continues to perform well

Dear Editor,

As our country makes rapid strides in its economic development, more overseas-based Guyanese and foreigners are also making visits to the “Land of Many Waters,” or to the “Land of the Mythical City of Manoa Del Dorado.”

Foreigners are attracted by the good prospects of investment – our country is endowed with an abundance of natural resources – as well as with the awesome natural beauty, including the stupendous Kaieteur Falls.

Despite the utterances of socialist rhetoric sometimes, Guyana hasn’t got a “control and command” economy any more. Its growth is guided by sound economic principles of the free enterprise system where market forces, for the most part, dictate supply and demand.

To the ordinary Guyanese, this is perhaps best reflected in the operations of the airline industry. For example, when there is more than one international airline carriers, prices tend to drop sharply.

When Dynamic Airlines began its inaugural flight a few months ago, it announced that the economy return airfare would be $499 and that pressured Vision-Travel Span to lower their fare to $499 for a while.

Prior to Dynamic Airline inauguration of return flights to Guyana, the cost for economy return airfare was about $680 and even more. Unfortunately, that competition didn’t last too long.

Dynamic Air encountered logistical problems and had to suspend operations until August 2014 just after a few flights. The immediate impact has been a steep rise in airfares to over $600. The price movement in the airline industry clearly illustrates the importance of competition in a free enterprise system.

It’s because of the free market system that Guyana has been making such good progress, averaging about five per cent annual growth rate over the last decade. The economic system has brought into existence an ever expanding middle class, which further propels growth.

Studies elsewhere have shown that the middle class is the engine of economic growth. New four-lane roads are being constructed, new sea defences, new bridges, new schools, new hotels and houses are being built, and new businesses are being established.

Over the 20-year history of the “Freedom Index,” Guyana has advanced “its economic freedom score by 10 points.” This overall increase has been achieved by enhancements in seven of the 10 economic freedoms, notably the management of public spending, freedom from corruption, and monetary freedom.” Guyana’s economy is the 121st freest in the 2014 Index. There is still much more work to be done here.

And yes, “Guyana is and remains the best performing economy in the Caribbean, outshining every single economy in the Region,” despite the tremendous loss over the past decades of skilled manpower due to net migration.

But economic growth does not suggest an elimination of poverty and unemployment (which is at 11 per cent). There are still pockets of poverty in various regions. It is estimated that over 20 per cent of the Guyanese population live below the poverty level.

The Government has a social impact amelioration programme to neutralise the harsh effects of poverty and it has also been increasing spending on the social services. The low inflation rate of 2.4 per cent also helps to ease the pressure. It’s true that the cost of living is high and many lower income families find it hard to balance their budgets.

And many can only accomplish this task with the remittances they receive from relatives overseas. It has been estimated that Guyanese remit over US$300 million annually to Guyana. The injection of this sum plays a huge part in the country’s economic growth, too.

Detractors of the Government point to a few apparent negative offshoots of development, that is, the prevalence of corruption, drugs and crime. However, it must be recognised that these negative forces have to be reduced and controlled.

When important funds are siphoned off into the pockets of racketeers, this does not only divert resources from much needed projects and causes (hurting especially the poor segments of the population), but also, taints the image of the country. Crime terrorises people; makes them anxious about their physical safety; and discourages investment and tourism.

Drug trafficking has become a huge problem in Guyana. There have been several drug busts in Guyana and also at the high seas. In a 2012 report, it was stated that 103.6kg of cocaine (valued at $93 million) and 111.5kg of cannabis (valued at $20 million) were seized by the Guyana authorities.

One of those measures, according to Home Affairs Minister Clement Rohee, that could reduce the drug trade is the implementation of the “Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Bill.” Rohee claims that drug trafficking is linked to money laundering, drug running, etc.”

Respectfully,

Dr Tara Singh