– PPP advisor
As Rusal’s shares continue to tumble following United States sanctions against one of the company’s co-owners, President David Granger and Finance Minister Winston Jordan are being heavily criticised for having been caught “sleeping at the economic wheel” as hundreds of jobs and the availability of foreign exchange are under threat.
This contention was made on Wednesday by People’s Progressive Party (PPP) advisor, Dr Peter Ramsaroop, who, in a statement, observed that Guyana could fall prey to the spin-off effects of the sanctions by US President Donald Trump’s Administration.
“The move against Russian oligarch Oleg Deripaska to freeze all of its US assets will no doubt have crippling effect on Rusal and by implication, its Guyana operations,” Dr Ramsaroop noted.
Deripaska is the main owner of the EN+ conglomerate, which is the co-owner of Rusal. US special counsel Robert Mueller has been investigating Russia’s involvement in the 2016 US presidential election. The US Treasury Department, in a statement on Friday, announced the sanctions against seven Russian oligarchs, 12 companies they either owned or controlled, and 17 senior Government officials – who Washington said were profiting from the Russian Government’s engagement in “a range of malign activities” around the world.
Hong Kong-listed Rusal is one of the world’s biggest aluminium producers and is a key player in Guyana’s bauxite industry. The company’s exports to the United States accounted for over 10 per cent of its output. The company also owns assets in Italy, Ireland, Sweden, Nigeria, and Guinea as well as a stake in Australian QAL, the world’s top alumina refinery.
Following the steep shares’ drop, Guyana’s Government has been called upon to state an official position on the matter. Foreign Affairs Minister Carl Greenidge said on Wednesday that the Administration was analysing the situation. However, in Dr Ramsaroop’s view, the reaction has “again exposed a weakness in the David Granger Administration to accurately forecast international developments and put in place mitigation strategies”.
“A bailout of Rusal and a Government takeover of the Berbice operations is not out of the question, but will no doubt become an additional strain on the economy,” the advisor observed.
He questioned if Government would really want to bail out the Guyana’s bauxite industry “traditionally seen as supportive of the PNC” or if the Administration would shut it down as with the downsizing of the Guyana Sugar Corporation (GuySuCo).
“Businesses in Guyana and no doubt the sugar workers will be critically looking to see what action the David Granger Administration will take in the bauxite industry, if any,” he pointed out.
He used the opportunity to highlight Government imposing “200 new taxes” in addition to now contracting “massive loans” which he said would lead to debt and no revenues. He opined that this would cause the economy to “go into a tail spin” which could see exchange rates skyrocketing.
“Minister of Finance Winston Jordan has now gone to the Islamic Development Bank and secured what he calls a resource envelope – tantamount to a loan – but in the absence of any specific plans by the administration, it is clear Government’s resorting to debt to run the country.
“Guyana’s foreign exchange earnings continue to give slimmer and slimmer returns each year; the foreign reserves are now being used/abused and now even more jobs [are] to be lost,” the Opposition advisor contended. His concern over the sanctions has followed that of President of the Guyana Bauxite and General Workers Union (GBGWU) Lincoln Lewis who said on Tuesday that the Union was in the process of analysing the possible effects on local workers. The Rusal subsidiary, Bauxite Company of Guyana Incorporated (BCGI) currently employs over 500 persons.
According to reports, the sanctions against Rusal caused aluminium prices to surge, since all of the company’s assets under US jurisdiction are frozen. In fact, Reuters reported that as of Monday Rusal’s shares plunged as much as 41.8 per cent.
