No “Good Life”

One day after it was exposed by this newspaper, Finance Minister Winston Jordan finally conceded what analysts had been claiming for some time: that the economy was contracting, rather than growing. From a growth rate of 5.2 per cent in 2013, during this regime’s stint at the helm, it had dropped by 2015 to 3.2%; 2016 3.3% and now an abysmal 2.1% for 2017.
Jordan’s excuses for the latter were pointed out since the beginning of the year: less gold and sugar produced, so one wonders what caused the delayed concession.
Overall, the news destroys any claim the PNC-led government can make about fulfilling its campaign promise to provide “the good life” for all Guyanese. Even though aggregate growth figures can hide a multitude of economic sins, such as disguising growing inequalities under the neo-liberal paradigm that Guyana follows, it can at least suggest the possibility of economic improvement in the lives of ordinary citizens. With 2.1% growth rate, coming from a very narrow sliver of the economy, however, it is clear that for most Guyanese, their standard of living had to have worsened.
Minister Jordan noted that the downfall in the production of sugar was even worse than they had projected. This indicates their theory is flawed — that production and productivity would improve in the industry with the unilateral closure of three estates. Whatever had ailed the industry with seven estates is still there with the three left grinding. But, unfortunately, as far as the “good life”, the 7700 workers (5700 from GuySuCo and 2000 from private cane farmers) and their families, totalling some 38,000 men, women and children, are now bereft of any dignified life, much less a “good” one.
The bemoaned drop in the declaration of gold is interesting for several reasons. When in opposition, now Minister of Natural Resources, Raphael Trotman, had asserted between 50-60% of gold was being smuggled out of the country without being declared to the Gold Board, so that Guyana could collect its royalties and taxes. He has never followed up to reveal what steps have been taken to staunch this incredible haemorrhaging of Guyana’s revenues, and whether this may also be the cause of last year’s shortfall in production.
Be that as it may, it would appear the PNC-led Government is doing all in its powers to guarantee we contract that much cited “Dutch Disease”, which will kick in as oil revenues start flowing by 2020, to ensure our economy contradictorily contracts even further. The Economist had coined the term back in the 1970s to describe the apparent anomaly of massive increases in revenues from Dutch gas exports coinciding with an increase in unemployment caused by the appreciation of the Dutch guilder and local exports becoming “more expensive”.
Additionally, as it explained later, “Extra foreign currency enters the country, is converted into local currency, and is spent on goods that cannot be traded across borders (construction, certain services and so forth). As foreign currency is changed into local currency, the money supply rises: extra domestic demand pushes up domestic prices. That, in the jargon, results in an appreciation of the “real” exchange rate: a unit of foreign currency now buys fewer services in the domestic economy than it did before. The country loses competitiveness.”
If the Government had kept its Manifesto promises on economic development, not only would growth rates have been higher, but we would have been inoculated against Dutch Disease. In its goals re “Industrialisation and Jobs”, the PNC/APNU coalition had promised “to create a new economy that will stimulate rapid development through Guyana’s transformation from a raw material producer”. This would have created a “Singapore in the Americas by creating more jobs and better pay.”
But instead of creating that new economy, they have allowed even the old economy to implode. It is now clear that the Government’s growth projections are more of a wish and a prayer for “key sectors to rebound” than hard numbers based on an economic plan.