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…says inflation high, several sectors contracted, no visible benefit for the average person
Former Minister of Finance, Winston Jordan said that while it is an acceptable fact that Guyana recorded real Gross Domestic Product (GDP) growth of 14.5 percent according to the Ministry of Finance’s Mid-Year Report for 2021, what really stands out is the gap between economic growth and development currently experienced in Guyana.
On a recent APNU+AFC programme, Jordan was asked to examine the Report and to give his position on the progress made by the current Government.
BREACHES OFF THE BAT
To begin with, he pointed out that the Fiscal Management and Accountability Act (FMAA), Section 67:1 mandates that the production of the Half Year Report should be made 60 days after the completion of the half-year.
Section 67:1 states: “The Minister shall present to the National Assembly within sixty days after the end of the first half-year of each fiscal year a report on the year-to-date execution of the annual budget and the prospects of the remainder of that fiscal year.”
Jordan highlighted that August 29, 2021, marked that 60 days period which means that the Government breached the FMAA with the release of its Mid Year Report on October 5, over a month later and also has not yet presented the report to the National Assembly.
“There’s no excuse that the National Assembly is in recess. This law was put in place under the PPP,” he said. “Under the Coalition Government, not only did we produce that report within the specified period but we had the report in Parliament before Parliament went into recess — that is before August 10.”
He said the report is important for planning purposes and it appears as if he and other Opposition MPs did not press for it publicly that the Government would not have brought it to the fore.
NON-OIL GROWTH SHOULD HAVE BEEN HIGHER
Delving into the details, he said that the comparison with the previous year shows that there has been no tremendous non-oil growth in Guyana between 2020 and 2021.
At the half-year of 2019, the non-oil growth — which comprises the traditional, labour-intensive sectors — stood at 4.2 percent. For the same period in 2020, the non-oil growth was -4.9 percent and for 2021 it was 4.8 percent.
Jordan said that this minimal growth is concerning considering that the non-oil sector is being positively influenced by the presence of oil in Guyana. Furthermore, when one takes into consideration the Mid-Year for 2020 which was affected by the significant slowing down of business caused by the pandemic and reclusiveness of investors due to the elections, the Former Finance Minister said that one would expect an “explosion in growth” as a rebound from this period.
“This 14.5 percent, excluding oil which is down to 4.8 percent, is a growth that is expected [and] should have been far greater than the 4.8 percent,” he began, adding
“Notwithstanding all the talk about diversifying the economy, about agriculture being the premium sector and so on, it is clear for everyone to see that in a relatively short space of time, oil has begun to dominate the economy in every single way…and it’s only one year and one FPSO. So, if oil is having that kind of dominance in the economy, please tell me what is going to happen when we put 10 FPSOs out there.”
DIVERSIFICATION ON THE BACK BURNER
In the Report, it was noted that the agriculture, forestry and fishing industries contracted as a result of lower output from the industries.
It is estimated that the sugar industry declined by 22.4 percent when compared with the 2020 half-year performance. Production estimates for the second crop have been revised downward and the industry is now projected to contract by 10.4 percent in 2021.
Meanwhile, though the rice industry grew by an estimated 7.8 percent, the projected production was marginally lower than the target set for the period. The other crops subsector is estimated to have declined by 7.3 percent in the first half of the year, driven mainly by declines in the production of vegetables and fruits as a result of flooding.
Jordan put forward: “This at a time when everybody is telling you, in the context of COVID, you need to eat your vegetables and your fruits. If that is declining on top of the fact that it’s so expensive to even buy anything local, pray tell when are we going to be able to come out of the COVID?”
Regarding the fishing industry, this contracted by an estimated 6.6 percent when compared with the same period in 2020. The forestry industry is estimated to have contracted by 7.1 percent when compared with the first half of 2020.
Jordan said: “Yes, 14.5 per cent as they announced is real, but it’s fiction in terms of what it means to the average consumer and the average worker and definitely the public servants.”
INFLATION RATE CONCERNINGLY HIGH
Still on the topic of the impact to the average Guyanese, Jordan shared that in the 7 months of 2020 under the former Government, the inflation rate was stable whereby the Half-Year inflation stood at 0.05 percent despite the election period and the surprise blow of COVID-19.
However, the 2021 Mid Year Report states that, at the end of the first half of the year, consumer prices were 5.6 percent higher than the levels recorded at the end of 2020.
The Report indicated: “This increase was due largely to higher food prices, as a result of the inclement weather and shortages experienced due to extensive flooding across our Administrative Regions…bottlenecks in the global supply chain resulted in some emergent measure of imported inflationary pressures, transmitted primarily through escalated costs and delays in international shipping.”
Meanwhile, the Report underscores that inflation is now projected to be in the order of 3.8 percent for the full year.
Jordan said that the Coalition Government left the country’s inflation rate at almost zero and it was only some serious form of mismanagement that could have pushed it to the current and projected figure. He said that this is even as the Government takes the praises for handing out a series of grants when it is overdraft with the Bank of Guyana.
“You’ve got to really know what’s going on in this country, galloping inflation and this will not subside…nobody is asking where the Government is finding the money from to finance all of these cash transfers and so on. You just have to go to the Bank of Guyana Report, the Government is in overdraft on the Bank of Guyana account and when we left it was 78 billion Guyana dollars.”
According to Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, the first half of 2021 has not been an easy period due to the global health crisis and the unprecedented nationwide flooding.
“When you consider the fact that you had the reality of COVID-19 and you consider the fact that you had the flood impacting a number of sectors in a very significant way, you come to realise that recording growth of 4.8 percent is in fact an extremely commendable achievement,” he said on an NCN programme.
He also said that when the Government assumed Office the economy was “literally on its deathbed” as a result of bad policies, mismanagement of most of the productive sectors and a hostile attitude to the private sector.
Dr. Singh assured the nation that moving forward there will be aggressive expansion of all sectors in Guyana as the country remains a major investment hub in the region