October 6, 1998
Cabinet is to proceed on a retreat at the Ogle Management Training Centre on Saturday and Sunday.
The retreat could help infuse momentum into the government's handling of key issues and generate fresh ideas for resolving intractable problems. It depends on whether Cabinet sees its role as simply consolidating the status quo and not admitting weaknesses or accepting its responsibility as an important change agent.
Agenda items also have to be carefully selected so as not to clutter this important forum.
In our What The People Say feature yesterday, we canvassed members of the public for the issues they thought would be critical for consideration. They ranged from the parochial to the more complex questions confronting today's society.
They included tax exemptions for single parent families, the dire need for trained teachers, the race issue and discrimination in the award of contracts, attention to the hinterland areas, unemployment and job creation.
These, together with the pervasive crime question, are all worthy of close attention. There are other issues which also spring to mind.
Foremost is the slumping economy, reduced revenue inflows from exports and the foreign exchange shortage. Guyana is not immune to the contagion that has gripped the world's financial markets. One of the likely repercussions of the general economic malaise and the international turbulence is the loss of confidence in the local economy. There has been a de facto devaluation of the local currency by eight percent in a very short period and capital flight may well explain the extreme scarcity of foreign currency. This combined with a lack of new investment has stultified economic performance. The business sector is faced with job cutbacks, dropping sales, costlier foreign currency inputs and the inflationary risk of the devalued dollar.
What the government must do - beyond mere intervention in the currency market - is to formulate a stimulus package for the economy to push manufacturing growth, employment and foreign exchange generation. Permitting the economy to chug along at its own pace is likely to further erode diminishing confidence. While expected proceeds from rice exports may help to calm the flutter in the foreign exchange markets, other factors such as a lack of confidence and investment outflows from the major South American economies may weigh much more heavily on Guyana.
Tighter management of the economy is needed to extricate it from this economic slump and some stimulus package must be urgently put in place.
It is interesting to note that in Jamaica, the Kingston government and the Bank of Novia Scotia (BNS) agreed on a package of incentives to ignite economic recovery. As reported in the September 12 edition of Stabroek News, BNS is offering the productive sector up to US$35.5M at a subsidised interest rate of 8.5%. Simultaneously, the government is moving to restructure and refinance indebted companies as well as to offer help to the agricultural sector. The BNS loans are for a period of five to eight years and two state development banks will share the risk with BNS for under-collaterised projects. The funds being offered are derived from the Jamaica government's phased reduction of the cash reserve ratio in commercial banks, a suggestion that has been promoted as a possibility here.
At its annual awards dinner on September 19, Guyana Manufacturers' Association President Ron Webster called on the government to inject US$15M-30M into the economy to give it a kick-start and create a special fund to invigorate the productive sector.
The onus is on the government and Finance Minister Bharrat Jagdeo to craft some strategy or package to pull the economy out of the doldrums and this retreat is the appropriate forum.
The government essentially has to switch from leaving the economy on an autopilot mode to a more interventionist stance.