A sense of perspective Editorial
Stabroek News
February 19, 2002

Then President Desmond Hoyte embarked on a programme of economic reform in the late eighties and early nineties. He privatised various state owned companies and secured new investment by Barama, Omai and Aroaima. There were many at the time who criticised the agreements that were made with the new investors. Criticisms ranged from the granting of tax concessions, which were said to be too generous, to royalties said to be too low, inadequate acquisition prices, and so on.

Our editorial position at the time was that though some of the terms of the contracts were by no means ideal, Guyana was down and out economically and had little bargaining power and a start had to be made in securing investment and creating some momentum. We supported Mr Hoyte's thrust to reduce the inefficient state owned economy and to attract new private investment. This did in fact lead to substantial economic growth over the next few years.

Perhaps inevitably, a lot of the momentum was lost with the change of government in l992. There was suspicion about what had been done and there were calls for the contracts with Barama, Omai and others to be taken to parliament for scrutiny and for possible renegotiation. Eventually, however, there was no such renegotiation.

The new PPP/Civic government that took over in 1992 did continue the efforts of Mr Hoyte's government to privatise the state owned bauxite industry which was in dire straits, so far without success. It also eventually privatised the Guyana Electricity Corporation, which had also been on Mr Hoyte's agenda. A deal with Sask Power of Canada had fallen through at the last minute. CDC/ESBI, the current owners, were subsequently the only investors seriously interested. The choice facing the government was to continue with the state owned electricity corporation, which had plagued our lives for so many years and helped to cripple the economy, or to privatise in the hope that things would get better, even if the new deal was a tough one. We believe that the government made the right decision to privatise even though the terms were clearly once again far from ideal (in particular the high guaranteed rate of return). If they had not, deterioration would almost certainly have continued and so would price rises, to which we had become accustomed.

It is fair to say that the supply of electricity has been more reliable since privatisation and output has increased though there are still major problems with transmission and distribution and there is a long way to go to achieve the kind of efficiency one was hoping for with private management.

It is easy to forget or overlook the plight we were once in. When Mr Hoyte started the programme of economic reform the country was virtually bankrupt and had no international creditworthiness. It had a huge debt burden and a shattered economic and social infrastructure. There have been definite improvements in our general situation since l989. We have frequently made the point that Mr. Hoyte deserves great credit for having had the courage to recognize how bad things were, and for the radical change of economic policy and the hard work put in to secure new investments. He made some bad decisions and some of the terms obtained were not good but that was inevitable. The PPP/Civic also has some achievements to its credit. However, the state of the nation was so shattered when the recovery started that we are still well below that state of development to which everyone aspires.

It is useful, therefore, to retain a sense of perspective when seeking to evaluate our present position. We have experienced a brain drain and a diaspora. Recovery is difficult. Certainly there has been a great deal of governmental incompetence, but that is not the whole story. The essence of that story is that we had been reduced as a nation to a state of penury by decades of political strife and reckless policies and we're trying to get back to some kind of normality.

Exaggerated rhetorical posturing does not help. What is needed is a sober awareness of the problems we face and less of a hothouse atmosphere. One cannot repudiate contractual obligations to investors without doing enormous damage to future investments. Investors will not come into a country where contracts are torn up five years later. If Prime Minster Sam Hinds attempts to make a realistic appraisal of the situation as regards price increases for electricity in the context of the contract with CDC/ESBI it must not be assumed that he is a charlatan. Mr. Hoyte, Mr. Jagdeo and Mr. Hinds have all, we believe, made good faith efforts to come to grips with a very difficult situation that existed after decades of collapse.

There are many things wrong and the struggle for power and for development will always continue. But there must be limits to dissension, which we seek to define as we go along. If the ship of state never gets on an even keel and is buffeted by ongoing strife the journey will continue to be precarious and the future cloudy. We need a realistic understanding of our problems and the possibilities for change and improvement.