Economy suffered from external, domestic shocks
By Chamanlall Naipaul
November 6, 2006
Finance Minister Dr. Ashni Singh says over the past 10 years the national economy has been subjected to severe external and domestic shocks which have curtailed growth and development.
Dr. Singh cited the Asian economic collapse, rising oil prices which rose to about US$78 per barrel by July this year, price cuts for traditional exports as being among the external factors, while on the domestic scene, the minister identified adverse weather and floods, and post election disturbances in 1997 and 2001.
The minister made this submission during the debate in the National Assembly last week on President Bharrat Jagdeo’s address at the opening ceremony of the Ninth Parliament on September 28 last.
However, through discipline and resilience and a prudent fiscal policy, macro-economic stability prevailed with a low inflation rate restricted to single digits and the interest rate on bank loans being reduced from 19% in to 2005 to 14.5% presently.
The external debt has been reduced from US$2.1 billion to US$1.1 billion, largely through debt write-offs, and this is expected to be further reduced to about US$900M by the end of this year, Dr. Singh informed the House.
The budgetary deficit has also been restricted to an acceptable level of 4.6% of Gross Domestic Product (GDP), despite an increase in the salary bill moving from $5.7 billion to $18.5 billion, and a massive public sector investment programme.
Several initiatives will be undertaken to stimulate economic growth and investment, the Finance Minister said, and these include removal of “red tape”; improving the judiciary system, including the establishment of a commercial court through funding from the Inter-American Development Bank (IDB) to the tune of US$10M; and advancing the tax reform agenda with the implementation of the Value Added Tax (VAT) laying the foundation for reform.
He told the House that an announcement will soon be made on zero rating of tax on several basic food items.
On the issue of fiscal governance, moves are ongoing to make the Audit Office of Guyana stronger and more independent and financial operations are being computerised, the minister reported.
He conceded though that the framework of the current legislation on money laundering needs to be improved and draft legislation in this regard is being prepared.
He also told the National Assembly that several concerns raised by the Leader of the Opposition, Robert Corbin, including the alleged misuse of Guyana Lottery Funds, are being addressed.
However, People’s National Congress Reform One Guyana (PNCR-1G) parliamentarian Winston Murray lashed out at the government for failure to adhere to financial regulations and for corrupt practices.
Murray said the objectives outlined in the President’s address are laudable, though he questions whether the government possesses the will and intention to give substance to these noble objectives. He added that words must be matched by deeds.
He recalled that in December 1992, when the present government came into office, the late President Dr. Cheddi Jagan announced a policy of a lean and clean government. He recalled that in 1992 there were 16 ministers of government, but today there are 21, and in addition there are three Parliamentary Affairs Secretaries.
He suggested that maybe that policy has been dropped by the present government.
Murray also charged that retired ministers are being wedged into agencies to provide sinecure benefits despite the fact that they are receiving their pensions.
Rumours abound of kick-backs and narco-money circulating in high places, Murray observed, while there is no transparency in the use of the Guyana Lottery Funds.
Murray said he found it perplexing that the Broadcast Legislation, which was referred to in the President’s address to the Eighth Parliament, was notably absent from the address to the Ninth Parliament.
Nevertheless, he told the House that he is not raising these matters to embarrass the government, but merely to have these shortcomings remedied.
With regard to the presentation by Finance Minister Dr. Singh, Murray claimed that it was devoid of measurable targets and benchmarks.
He said that he would have expected the minister to give projections for the next five years on the major sectors of the economy, claiming that the People’s Progressive Party/Civic (PPP/C) election manifesto is more specific in this respect.
Murray charged too that an independent study found that a figure less than the 16% VAT charge would have been revenue neutral.
However, on the parliamentary scene, Murray agreed that over the past five years efforts at parliamentary reforms have been positive, with several important pieces of legislation passed and changes implemented in the functioning of the body.