THERE are some interesting lessons for the rest of the Caribbean region to learn from the road Guyana has travelled, having moved from a deep abyss to a position of enjoying seven years of uninterrupted growth up to 2012 at a rate of 4.5 per cent per annum.
This is the view of Dr. William Warren Smith, President of the Caribbean Development Bank (CDB), who noted that Guyana’s growth did not start seven years ago, but that those who have been around for a while would be familiar with the challenges that the country had been experiencing over too long a period of time. “Those of us who are from the region have always known about, talked about and hoped for the blossoming of the Guyana potential,” Dr Smith said during a recent interview with the National Communications Network.
Remarkable and Commendable
“Even though Guyana was coming from a very deep abyss, in many respects what has been interesting about Guyana’s experience for me is that once Guyana took the decision to start to address its economic and social issues there has been a very remarkable and commendable consistency of policy from one regime to another and it has been maintained up to this point,” Dr Smith emphasised.
There is no question in his mind that that has been a direct underpinning of the successes today, and in spite of all of the pressures, Guyana has been able to maintain that constancy of policy especially in the economic arena.
“What we have seen is a willingness to make very tough decisions and live with them in spite of the fall-out – political or otherwise,” the CDB President indicated.
He stated that the fact that Guyana was able to survive that difficult period has a lot to do with good economic policy, and that approach was reflected in the management of the financial sector; however going forward, Guyana’s financial sector is one that would have to show much more rapid development and greater deepening in order to underpin the dynamism of the economy that is now emerging.
“Foreign Direct Investment (FDI) is part of the good story…it has helped to drive development…that FDIs perhaps would not have been attracted to coming here if that economic stability and foundation had not been created over a very long period of time with a lot of pain so that the two things are related and they create an environment within which much greater things can be done on the economic and social front,” Dr. Smith said.
When it comes to advising the Government of Guyana, the CDB President highlighted that the Bank is of the view that Guyana needs to put a lot of emphasis on good governance, social development, creating stronger institutions to strengthen the good things that are happening here. “That is a work in progress…I think that the government themselves they acknowledge the work that needs to be done in strengthening those areas and some good things are beginning to happen,” he said.
What the Bank is trying to do is use its resources and the experiences to help the Guyana Government and other member countries to address these problems because sometimes they would recognise the need but the resources aren’t there to carry it out.
With regards to the financial situation being experienced by the Caribbean, Dr. Smith stated that it is one of the most difficult periods that he has experienced. “The Caribbean is experiencing the international economic crisis in somewhat of a differentiated way; every simply put what we’re seeing on the global scene where you have sort of a two speed development taking place, where you have some countries developing rapidly and others are recovering slowly, the same phenomenon is playing out in the Caribbean,” he pointed out.
Meanwhile Guyana, Suriname and Belize are experiencing very rapid economic growth, with very high foreign direct investment inflows and are generally on a very good trajectory as far as the development of their economies are concerned.
“Those of our economies that are more dependent on services, especially tourism and financial services are having a very difficult time. These countries tend to be much more integrated into those economies that are experiencing either very low growth or recessionary conditions – I am speaking about North America and the European countries,” Dr. Smith indicated.
He added that the tourism and service dependent economies are either going through negative economic growth or very marginal growth, whereas the commodity-based economies like Guyana, Belize and Suriname are growing rapidly.
Advice for member states
The CDB does not only finance projects, it does much more than that. “We like to think that the advice that we provide to our countries is as much a part of our mandate as the financing role and we do have very frank and open dialogue with our countries about economic strategy, we also talk to them very frankly about the issues they need to address in order to be more diversified, to become more attractive to international investment,” the CDB President emphasised.
He posited that the unfortunate reality is that the very small economies will always have fewer options than the larger ones and many of them do not have natural resources like Guyana so that limits them in a particular area. “Having said that, historically, those smaller countries have done relatively well working with few options, but becoming very good at what they do and developing a very big international reputation,” he added.
The CDB President said, “The more diversified your economy the more resilient you will be, you will be less vulnerable to the impact of economic shocks from the outside and also to natural disaster shocks… Guyana is well placed to not only be a power house in natural resources, but also to develop the creativity of its people in culture, in the intellectual services and education…Guyana has the potential to be a very diversified and dynamic economy not just built around its natural resource endowment… so we would certainly encourage the development of those sectors that have no relationship to your resource endowment,” Dr. Smith emphasised. (A GINA Feature)