President Jagdeo explains how Guyana surviving global crisis
PRESIDENT Bharrat Jagdeo has reiterated that, without some assistance on their debt, most CARICOM countries will not have a viable medium term strategy.

He said so while delivering the feature address at the Wednesday official commissioning of the $1.8 billion state-of-the-art Linden Hospital Complex at Watooka, Linden, in Region Ten (Upper Demerara/Berbice).

The current Chairman of the grouping, President Jagdeo said: “What we are doing now, at the regional level, as Chairman of the Economic Task Force for CARICOM, I am trying to create a model, with the support of my colleagues, that will see those countries also get some assistance on their debt.”

He said, right now, the world is facing a recession of a kind that has not been seen since the 1930s, when the great depression hit the United States.

“A recession that has seen, apart from the wiping out of 30 trillion dollars of wealth in six months across the globe, millions of people lose their jobs and millions more lose their homes and a great contraction in the economies of many countries with consequences for revenue and public sector programmes,” the Head of State observed.

He said, in the regional context, it has taken a devastating toll on the economies of CARICOM countries.

President Jagdeo said Jamaica Prime Minister Bruce Golding has pointed out that the bauxite industry in his contributes more than 50 per cent of total merchandise export of his country and has lost three of the four operations, because of the global recession, with tens of thousands of people losing their jobs.

Mr. Jagdeo said tourism arrivals across the region have fallen by 20 per cent, considering that the sector is the mainstay of many of the economies.

“And, because many of these countries have a debt profile, where they have a huge debt overhang and they are where we were, sometime in the past, where as much as a 100 per cent of revenue has to go towards servicing debt,” he stated.

President Jagdeo also cited the case of Antigua and Barbuda which could not pay public sector wages while Jamaica has seen a dramatic depreciation of its currency.

However, he posited that, in Guyana’s case, it has seen the largest public sector budget ever in its history this year and that trend is expected to continue.

PRESSSURE
“We have a significant part of our budget, although we are approaching year-end, yet to be spent. So, I have been putting significant pressure on some of my ministers and their ministries to spend the money in their budgets,” the President disclosed.

“How did we come about with this kind of situation? Why is it that the global recession, the worst since the 1930s, has had limited impact on our ability to spend and our ability to allocate resources to various sectors?” he asked.

He said: “It is largely because of this master plan that we have had over the many years that we have been diligently pursuing and that master plan had and has, as its very first component, ensuring that the state of finances of our country can support national development.”

President Jagdeo said the health sector budget has grown from $750M in 1992 to $12 billion today and increases are being seen in many other sectors, such as education, infrastructure spending, housing and water and sea defences.

He continued: “So where is all of this money coming from? How could we have a $44 billion budget without affecting the macro-economy of the country, without inflation being double and triple digits like the ones that we experienced in the past, without a depreciation of our currency and with interest rates falling not rising?”

President Jagdeo invited Guyanese to examine the situation of “how we have, through prudent fiscal and monetary policies, a rigid and almost single-minded pursuit of the biggest factor that was weighing down our economy – that is the debt – we have, today, managed to bring this within sustainable levels.”

He revealed that the country is using just over four per cent of its revenue to service debt, as compared to 94 per cent when this Administration took office.

President Jagdeo said the Government has been able to pay back more than US$1.5 billion and asserted: “That is the kind of thing that has created the fiscal space in our country to increase spending.”