IN his recent article, Mr. Christopher Ram has done a very insufficient analysis of the Guyanese economy.
I respectfully ask if Mr. Ram lacks knowledge of the workings of the economy, or is perhaps just being forgetful; or maybe he is just being mischievous regarding the effective workings of the People’s Progressive Party/Civic (PPP/C).
From his simplistic analysis of the economy and the 2011 manifesto of the PPP/C, he appears to have become a scandalous factor of his profession of auditing and accountancy. The clients of your well-established firm should now become worried at your level of ineffectualness. However, Mr. Ram, let us all remind you that you are no economist, neither by training nor by experience. As such, you should not venture into areas in which you do not have any sound knowledge or expertise.

He stated that the People’s Progressive Party/Civic only recently finished paying off a US$300M loan for the PNC’s failed hydropower project; that the line loss of the Guyana Power and Light Inc. (GPL) was not 50% in 1991, nor is it less than 30% today; that GuySuCo does not produce 30MW of bagasse power at Skeldon, a diesel-powered engine does; that the external debt of approximately US$800M is actually US$1,111M; that rebasing the economy in 2009 accounted for the growth figures; that the exchange rate of US$1 to Gy$125 sank 65% since 1992. Please note, Mr. Ram, that the PPP/C government has maintained stability of the exchange rate, and our exchange rate has been stable since mid-2007 when the rate was Gy$195.to US$1.

As such, this deflation boosted exports, which contributed significantly to the overall growth and development of our transitional economy. Mr. Ram stated that the domestic debt climbed from $18B in 1992 to $103B in 2011, but he should focus on the workings of the PPP/C as these relate to the foreign debt of this country.

In 1992, 96% of revenues was consumed in servicing debts; it is now only 4%. These prudent macroeconomic policies were effective since 1993 under  PPP/C governance.

Further, he noted that the cost of electricity was $12 then, compared with $54 per KW currently. Once again, Mr. Ram should focus on the improved quality (less blackouts) – and look at the real increase in cost. This is a nominal increase – 42% for almost 20 years, compared with trends in electricity costs in the region. Jamaica, in 2009, was $84; Anguilla is $86 current cost per KW.

He noted that greenheart was $85 per board metre then, compared with $350 now. Mr. Ram, this is indeed correct, but you need to focus on the general cost of operation in the forestry sector, and you would realise that this increase was also subject to external factors that are in a free-market economy.

Mr. Ram stated that there are no new ideas presented in the 2011 manifesto, that these are just principles and policies from the Jagdeo era. Perhaps Mr. Ram should read the PPP/C 2011 manifesto a few more times to fully grasp the ideas and concepts of growth and development. Whilst emphasis will be placed on the full realisation of the Amaila Falls  Hydropower Project (AFHP), there are other developmental pillars which will be laid, such as renewable energy sources, job creation, ICT in developing and initiating new business sectors for increased investments, and full computerizing of government services.

Mr. Ram set out to criticise the One Laptop Per Family (OLPF) programme by stating that these laptops are expensive and will cost billions of dollars.  Once again, let us school Mr. Ram on economics, and to a less extent on math. US$7.5M was the cost to supply 27,000 laptops from China. If you do the math, the cost will get pretty high. The Government of Guyana has allocated Gy$1.8 billion to procure the 90,000 laptops.

He stated that, with hydropower, the cost of electricity will still remain high. Mr. Ram, are you serious? Are you conceptualising the words you type? This country will benefit tremendously from cheaper and cleaner sources of energy, and the Amaila Falls project will ensure Guyana has a greener economy. The hydropower plant will save Guyana an estimated US$135M annually, and produce 150MW of power for local usage in all elements of the economy.

Moreover, in the PPP/C’s 2011 manifesto there is a notable element of equal opportunity and national unity, regardless of race, religion or social circumstances. This government’s plans for infrastructure and diversifying the productive sector will directly benefit the private and manufacturing sectors. Also, tax reforms in the past have contributed to the regulatory groundwork essential to reduce tax evasion and introduce other financial reforms, and these have provided the groundwork essential for reducing corruption. The PPP/C is now working towards greater implementation of its plans, and will continue to explore different financial reforms, such as procurement, for ease of doing business in Guyana.

Mr. Ram further stated that the 25,000 new information and communication technology (ICT) jobs that will be unfolded in the next five years are unrealistic. Mr. Ram, let us be true and fair: the Government of Guyana, through infrastructural development, including the fibre-optic cable, will substantially improve the investment climate for ICT.

Call centres alone have produced 2000 jobs over the last two years. As such, continued expression of interest in this emerging sector – with some investors waiting to see results of other call centres –with the advantage of commonality of time and language will allow  significant resources to be allocated to improving Guyana’s competitiveness, thereby attracting greater foreign direct investments (FDIs). Even more positive externalities of indirect jobs will be created in other sectors through the advancement of the ICT sector.

I again ask Mr. Ram to re-read the 2011 manifesto of the PPP/C, since he openly stated that there was no mention of culture in that detailed contract which has been set out for the people of Guyana.  Mr. Ram, there is an entire section on youth, sports and culture. It specifically mentioned upgrading cultural assets in urban areas and providing similar facilities in rural and hinterland communities. Youth empowerment and culture are interrelated.
Mr. Ram, in the 2010 International Monetary Fund Article IV Consultation of Guyana, the following was highlighted about the Guyana economy under the PPP/C governance: “Guyana has become a magnet for environmental issues, given its large forestry reserves. In this context, its prospects hinge in part on a Low Carbon Development Strategy (LCDS) for structural transformation. The macroeconomic outlook is generally positive”. Despite external and domestic shocks, the Guyanese economy demonstrated resilience, and registered a fifth consecutive year of robust growth.
Monetary policy has been moderately expansionary in Guyana. In 2010, the 12-month broad money growth — the anchor of monetary policy — and credit to the private sector were robust, at 10 per cent and 11.6 per cent respectively in September 2010. Treasury bill rates have fallen below inflation, which has been relatively subdued. The currency has remained broadly stable against the U.S. dollar in the context of a steady increase in reserves. Most financial systems’ indicators improved markedly through end-September 2010, including the non-performing loans (NPL) ratio, which has declined to 6 per cent of total loans.

During 2010, reform efforts continued in the fiscal and financial sectors. For the fiscal sector, refor
ms at the Guyana Revenue Authority (GRA) have continued, including streamlining the new functional organization, further improvements in the integrated tax information system (TRIPS), profiling tax payers and implementing onsite inspections in the country’s ports of entry, and more intensive training to personnel.

For the financial sector, support for  development of the credit market and improving lending conditions, the authorities passed the Credit Bureau Act, and guidelines for its operations are being prepared. In addition, legislation was passed in Parliament bringing the mortgage institution the New Building Society (NBS) under the supervision of the Bank of Guyana.

Other reforms in 2010 were in support of long-term growth, such as the Low Carbon Development Strategy (LCDS). The Government of Guyana guided the signing of a LCDS trusteeship agreement between Norway and the World Bank on the administration of a US$250 million payment pledged to Guyana by Norway, paving the way for annual disbursements to commence. A Multi-Stakeholder Steering Committee has been formed to oversee the selection of investment projects.

In the sugar sector, modernisation plans continue with the reorientation of cane fields to better accommodate mechanisation. Meanwhile, work also continued on the sugar packing plant, which is part of the overall strategy to improve revenue; and this was realised in early 2011.

For infrastructure, during 2010, the Government of Guyana started a project to improve the distribution and transmission of electricity throughout Guyana. The Guyana Power and Light Incorporated (GPL) has also installed additional generation capacity to replace worn out equipment and correct longstanding underinvestment in generation capacity. In the area of information technology, a fibre-optic cable linking Guyana and Brazil is being installed, which would facilitate the introduction of e-government. In the housing sector, additional external resources have been secured for the expansion of low-income housing. Finally, work has commenced on the access road to the AFHP site, while enhancement work is soon to start on the road from Georgetown to the international airport.

The baseline macroeconomic outlook remains positive for Guyana in an election year and the medium term. Guyana is on the cusp of major changes, led by this government’s Low Carbon Development Strategy (LCDS) and private sector investments in gold, oil, and gas sectors, as well as the large public/private partnership (PPP) associated with the construction of the hydroelectric plant AFHP. These investments should sustain growth levels above the long-run trend of 3 per cent, to around 5 per cent over the medium term. While fully financed, the external current account deficit would narrow somewhat in 2011, largely on account of receipts from the GRIF3, before widening in subsequent years as the AFHP is being constructed.

Risks remain, but are more balanced over the longer term. On the upside, Guyana stands to gain from the global carbon credit market on account of its large rainforests, and the implementation of the LCDS. While gold and sugar prices are at historical highs, Guyana will also benefit over time from lower electricity rates.