EVERY effort is being made by these so called professionals in the APNU and AFC to run from an elementary fact: that the Guyana Economy is doing well in a period of global uncertainty, especially in the Caribbean region. One has to sympathise with Tarron Khemraj’s, AFC column in Kaieteur News (13/11/11), praying for doom as the final count-down for election draws nearer.
This column peddled a variety of half-truths and half-lies in what can safely be concluded as two half-truths making one big lie.
Dr. Khemraj argued that “the growth rate was adjusted upward because of the rebasing of the data”, which is utter nonsense. Even without the rebased data being applied, the economy would have grown at an even higher rate since the economic base on which the growth is calculated would have been lower.
The rebasing of the GDP was long overdue, since that is done every 10 years, while the last rebasing of Guyana’s GDP took place in 1988.
Dr. Khemraj vilely argued that economic growth did not take place since there was limited Foreign Direct Investment (FDI) – “The little foreign investment is mainly reinvested by already established foreign firms or investments to buy up old assets such as bauxite.” Again, this is total absurdity from the goodly doctor.
Foreign Direct Investment flows for the January to September, 2011 period is already US$158 million and is expected to pass the $200 million mark by the end of this year. This is in comparison to an FDI flow of US$164 million in 2009 and US$198 million in 2010.
If Dr. Khemraj considers that amount minuscule then so be it, but the bulk of it are new investments.
Dr. Khemraj would have deliberately missed or overlooked the Toropane Gold Project, highlighted and reported by the Stabroek News last week. For Dr. Khemraj’s information, this US$600 million project that is expected to yield US$550 million annually will create 1,000 jobs, while the country will receive 5% royalty when gold prices are below US$1,000 per ozs and 8% royalty when it is above $1,000USD. There are more benefits, such as electricity, ports, corporate income tax, etc: In addition, there are other investors, such as Aurora, Guyana Goldfields, just to name a few in mining only.
Dr. Khemraj then turned to the exchange rate, with special reference to what he terms his ground-breaking research paper on exchange rates that was published by a reputable journal (by whose definition?).
Academic research, especially on exchange rate models, had done very little to inform good policy decisions on exchange rate management.
The long cycle of exchange rate stability in Guyana has been a hallmark of macro-economic stability. The main players in foreign exchange markets have fully grasped what needs to be done, rather than play around with some theoretical abstractions.
Hopefully, the good luck in economic management that Dr. Khemraj refers to would translate into similar political fortunes on November 28, 2011, with another resounding PPP/C victory at the polls.