EVEN AS countries close to Guyana are experiencing economic struggles, Guyana’s Finance Minister, Winston Jordan believes that we stand as a “light of progress.”

During an interview done on 94.1 radio with Gordon Moseley yesterday, the Minister made it clear that it was important for naysayers to examine the state of our economy and not look at it in isolation of all that is taking place in the Region.

“When we look at the countries that are closely surrounding Guyana, you see an ocean of problems, Suriname, Trinidad, Barbados…they are tired. Venezuela we know what is going on there, Brazil they have their issues and in all this ocean of problems, we are a light of progress,” said Jordan.

The Finance Minister maintained that last November, government had projected a growth of 2.6 per cent but noted that with actual figures being made available, the economy actually grew 3.2 per cent last year, which he noted was better than 2015.

He reminded that the local economy was driven by gold, as the agricultural sector had been struggling, but noted that with the implementation of the public sector programme, there had been some improvement.

Jordan made it clear than the economy can do much better if government spending can get going, while referencing this year’s $250B budget. Asked why there appears to be a problem with government spending, the Minister said that “greater transparency and scrutiny comes with some slowing of progress.”

He attributed the change in spending to the change in procurement systems and noted that there were also administrative issues with employees having qualifications and not the experience or on the converse side, those who have no qualifications but the relevant experience.

“You have a public sector that needs some amount of modernisation to keep pace with the economy and the increased scrutiny that the economy is undergoing,” the minister stated.
The Minister made it clear that “all that glitters is not gold”, referencing to that which obtained under the past administrations. He said the issue was one of sustainability and noted that Guyana’s economy was growing, but at the time the APNU+AFC coalition government took office “it was running on fumes “and Jordan attributed that to the fact that Guyana has not diversified its economic activities after 50 years of independence and continues to be dependent on traditional sectors; rice, sugar, timber, gold, bauxite and fish.

The minister posited that some of the very industries that sustained the country’s economy have collapsed and at this point the economy has to “right itself”, something he says cannot be done overnight.

“If we ourselves don’t adjust the economy, then we are just going to have to hand it over to somebody else to do it,” Jordan added noting that “the ordinary man may not feel it like he had four years ago.”

The reality he said was that the economy was ripening itself and Guyana had to prepare the economy for “the take-off.”

On the issue of taxes, Minister Jordan made it clear that the current tax system would be examined again as government begins to prepare its 2018 budget. He said, “Every budget we have to review our revenue, which comprises mostly taxes, and we also have to review spending,” while adding that the trio – revenue, expenditure and financing – had to gel before a new budget could be compiled.

Additionally, social and moral implications are also examined. The Minister said his administration took office and was faced with a “huge burden.” That burden was the failing sugar industry, which government has thus far pumped over $23B to aid in its survival.

He said Government has also been faced with a number of law suits that were ignored by the past administration and made it clear that some are huge law suits that cannot be swept under the carpet.

“The economy is not growing as fast as we like…and to meet the additional burdens, we have to find new areas…it is not an economy where we inherited fantastic infrastructure,” he added, while stressing that the critics of the tax system needed to be fair.

“People claiming taxes, taxes; they are not claiming take home pay. They have a job, no knocking off of people in the public sector; rising disposable income, income tax has gone down, the threshold has increased substantially. In doing those reductions, we have given up $9-10B,” said Minister Jordan, who also pointed to the reduction in the Value Added Tax (VAT) from 16 per cent to 14 per cent.

Foreign Exchange
Meanwhile, the Finance Minister made it clear that while there have been some issues with foreign exchange recently, Guyana has been able to maintain over $600M in its reserves, an amount that almost equals Barbados’ reserves. Moreover, he said the commercial banks have adequate reserves so that the issue of foreign currency shortage has been contrived.
He assured that there is no shortage of foreign currency here but noted that the exchange rate was “more or less stabilised.” Jordan said the rate stands between $210 and $215 though many persons are reporting that they are able to receive foreign currency from the commercial banks, though not in large sums. He explained that the banks are enforcing that you have to show why you want the currency. After an explanation is provided, the bank takes a few days to do its checks before providing the requested amount.

Asked whether he believes there is a deliberate attempt to starve the economy of foreign currency, Minister Jordan said, that is part of the situation but one also has to examine the reality.

“Part that and part reality. Right now the thing that is generating foreign exchange is gold. You have a couple of big gold dealers selling the gold overseas, we have a problem with them not declaring the entire amount they get overseas – the governor is trying to work with those people.”

The law requires that all foreign exchange must be declared to the bank by exporters but this is not usually done. Additionally, there have been issues with the traditional crops, rice and sugar. In the case of rice, the crop lost its prominence in 2015 when it lost its market to Venezuela. As a result, its earnings have been significantly less. Sugar is not earning anything on the export market, the Minister added, while noting that sugar can be considered a net loser in foreign exchange.

“Despite that though, the holding of foreign exchange in commercial banks have not reduced dramatically, neither in the Central Bank. In fact Central Bank reserves are higher than they were in 2015/2016. Part is contrived and part is reality as foreign exchange is not in the system, and part is our own doing because we have a large project portfolio which is externally financed and to the extent that if we don’t get them going we don’t get the disbursement,” Jordan stated.

He expressed confidence in the Governor of the Bank of Guyana, Dr Govind Ganga, noting that he doesn’t believe persons are trying to undermine the economy.

“I must have confidence in the staff. I don’t see them fudging the numbers; numbers don’t lie; the Governor couldn’t fudge the reserves and those are numbers he just can’t make up.
“To me it is a general pattern in the economy, it is not like the economy is collapsing; it is growing. We are trying to get our budget moving. Saw some numbers looking better than last year. This economy has to ripe itself to put it on a sustainable path,” Jordan concluded.