Jordan dismisses as spurious, claims economy underperforming

CRITICISMS about lack of growth in the economy were on Monday dismissed as misconceptions by Finance Minister Winston Jordan.
“Fast and loose” is how he terms those claims, while stating that the facts are glaring.
During a press conference called to address the 2017 Mid-Year Report, Jordan made it clear that growth has continued in the local economy, when compared with the many challenges being experienced by the country’s neighbours.
Economic growth was recorded to have risen during the first half of the year to 2.2 per cent compared to 2.0 per cent growth for the same period last year.
The minister explained that though the country’s growth target has been revised from 3.8 to 3.1 per cent, there is clear evidence that there is growth and that there’s nothing to fear.
In fact, he said out of an abundance of caution, the growth rate has been revised. The Finance Minister explained that the inability of sugar to meet its targets has resulted in a change in projection.
Sugar production was recorded at 49, 606 tonnes at half-year as compared to 56, 645 tonnes during the first half of 2016, representing a decline of 12.4 per cent.
“There is nothing we can do about sugar… it will take us a long time to get sugar righted,” Minister Jordan said.
“If sugar only came at what we had projected, the growth rate of 3.8 per cent would have been surpassed, based on last year’s performance,” he added.
Government has since begun a reform of the sugar industry, where divestment and diversification are being pursued.

EXCEPTIONALLY WELL
He noted that rice, on the other hand, has performed exceptionally well, and given the new markets, Mexico and Cuba, it is expected to contribute significantly to the economy. Rice production stood at 349, 867 tonnes, representing an increase of 31.6 per cent over production in the first half of 2016.
The Finance Minister admitted to inheriting an economy that was growing from the People’s Progressive Party (PPP), and noted that at the end of 2012, there was a 4.8 per cent growth due to rice production. That year’s growth increased in 2013 to 5.2 per cent, but by 2014 growth had plummeted to 3.8 per cent.
In 2015, the year the APNU+AFC coalition government took office, growth declined even more to 3.2 per cent, something the minister said was only to be expected, due to the history of the country’s elections and uncertainties which arise therefrom.
However, by 2016, growth had rebounded to 3.4 per cent, and it was on that basis that growth was projected at 3.8 per cent this year.
Meanwhile, former Minister of Housing Irfaan Ali was quoted in one section of the media as stating that the economy is eroding at a fast rate, something that did not find favour with Minister Jordan, who cautioned persons from making “fast and loose” statements.
He assured the media that there has continually been growth in the economy, and urged critics to check carefully all of the economy’s indicators.

NO STATIC RESERVES
In the case of reserves declining, the Finance Minister made it clear that reserves are not static.
“In any point in time, they move up and down; reserves can be 600 today and 500 tomorrow,” he said.
“I don’t think we should be playing fast and loose with these numbers. I know the Opposition is pandering to a certain section of the population…
“When you play with numbers like these, you are not only playing with a section but with the entire population,” he added.
The Minister disclosed that at the end of 2012, reserves at the Central Bank stood at US$862.2M, of which US160M came from the International Monetary Fund (IMF) disbursement. He was quick to state that Guyana was not in the IMF programme but money was made available to a number of countries.
By 2014, those reserves had plummeted to US$665.6M and in 2015, an election year, reserves plummeted further to US$598.5M. “Consistent with growth performance in the economy reserves at the end of 2016 had gone up back to US$615.7M,” said Minister Jordan, who stressed that reserves will continuously be moving upwards or downwards.
The key point, he noted, is how many months of imports the reserve can allow, the benchmark of which is three months. At the half year, reserves stood at US$574M and according to the minister, we are above the international standard on the matter.
“A country like Guyana that has massive needs… because we are an open economy, which means we import virtually everything and we export virtually everything to get our export income, there would be lots of moments in our reserves…” Jordan explained.

RISING DEBT
He said, too, that Guyana has not reneged on any debts, though there was a difficult period earlier this year with exchange rates being high. “Our inflation is well in check; I don’t know where certain people did their economics… All of the indicators are in the right direction,” he told reporters Monday.
Moreover, the Finance Minister made it clear that debt will continue to rise and noted that the issue is not whether debt will rise but what the ratio is. Debt he said should be in the region of 60 per cent of the Gross Domestic Product (GDP) and based on the Ministry’s last count, stands between 48 and 50 per cent of the GDP at half year.
He said since taking office, his administration has stated clearly all of the loans it has taken and those include loans which were in the pipelines before taking office. He cited the loan from the Indian Government for the acquisition of ocean going ferries, along with the loan for the by-pass. Jordan also referenced the East Coast Demerara (ECD) Highway loan from the Exim Bank of China.
“There were a couple of loans there that all I did was sign off. We have taken a couple of loans in the education sector…the debt will go up also because when we came to power there were a large number of loans that were accessed by the previous government that were going nowhere very fast. Loans that were taken since 2012, where virtually no disbursements had taken place,” he added.
The Minister explained that as the loans are disbursed, they will count as part of the country’s debts, unless they are cancelled, which is something he said that does not make sense.

According to him, the expansion of Sheriff Street-Mandela Avenue was not properly thought out, and that certain parts of that loan, which was granted in 2012, was cancelled.
“Aspects of it will be done to Sheriff Street, but not the madness the previous government had in mind… Most of the loan we are trying to redirect to housing,” Jordan disclosed.

TWO-LANE UPGRADE

The Inter-American Development (IDB) project had comprised of a two-lane upgrade of Sheriff Street up to the National Cultural Centre and a four-lane road from there to the junction near Banks DIH Limited. When completed, there was supposed to be sidewalks and bicycle paths.
Debt has increased by $53M during the first half of the year with $17.3M being due to government taking over the Marriott Hotel from previous owner Atlantic Hotel Inc. (AHI). He said before taking over the Hotel, a team of officials were tasked with renegotiating the contract and as a result of renegotiation; government will be able to save over US$3M.
Jordan mentioned too government’s signing of a Debenture Agreement of over $5.6B to repay the social security agency for losses suffered when the Colonial Life Insurance Company (CLICO) collapsed back in 2009.
That aside, he noted the number of concessions granted to the forestry sector over the years though it continuously fails to contribute significantly to the economy.