Dear Editor,

FORMER Finance Minister, Winston Jordan has blasted the PPP/C administration on planned borrowing. Borrowing has negatives and positives that I will address in a separate commentary.

I am not familiar with the China or Islamic loans negotiations to comment on them.  I do not know whether Jordan studied economics or mere bookkeeping. Suffice it to say that as someone who studied developmental economics, I know that poor countries like Guyana don’t have a choice but to borrow to finance capital expenditure, because they lack income to pay for infrastructure.

The problem with Jordan’s critique is that he, too, was engaged in heavy borrowing during his tenure as the Finance Minister of the ‘Coalition’, and he saw no problem with such huge borrowing and profligate spending. And the regime did not put structures in place to pay the debt. In addition, critics say that the ‘Coalition’ administration pursued policies that were not transparent, especially with regards to oil. And had the government not lost the no-confidence vote, it would have continued to borrow, tax, and spend.

Jordan knew accounting on how to get the money that needed to be spent during the PPP/C administration from the 1990s thru 2015, and in balancing the book. But he didn’t know how to create money to enlarge the pie without borrowing. He appeared weak in growth theory, as an economist should. When he was Finance Minister, he raised money and spent it as current expenditure, which does not create long- lasting wealth. His successors, Bishop Juan Edghill and Dr. Ashni Singh pursued infrastructure works that help to create wealth. The planned hydo-electric project and the bridge would lead to opportunities for wealth creation. There was no growth element coming from the debt that Jordan incurred as Finance Minister.

Under his tenure as Finance Minister, the ‘Coalition’ regime did not produce any significant new infrastructure project. It did some repaving of roads, widened some roads, and built arches and overhead passes. But some of these are not growth-oriented. The D’Urban Park structures are not wealth creating; they are rotting. There are questions about accountability of that park. The government raised taxes on everything in order to increase revenues for current expenditures. Money was quickly spent out. Productive workers who would have created wealth were terminated.

Debt wasn’t created for capital expenditure, but for current expenditure. And he did not minimise current expenditure. Every year, there was borrowing. Some US$500M (overdraft on Bank of Guyana) was spent on the domestic side, and there was at least $200M in external borrowing. These debts were not sustainable in the long term without some form of money coming in to service the debt.

At that time, the oil proceeds were not guaranteed. Now, the country is assured of oil revenues to service deficits. Unlike the ‘Coalition’, the PPP/C has borrowed money for capital expenditure; to build new roads, hospitals, hotels, farm roads, etc. These kinds of expenditures lead to sustainable growth, and increase development. There would be increase efficiency in production. New roads mean people will get to work faster, and goods will also move quicker, saving the country enormous amounts of money while increasing productivity.

Jordan got pulled in to the race-bias politics of the ‘Coalition’. And that hurt his image as an objective critic of the PPP/C administration’s borrowing plan.

Yours truly,
Vishnu Bisram