–economist, financial analyst school Opposition on reality of Guyana’s progressive economy
–say country well on its way to avoiding ‘natural resource curse’ with prudent macroeconomic management

THE resilience of Guyana’s economy, particularly its non-oil sectors, and the prudent macroeconomic management that allowed the country to not just withstand global shocks, but also perform above average economically, were cited as clear evidence of the nation’s progressive nature and its avoidance of the Dutch Disease, more commonly referred to as the natural resource curse.

Using empirical and factual evidence regarding Guyana’s economic position, Executive Director of the Georgetown Chamber of Commerce and Industry (GCCI), Richard Rambarran and Financial Analyst, Joel Bhagwandin, practically schooled the political Opposition, which claimed recently that there are signs, locally, of the Dutch Disease.

In short, according to the International Monetary Fund (IMF), the Dutch Disease refers to the detrimental consequences of a sudden boom in a country’s economy.

“I want to say that the proponents of the construct that Guyana is already suffering from a natural resource curse, in my view, I don’t think they understand the concept, and that a careful and thorough analysis has been done to ascertain that factor,” Rambarran said on Wednesday, during an interview on the National Communications Network (NCN).

The Opposition’s basis for its claim was the reported decline in the production of rice, sugar, gold and fish during the first half of this year. This was, however, examined in isolation from the overall performance of the economy, which recorded Gross Domestic Product (GDP) growth of 36.4 per cent and non-oil growth of 8.3 per cent.

On this point, responding directly to the Opposition, Rambarran said: “If there is a disaggregation of the economic sectors and you take a closer look, there still exists growth more strongly in non-traditional sectors than has ever been had in Guyana. Livestock, other crops, wholesale/retail, bauxite, all of those sub-sectors, very important labour-intensive sub-sectors, continue to grow.”

According to the Ministry of Finance’s Mid-Year Report, the livestock industry is estimated to have grown by 4.2 per cent when compared with the first half of 2021, while other crops expanded by 27.7 per cent, wholesale and retail trade grew by 17.2 per cent and bauxite by 31.9 per cent.

Drawing attention to the sectors that underperformed, particularly rice, sugar and gold, Rambarran explained that those sectors are highly dependent on favourable weather conditions, and where a country is facing inclement weather and a global economy plagued by COVID-19 and the war in Ukraine, the shortfalls are not necessarily a result of any internal policies.

MACROECONOMIC MANAGEMENT
“…the first half of this year was affected by the pandemic, and the war between Russia and Ukraine… what that did was create adverse economic conditions, and if you have an economy still experiencing positive rates of economic growth in a global context where economic prospects are dampened, then you have an economy, which in my view, speaks volume to macroeconomic management,” the economist posited.

Rambarran went a step further in commending the government for containing inflation to less than the global average, which is hovering around five-six per cent. There have been reports of countries recording inflation of up to nine-ten per cent, so, in Rambarran’s view, Guyana’s performance is evidence of what prudent macroeconomic management looks like.

The government, since being elected to office in 2020, has introduced several measures to put more disposable income in the pockets of Guyanese. From the onset, Value Added Tax (VAT) was removed from water and electricity, a burdensome measure placed on the backs of Guyanese by the former APNU+AFC administration.

There has also been the constant increase in old-age pension and public assistance which, in 2022, put $2.3 billion and $432 million respectively into the pockets of Guyanese.

Additionally, the PPP/C Government reinstated the “Because we Care” cash grant and school uniform cash grant which stands at $30,000 per child in both public and private schools.

Further, every household in the hinterland is in the process of receiving a $25,000 one-off cash grant and farmers are slated to receive $1 billion in fertiliser support. These two groups were severely affected by the rise in cost of living.

“…if you look quantitatively at the measures, it is more than 107 per cent of the natural resource balance as at 2021… they [the incumbent PPP/C] have done enough to cushion shocks,” Bhagwandin commented.

With sound policies and prudent fiscal planning, the financial analyst firmly believes that Guyana is becoming an example for other countries to follow, especially from a macroeconomic management standpoint.

The outlook for the second half of the year continues to be favourable, with real GDP now projected to reach 56 per cent by the end of this year and non-oil GDP growth at 9.6 per cent, maintaining Guyana’s position of global leader in economic growth.

GOLDEN RULE GROWTH
Commenting on the projections for Guyana, Rambarran said: “Non-oil growth is above what economists refer to as the golden rule of growth, which is around 4-4.5 per cent… that is extraordinarily important… with the sectors and sub-sectors poised to grow, you will find we are on the way and already putting measures in place to avoid the natural resource curse.”

In his view, the economy is poised for rapid take-off, and once weather is favourable, sugar and rice will rebound, and so too will the manufacturing sector once global conditions reach pre-pandemic levels.