–with strong policies and measures implemented by the PPP/C

WITH Guyana experiencing a decline in the output of main traditional sectors, major reduction in reserves at the central bank, increased overdraft at the central bank, and the introduction of over 200 taxes between 2015 and 2019, it was an uphill task for the People’s Progressive Party/Civic (PPP/C) to place the country on a path to prosperity after returning to government in 2020.

This was debated by President, Dr. Irfaan Ali, in a video message released on Friday, on his official Facebook page.

During the just over 25 minutes broadcast, the Head of State stressed the importance of good governance in creating a stable country as he compared the performance of Guyana’s economy during varying periods under different governments.

According to the President, Friday’s video was the first of three that will be released.

President Ali contrasted and compared the state of the country prior to 1992, when the country faced a period of “dictatorship” under the People’s National Congress Government, led by then President, Forbes Burnham; the period from 1992 to 2014 when the PPP/C was in government, and the period from 2015 – 2020 when the PNC/R- led A Partnership for National Unity + Alliance For Change (APNU+AFC) coalition was in power.

The President stressed that even as the government lays the foundation for the country’s economy in 2030 and beyond, it is imperative for Guyanese to understand the country’s development from a historical position.

“We must do so from a position where the basis of analysis is crafted in a fact-based mechanism, and not the imaginative presentation of someone,” the President charged.

The President opened his remarks with an outline of the country’s state prior to 1991 and contrasted this against the period 1991 to 2014 during which massive resources and time was spent on rebuilding Guyana structurally, economically, and socially.

“From 1991 to 2014 what occurred in this country, it is a great injustice for one not to understand the context in which the government operated and what they had to overcome, notwithstanding all that we inherited,” Dr. Ali noted.

During the period 1991 – 2014 the PPP/C government managed to improve the country’s Net International Reserves at the central bank, Bank of Guyana (BoG), from a deficit of US$27.9 million to a surplus of US$652 million. In addition to improving the Net International Reserve, the PPP/C government also reduced inflation from 70.3 per cent to 1.2 per cent.

The government also massively reduced the country’s external debt, which decreased from US$2 billion to US$1.2 billion.

“There was a time in our country when our debt to GDP ratio was 677 per cent,” President Ali noted.

Despite battling such harsh economic conditions, the government was still able to continually increase the public sector minimum wage. National minimum wage was increased from $ 2,546 in 1991 to $42,700 by 2014.

In the social sector, the government also managed to reduce the infant mortality rate. When we came into government in 1991 it was 43 to 23. Infant mortality rate is the number of infant deaths for every 1,000 live births.

“In 1992, when we came into government there were two doctors for every 10,000 people in our country. By the time we left the office in 2014 that increased by 600 per cent to 14 doctors per 10,000 people. When you look at nurses, there was a time when for every 10,000 population we had six nurses. By the time we left in 2014, we had 13 nurses for every 10,000 population, an increase of 400 per cent. This is the scenario that Guyana was found in 1991,” he said adding the PPP/C put in a lot of work to leave the country in a better place in 2014.

At the central government level, investment was increased in education as a share of the national budget. While in 1991 education only accounted for 1.9 per cent of the national budget, by 2014 it was 14.8 per cent of the national budget. Investment in health as a share of the national budget was also increased from two per cent in 1991 to 10 per cent in 2014.

“I want every Guyanese to understand the evolution of things and where we are going,” Dr. Ali said.

The President then went on to outline what took place in the country from 2015 to 2019. From 2015 to 2020 the economy saw the contraction, in terms of exports the sugar industry total production contracted by almost $21 billion, forestry contracted by $31 billion and the bauxite industry contracted by $9 billion.

“The decline of these sectors between 2014 and 2019 had cost us more than US$285 million,” Dr. Ali pointed out.

At the BoG, gold reserves fell from $25 billion to $800 million in 2019, a decline of 97 per cent.

Meanwhile the overdraft at the central bank increased by more than $114 billion or 540 per cent.

Speaking about the new taxes introduced, the Head of State noted that tax revenues increased from $136 billion in 2014 to $226 billion by the end of 2019.

“This is a government that came into 2015 with an effective tax rate of 15 per cent. At the end of 2019, the effective tax rate moved to 22 per cent. This meant that the people in 2019 [had] to pay an average of 22 cents earned on every dollar, when at the end of 2014, they were paying an average of 15 cents on every dollar,” the President explained.

According to Dr. Ali, small and medium-sized businesses ended up facing the brunt of the impact of the increased taxes, with many of these businesses having to shutter their doors.

“Private consumption declined by $77 billion. As a share of GDP private consumption fell from 82.7 per cent to 53 per cent by the end of 2019. This [meant] that the rate of spending by our people fell by almost 20 cents on every dollar earned in those four years,” he noted.

There was also a decline in domestic credit to the private sector which led to an increase in non-performing loans at a ratio of the gross loans, increasing from an average of seven per cent in 2014 to 14.8 per cent by the end of 2019.

A non-performing loan is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full.

“Our investors were finding it extremely difficult to service their debt. This is why we saw such a huge increase in non-performing loans. People can’t pay their loans, businesses are closing,” Dr. Ali noted.