By: Joel Bhagwandin

HAVING conducted a fair comparison between the two administrations, it was found that the non-oil GDP growth recorded under the PPP/C administration nearly ten years prior to the APNU+AFC administration’s tenure was 2.4 times higher than the growth recorded during the coalition’s tenure (2016-2019).

Needless to say, this astounding achievement in the period FY 2007–FY 2010 was obtained without oil resources or the commercial discovery of crude oil at that time. Notably, this level of vibrant non-oil growth rebounded with the PPP/C’s administration return to government during the period FY 2020–FY 2023.

BACKGROUND

One of the main criticisms by the political opposition is that the former government―that is, the political opposition that was in government during the period FY 2015-FY 2020, that they did not have access to the oil revenues during their tenure, as in the case of the incumbent administration; implying the reason for their “dismal” performance.

However, the fact of the matter suggests otherwise. The former government expended upwards of $1.6 trillion during the period FY 2015-FY 2020.

The former government consistently slashed the capital budget, thus the lack of investment in developing the productive capacity in the economy, to the extent that the capital budget represented 21 per cent of the total budget. Resultantly, the recurrent expenditure was ballooned unsustainably to 79 per cent of the budget.

OVERDRAFT BALANCE ON THE GOVERNMENT DEPOSIT ACCOUNTS

The former government inherited $81 billion (2014 end year balance) in liquid cash sitting in the government’s deposit accounts held in the banking sector. By the time the former government demitted office in FY 2020, the government deposit accounts held at the Bank of Guyana recorded a massive, illegally accumulated overdraft balance of $128 billion at the end of 2020.

In this regard, the opposition spokesperson on finance argued that the former government overdrawn balance as of August 2020, stood at $98 billion. The opposition further contends that in May 2021 when the incumbent government would have cleared the balances through the issuance of debt instruments, the balance stood at $148 billion.

As such, the opposition argued that the incumbent government racked up the difference, which was a significant sum for the short period of some $50 billion. Notwithstanding, the opposition spokesperson may have been misguided and/or unaware of the financial law that governs the fiscal operations of the government deposit accounts.

It is important to note that the balance recorded at the precise time when the former government demitted office in 2020, may not have been the accurate balance reflecting all of the withdrawals attributed to the former government.

The explanation for this is such that the deposit accounts operate similarly to a business chequing account whereby cheques are drawn on the accounts. This means that there are likely to be unpresented cheques at the end of the reporting period.

With that in mind, the most important fact that the opposition spokesperson appeared to be unaware of, is that the manner in which the former government operated the government’s deposit accounts, was in gross violation of the Fiscal Management and Accountability Act (2003) (FMA Act).

In this regard, Section 60 (1) of the FMA Act states that “…the Minister may approve the use of advances in the form of an overdraft on an official bank account to meet cash shortfalls during the execution of the annual budget.

“In other words, the Act provides for the deposit accounts to be overdrawn. However, Section (2) of the FMA Act states that…” the Minister shall repay in full all advances in the form of an overdraft on an official bank account on or before the end of the fiscal year during which that overdraft was drawn”.

The overdraft balances were never cleared for the entire five-year period (2015-2020) until the incumbent government assumed office in 2020 and made the necessary provisions to regularise those overdrafts in accordance with the FMA Act, which was effected in May 2021.

Consequently, this is where a major violation of the FMA Act was perpetuated by the former finance minister, and by extension the former government that apparently escaped the opposition’s spokesperson on finance―during the budget debate.

FAIR COMPARISON OF THE APNU+AFC VERSUS PPP/C GOVERNMENT’S STEWARDSHIP OF THE ECONOMY

In view of the political opposition’s contention that they did not have the benefit of the oil resources as in the case of the incumbent government, a fair comparative analysis would dismiss the “excuse” on the part of the opposition for their failure to deliver during their tenure in government.

In so doing, the author examined the cumulative non-oil GDP growth during four of the best years of the APNU+AFC administration (FY 2016-FY 2019) relative to FY 2020 – FY 2023, and in comparison with four prior years of the PPP/C administration, specifically the period FY 2007– FY 2010.

In the interest of fairness, the period FY 2011- FY 2014 under the PPP/C was deliberately not considered for the purpose of this comparative analysis because during that time, the government was a minority government. Within this dispensation, the political opposition had a one-seat majority in the National Assembly, such that they had full control of the National Assembly.

This dispensation allowed the opposition to exercise their control of the National Assembly in a manner that stymied and disrupted the development agenda of the government, inter alia, imposing massive cuts to the national budgets presented by the government. Ultimately, this led to snap elections in 2015.

During the period FY 2007-FY 2010, the total non-oil real GDP growth recorded was 29 per cent; for the period FY 2016-FY 2019 the non-oil growth was recorded at 12 per cent, while for the period FY 2020-FY 2023, the non-oil growth recorded was 30 per cent.

CONCLUSION

Evidently, the non-oil GDP growth recorded under the PPP/C administration nearly ten years prior to the APNU+AFC administration’s tenure, was 2.4 times higher than the growth recorded during their tenure (2016-2019).

Needless to say, this astounding achievement in the period FY 2007–FY 2010 was obtained without oil resources or the commercial discovery of crude oil at that time. Notably, this level of vibrant non-oil growth rebounded with the PPP/C’s administration return to government during the period FY 2020–FY 2023.