–Dr Ali says, schools critics on true meaning of macroeconomic indicators
PRESIDENT Dr Irfaan Ali has strongly rejected claims that Guyana’s recent economic growth is being driven primarily by government spending, describing such assertions as “comical” and rooted in a fundamental misunderstanding of basic macroeconomics.
Speaking on the performance of the non-oil economy, Dr Ali, on Wednesday, stressed that Gross Domestic Product (GDP) measures production, not payments, and that sustained growth in non-oil GDP reflects increased output and productivity across sectors such as construction, manufacturing, agriculture, services, transport, and trade.
He noted that government spending is not itself a production sector and only appears in GDP when it results in real economic activity, for example, when a contractor builds infrastructure, a supplier delivers goods, or workers are employed.
Dr Ali reiterated that the assertions being peddled by some critics are “devoid of facts, reality, or any understanding as to how the economy works, how systems work, and how governments operate. Government expenditure in the economy is geared towards enhancing services, building resilience, expanding opportunity, creating jobs and building prosperity for every single Guyanese and every single Guyanese family.”
He pointed to capital investments such as the Dr Bharrat Jagdeo Demerara Harbour Bridge and the construction and rehabilitation of hinterland roads, noting that these projects reduce travel time and fuel costs, improve connectivity, and support higher productivity, particularly for miners and those in the forestry sector.
Such spending, he said, creates jobs, encourages investment, and expands economic opportunity.
“Now the parrots will continue….. it is important for us as a people to understand the reality, appreciate the reality,” President Ali said.
He pointed out that for non-oil GDP to increase, businesses must be producing more goods and services, indicating higher levels of productivity and real economic activity across the country.
According to the President, there is no accounting framework that allows a government simply to spend money and, without any corresponding production.
“This is no accounting framework. There is no accounting framework in this. This is not a balance sheet, nor one that allows government spending to artificially inflate non-all GDP without real economic activity. So without real economic activity taking place, without real production taking place, without real value being created, without real jobs being created, there is no counting framework that could artificially address GDP or change the GDP numbers,” he said.
The President reminded everyone that non-oil GDP has grown consistently, rising from 4.6 per cent in 2021 to 14.3 per cent in 2025 and averaging 13 per cent between 2022 and 2025, with non-oil sectors contributing almost 20 per cent of total economic expansion in 2025.
Distinguishing between government spending as a catalyst for economic transformation and the claim that it is the sole driver of growth, the President explained that capital spending by the government is intended to support structural changes in the economy, improve productivity, and reduce the cost of doing business.
Recurrent spending is designed to ease short-term pressures, for example, by increasing disposable income, reducing cost-of-living burdens, and providing in-kind support such as grants to farmers and assistance for children and vulnerable households.
“Capital spending by the government is intended to support structural changes in the economy and to increase productivity in all key sectors, while recurrent spending is to ease short-term
pressure, for example, increasing disposable income, reducing cost of living pressures, and providing in-kind transfers. That is the grant, that is the support to our farmers, and that is the support to our children. That is in this current expenditure,” he said.
