Budget like broken record- Nadir- Ally sees negative growth
By Gitanjali Singh
The United Force (TUF) leader Manzoor Nadir said on Tuesday that the 1998 budget presentation sounded like "a broken record" of the PPP/Civic government. Nadir said that while the budget contained no new tax measures, he was expecting more incentives to attract private capital. "What we heard from the finance minister [Bharrat Jagdeo] is much of the same very good intentions which this government has. We have heard that since the first PPP/Civic budget in 1993 to the last budget in the last Parliament and we now hear it again," Nadir said. Giving this newspaper his first impressions on the budget, he said that Guyanese needed to see positive results on the ground in terms of private investment so that jobs would be created and economic activity stimulated. The 1998 budget, he said, dealt with the current economic stagnation but did not offer incentives to propel the country into a higher plane of more economic growth. The TUF leader said the thrust of the budget and of development in Guyana was from government spending especially in the area of capital works. "This is not going to be sufficient to put the economy in a take- off position," Nadir said. He said it was time that a national commission on investment and economic development was established, comprising parliamentary parties and the private sector. He said that unless this was done, the government will continue to propel development by its spending. Nadir opined that the government should not be spending money on industrial estates, but that policies should be in place for the private sector to develop these estates. He also said that the private sector should take the lead in the issue of a deep water harbour, which has been in the air since Guyana Democratic Party (GDP) leader, Asgar Ally, was finance minister. These projects, Nadir argued, will take too much scarce government revenue which should be directed to the social sector. "We need to see more private sector-led activities in the economy in the budget," Nadir said. He also noted the impact the political uncertainty was having on the investment climate. Ally, meanwhile, has rated the budget as high on rhetoric, and low on practical measures that could impact on the economy. His argument is that Jagdeo is too optimistic in his projections for economic growth and his assumptions are based on variables which could be flawed. "I don't see where the 3.2% growth will come from," Ally said. He expects negative growth of two or three per cent this year. The housing sector, he contended, will take some time to pick up, while the forestry sector might not experience any growth because of the current economic climate. The service sector, he said, could be flat at best. "So when you put all of that in light of the decline in rice, sugar and bauxite production, obviously you will come up with a negative growth," Ally said. On the issue of housing, Ally said that no concession to stimulate commercial mortgages could deal with the problem of low cost housing. He said there needed to be concessional funding with about two per cent interest and suggested compulsory employer/employee savings schemes. "You have to come up with unconventional schemes like this to deal with the housing problem," Ally said. Reintroducing the tax holiday was a good step by Jagdeo, but, Ally said, it comes at a time when the investment climate is clouded because of the political situation. He said there needed to be a green paper setting out clearly how this incentive will work, contending that a weakness of all budget presentations by this government has been announcing measures which cannot be given effect immediately because of the lack of a state paper on the issues. He feels that there is need for economic zones to stimulate economic activity and develop the border towns. "There is little, except the El Nino fund, to deal with the economic problem the country now faces," Ally said, noting that the incentive for investment will require a gestation period before the benefits to the economy are seen. The budget, he says, is optimistic on revenue collection which is not likely to be realised. Many companies, Ally says, are now reporting losses and are restructuring and sending home staff. And with lower imports because of the economic hardships, he sees these leading to a reduced tax base. He also noted that the budget assumes that El Nino would be temporary and said Jagdeo underestimates the extent of the economic problem facing Guyana. Rice and sugar production have hit a plateau, he said, and investment was not flowing in. "I see the budget built on optimistic assumptions that as an economist, I find would be difficult to sustain," Ally said. The economist said he was happy to see that Jagdeo has come around from the position that Guyana does not need a stock exchange to seeing the need for securities legislation. He hopes the legislation will be kept simple. Ally also agreed with the necessity for a private development bank and highlighted the need for venture capital. 
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