Budget has no answers
EDITORIAL
Stabroek News
April 2, 2004
An uninspiring, $75.6 billion (US$378M) budget was presented to the nation on Monday. A similar budget (US$372M) had been presented the year before and yielded negative growth of 0.6%.
It is sad to say that nothing within the 54-page document read by Finance Minister, Saisnarine Kowlessar, suggests that the government has a plan to restore political confidence in the economy, to allow the private sector to play a meaningful role in the commercial centre or to foster investments in the regions to mitigate the effects of political turmoil in the capital city on the economy.
The Minister gives the impression that the political problems are under control and the gravy train will be on its way delivering a road here, water somewhere else, irrigate a few acres at another place.... The government is hoping that the economy will grow by 2.5% this year but should sugar sneeze the economy will fall into recession. As the chartered accountants firm, Ram & McRae pointed out in its review of the budget, you cannot keep doing the same thing each year and expect to see different results.
The budget downplays a key catalyst to growth - the political situation - and fails to innovate to put back the country on a sustainable growth path. Sugar continues to have a stranglehold on the GDP basket. There is no plan to deal with the dislocation that will follow the impending closure of the Omai Gold Mines Limited. There is no plan to attract investors into the regions, to make those regions viable if for any reason access to the city is cut off. The economy remains heavily centralised, depending on rice and sugar, which suffer with the vagaries of weather apart from being exposed to exchange rate risks and commodity prices as well as demand constraints. There is no credible plan to create jobs for the growing number of jobless........and the list can go on.
On the political side, the Finance Minister gives the impression the political problems are under control until a long-term solution is found. "...We have had to grapple with an unstable political climate, which grew out of the unwillingness of the main opposition party to accept the results of the elections and their subsequent pronouncement to make the country ungovernable. A ray of hope emerged towards the middle of 2003 when this negative position gave way to constructive engagement. Sadly during the intervening period, the country bore witness to a rein of terror...." "The signing of the May 9, 2003 communiqué and the subsequent return of the main opposition party to parliament...were important steps in establishing trust and engendering confidence in the difficult process of building this young nation. We will continue to engage the political parties, civic and other groups in dialogue and discussions. Our reality and circumstances dictate that we explore all avenues for achieving lasting peace and stability."
But the political situation is not under control, nor is crime. Discontent is high and the dialogue process has been suspended. We already have evidence of bursts of criminal activities on the east coast corridor.
The government has to wake up and face the reality. It has to take the steps necessary to make the country governable. It was empowered to make decisions to foster business, create wealth and improve the welfare of all Guyanese. This means it has to do what is best for Guyana, the country and its citizens, and that includes leading the process to find a lasting political solution. And time is of the essence as we continue to slide without hope of recovery.
Supporters of the government say the 2004 budget was the best the government could have done in the circumstances, given that the private sector is operating at minimum capacity to keep the engines warm and no investor is willing to come into Guyana with the current political climate. If this was true, at the rate we are going, the country would fall to pieces.
But subscribing to this view is accepting that the government lacks a vision. What happened to scouting out investors for non-traditional investments in the regions which are not affected by political strife? So far, Regions Four and Ten (and as a result the mining areas) stand out as the ones where investments can be held hostage in political strife. But what about the other regions? Are they barren to investment opportunities and innovative measures to realise these opportunities?
The International Monetary Fund would have guided the setting of the macroeconomic targets while HIPC targets would have defined spending in the social sector. But what about the rest of the US$378M to be spent?
On the heels of successive budgets which have failed to stimulate the economy, the Minister of Finance and the government have again let a golden opportunity pass to provide an impetus for the economy.