The President of Guyana should have delegated the announcement of the country's five per cent growth to his Minister of Finance. After all, we do have a Minister of Finance and giving him the opportunity to make the announcement would have boosted his standing in the eyes of the public.
A second possibility would have been to defer the announcement of the actual GDP growth until the tabling of the 2007 Budget.
While the laws of our country provide for the government to make public details about the half-yearly performance of the economy, for the first half of last year, 2006, there was no report fueling speculation that the economy had not performed as anticipated. It was therefore something of a surprise, especially the losses suffered by rice farmers in the first crop, to have learnt that the economy did grow by about 5% last year. Guysuco and the Brazilian miners operating in Guyana must have had a wonderful year.
Has the Jagdeo jinx been finally broken? After all these years, has the President's luck finally turned for the better? Is Guyana 's economy turning the corner and now on a rapid ascent?
For his perseverance after so much ill-luck befell his Presidency, it would be nice to know that Guyana can look forward to years of high economic growth. No President has had to endure as many problems as this President. From floods to crime waves to political instability, Bharrat Jagdeo has seen it all. If there is anyone who deserves a little bit of luck with the economy it is our President.
Ever since he took over the reins of the economy in 1997, Guyana 's economy has underperformed and there have been no shortage of excuses for the fact that over the past nine years, instead of our GDP doubling, it has averaged a miserly average of just over one per cent per annum. This will not suffice for a country which, when the PPP took over, was the second poorest in the western hemisphere and is still fourteen years after, the second poorest in the region.
Are we witnessing the beginning of the sort of economic growth that we should have been enjoying for the past ten years?
Before we get all excited by the fact that the economy grew by about 5% in 2006, I would remind Guyanese that in 2005, the economy contracted by 3.5%. Thus in real terms the economy in 2006 only grew 1.5% over the 1994 performance, averaging a positive annual growth of less than one per cent per annum over the past two years.
In terms of inflation, it is difficult to understand how the country's inflation rate was only 5% in 2006, when the President himself was stressing how much we have been importing inflation. But considering that the President is correct, it means that the teachers' union did indeed sign a bad deal because while inflation for 2006 was 5%, teachers will this year only enjoy a 5% increase, a figure that has already been undermined by this year's inflation. Thus with their 5% increase for this year, teachers will be no better off than they were at the end of last year.
We were also told that the national reserves have significantly increased. This however is not something to shout about. Guyanese should be complaining about our country keeping high levels of international reserves when our dollar continues to depreciate.
I have argued before in these columns that the international conditionalities insist that we hold quite a few months of imports as reserves. However considering the bragging about macroeconomic stability, we should be keeping no more than three months of imports as reserves with the balance been ploughed back to improve the strength of the dollar against other currencies. If we are doing such a good job of managing the economy why then do we still have to carry such high levels of international reserves?
The strength of a country must not be assessed solely by one variable, in our case, for example, purely by the level of GDP growth. If our economy is doing well and becoming stronger, I also expect the value of our dollar to improve.
We should aim ideally for a situation where for every one percentage point growth in the economy, we improve the value of our currency by $0.10. Thus if last year, our economy grew by about 5%, then it would have been nice if our currency appreciated by two shillings.
For nine years our country has laboured under the Jagdeo jinx and this has brought very poor levels of economic growth. What is driving our economy is heavy government spending on its capital program and recovery within sugar and mining. Perhaps, if we allow others to play more involved roles in the management of the economy, perhaps if we allow the present Minister of Finance to report on the performance of the economy, perhaps, just perhaps we could break this jinx that results in substandard levels of growth within our country.
I therefore look forward to the Minister of Finance calling his own Press Conference to explain how this 5% growth was achieved in 2006. If he is not so inclined then I suppose we can await his Budget presentation and I hope that the Minister of Finance leads the charge in defending his Budget.
The Minister of Finance needs no assistance in explaining how the economy performed in 2006, as I am sure that it was within the capacity of the Minister of Tourism, Industry and Commerce or the Minister of Culture, Youth and Sport to have explained the rationale for the reason for government supporting the hotels under construction.