Thursday, February 12, 2009

Your budge-not

Peeping Tom: I wonder how Donald Ramotar felt listening to the Budget Speech of Finance Minister, Dr. Ashni Singh. I wonder whether he was happy.

I hope he is not because if he holds any aspiration to become the President of Guyana in 2011, he must know that this Budget Speech would not do any good for his own chances or for that matter, the People’s Progressive Party.What the speech reveals is the stifling lack of imagination that exists within government.

Surely, the speech contained the same old policies which have been tried and tested in the past.

The PPP when it was in opposition had decried neo-liberal economic policies. Yet this same government has for sixteen consecutive years embraced a neo-liberal model of development, ironically the very model which was responsible for the economic meltdown in Argentina a few years ago and which is not shaking the very foundations of the global capitalist system.The present Budget is devoid of vision.It is hallow and shallow.

It does not lead anywhere but to a blind alley. It is based on a model that projects growth based on fundamentals that are not going to lift the masses of our people out of poverty.The 2009 Budget is like any other PPP Budget. You have heard one and you have heard all. The emphasis is on collecting more taxes so that public expenditure can be increased, increased borrowing to fund projects and the constant stress of macroeconomic stability.This nonsense about macroeconomic stability needs to be nailed once and for all.

There is nothing stable about macroeconomic stability in Guyana. We are either supporting an undervalued currency or floating an overvalued dollar. Macroeconomic stability is not allowing our dollar to appreciate and this is the surest sign that while we have economic growth this growth is distorted because it is not making our dollar stronger.Macroeconomic stability is also not helping interest rates to find their equilibrium.

These rates are being supported by monetary policies that are concentrated on sterilizing excess liquidity in the banking sector, instead of boldly and imaginatively seeking to put this excess liquidity to work.All of this is due to an unimaginative monetary policy which is perhaps the greatest failure of economic planning over the past twenty years.

The inflation rate baffles me. What is quoted as the official inflation rate bears little resemblance to what consumers face in the shops each day. Prices are high and this is one of the great tragedies in our country.

There is simply a lack of sufficient sensitivity to the impact of inflation on the daily lives of citizens.Yesterday, the printer’s devil was at work quoting the Peeper as saying that Guyana’s economic plans for 2009 rests on the tenuous strings of recovery within sugar and public consumption.

The latter should have read public construction.Even if as part of a stimulus package we had engineered massive public construction expenditure, this would not resolve the problems of underdevelopment since the construction boom in our country benefits a small number of contractors.

It was hoped that this year the government would have moved away from that model and instead try to design public sector projects so that it would help to a greater extent in job creation. The greatest obstacle to increased jobs, for example, in the construction sector, is the notion that Guyana has problems with absorptive capacity.

This thinking unfortunately is quite pronounced and is mainly responsible for only a handful of firms dominating road construction in Guyana.The private sector also has similar problems of capital concentration. While there are a number of small companies that are in existence at the moment, especially in the retail trade, wealth and market share in the economy are dominated by a few large companies in the manufacturing and financial sector.

Fortunately, most of these titans are doing well. But all it would take is for one massive failure of any of the large companies in Guyana for there to be a business tailspin. And this is why the eerie silence of the Budget in terms of monitoring some of the large companies in Guyana is worrying.But certainly, it is not as worrying as the fate of GuySuCo, the richest company in Guyana, but one which has for years now been facing problems, and on which the performance of the economy is hanging.

This is why I am worried for ‘The Donald’. And this is why I believe he should be worried too, because the 2009 Budget can shatter the dreams of his fans who are hoping that ‘The Donald’ will become the PPP’s next Presidential candidate.And this is why over the next week he must fight tooth and nail to have this Budget sent back to the drawing board.

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