Changes in the Guyanese economy

Written by

Within the last two years, there have been several changes to Guyana’s fiscal, social and political fabric for various reasons. Most of these changes have resulted in positive benefits for the nation’s regional and international image while securing encouraging reactions from the world over.
But in the domestic borders, these so-called “changes” have earned mixed responses from a concerned populace.

The sugar industry
The troubles plaguing Guyana’s sugar industry and Government’s response to it is a classic example of the mixed reactions one would see from within the nation’s borders compared to that of the international platform.
Sugar remains the largest employer of labour in Guyana, securing a workforce of some 17,000 employees.
But since the year 2000, there have been marked declines in the sugar productions. Solutions of every type were formulated by the former administration, the People’s Progressive Party Civic (PPP/C), to somewhat steer away from the inevitable – the scaling down of the sector. That administration brought experts from Cuba, Jamaica, India and China, among other territories, but they still couldn’t save the ailing sector. They even invested over US$200 million in constructing one factory—the Skeldon Sugar Factory—that was intended to rescue the industry. But that ended up being nothing but a hydrocele on the sector.
Compounding the issue as well, was the fact that some old factories were not being maintained as they should be. Then, Guyana lost its European Union (EU) market, which offered preferential prices for Guyana’s sugar. To top things off, employment costs and the cost to produce sugar in Guyana was astronomical when compared to Caribbean territories and ABC countries.
Even with all of these issues, the authorities still continued to feed the sector with billions upon billions of dollars in bailouts. This may have quelled the passions of sugar industry advocates in Guyana who believed that sugar is too big to fail and needs to be kept alive no matter the economic costs. But internationally, this was only hurting Guyana’s image.
Big donor agencies, such as the World Bank and the International Monetary Fund (IMF), opined that the bailouts were simply too big. They contended that such spending was distorting Guyana’s growth and development in other areas. They cautioned Guyana, on several occasions, that its treatment with the sugar industry would disfigure the moral, economic, political and social well-being of the nation.
Understandably, the authorities of the day could not risk the consequences of not heeding the advice of these powerful global organizations. As such, the authorities today made the bold decision to scale down the sugar industry.
Guyana is now moving in the direction of producing sugar on a small scale; a scale that will only cater for domestic consumption and other smaller markets within CARICOM.
The Government has chosen to make the international organizations happy. And one can even argue that the decision regarding the sector is justified in some respect. However, the locals are not happy with this. Scaling down the sector means putting thousands of workers on the breadline. Where will they go? How will they survive? This drastic change and its social and economic repercussions are yet to be addressed.

200 New Taxes
Another economic change that has left the nation split down the middle is the move by the Government to introduce new taxes. Since the Coalition Government – A Partnership for National Unity + Alliance For Change (APNU+AFC) – came into power, it is the first in Guyana’s history to introduce 200 new taxes.
This decision has earned them unsavory remarks by some and applauses by others.
Some sections of the populace see the Government’s introduction of new taxes, such as a 14 percent Value Added Tax (VAT) charge on water and electricity bills, as well as on private tuition and private health care, as a burden on the poor man. But others, regardless of the implications, believe that it is the best way to go.
In fact, recent statistics by the Ministry of Finance show that Central Government has actually increased by more than 30 percent of its projections. The Ministry of Finance, in its monthly report, revealed that tax revenues for January 2017 were GYD$11.9 Billion. It said that this figure is 40 percent more than the tax revenues earned for the same period in 2016. Total tax revenue for the entire 2017 was budgeted at GYD$162.7 Billion, or 8.67 percent over last year, given the astounding benefits of the new taxes.

The Fight against Corruption
Like many other territories, Guyana has been waging an aggressive fight against corruption, especially since the new administration took office in 2015. And while the efforts on the part of the relatively young government are still to be felt deeply and on a wider national scale, it has still managed to help boost Guyana’s image on the international platform.
One of the major accomplishments for Guyana, when it comes to the fight against corruption, is the establishment of a State Asset Recovery Unit (SARU). This is the first time Guyana would have such a department, which is specifically tasked with the responsibility of recovering state assets which were stolen by officials of the past regime. These would have to be recovered through civil proceedings in the court. The impressive, yet bold move is one that has attracted the praise and even technical assistance of partners in the United States and even organizations like the World Bank.
Another historic step that Guyana has taken on the pathway of anticorruption is that it has launched over 40 forensic audits to identify loopholes which existed under the previous administration for corruption of any form and to plug them all. This has started and performance audits and reports on some agencies have shown that there has been a massive reduction in abuse of resources and corruption and less room for the abuse of the system by some stakeholders.
One of the major areas of weaknesses in Guyana is the public procurement system. So weak was this area that Guyana was said to be losing over GYD$30 Billion annually, based on computations from the Auditor General’s yearly report on the accounts of the nation.
While there were some obstacles in the beginning, the Government has been successful in the establishment of a Public Procurement Commission which will monitor the system for any form of abuse and trickery by contractors. The Commission will also serve to eliminate Cabinet’s no-objection role in billion dollar contracts. The move is one which the nation had waited on for over 23 years.

In order for any country to move forward morally, socially, politically and economically, it must be able to first make an honest assessment of where the weaknesses are and admit them. After doing so, the next big and important step is to make a sincere effort to address those faults.
Guyana is not perfect in this regard. In fact, no country is, but what is praiseworthy is that the necessary steps are being taken to ensure that Guyana is not stuck in its old ways; efforts are being made to ensure that not only is this nation safe but it has a viable and conducive environment for the growth and development of all.
Be that as it may, there are still a number of challenges facing the nation which have to be addressed sooner rather than later. There are still some loopholes which have to be closed and there are still areas in the economy which are yet to be improved.


(Article taken from the Guyana Inc. Magazine Issue 27)

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Menu Title