We must not be fooled by deceitful arguments and misapplied statistics

Dear Editor,
After the minority PPP government was recently condemned in the media for being grossly irresponsible and incompetent in its management of our nation’s national debt, Finance Minister Ashni Singh responded by issuing a statistics-laden statement that praised the minority government for its performance since it regained power in 1992.
And as is the wont of the PPP, Mr. Singh compared every piece of statistic from the base year 1992, when the PPP replaced the PNC, with similar statistics from 2012.
But Mr. Singh’s attempt to defend the PPP failed the minute he made the ludicrous and self-serving claim that it is misleading to denominate Guyana’s national debt in Guyana dollars. And though he argued to the wind that Guyana’s debt can only be properly contextualized and understood when denominated in United States dollars, he never revealed the real reason for his belief.
Here is the reason. When the PNC left office in 1992, our currency was much stronger than it is today: one US dollar was worth one hundred and twenty-six (126) Guyana dollars; today it is worth around two hundred six Guyana dollars.
This means that our smaller 1992 debt denominated in US dollars would be larger than our larger 2012 debt denominated in US dollars. Thus the PNC’s 1992 debt of GY$265 billion will show as US$2.1 billion when converted, but the PPP’s larger 2012 debt of GY$350 billion will show as $US 1.7 billion when converted, 19% less than the PNC debt.
However, rightly showing our debt in Guyana dollars will highlight the fact that the PPP’s debt is 32% higher than the debt left by the PNC, resulting in the questions about the PPP’s competence and causing Mr. Singh’s fixation on denominating our debt only in US dollars.
Because 75% of the PNC debt has been written-off due to our nation’s poor and beggarly status, coupled with the possibility that our government has undisclosed commitments, many informed observers believe that the PPP has already borrowed much more than the PNC did.
However, at current exchange rates, our national debt will have to reach GY$433 billion before it, in equivalent US$, exceeds the GY$ 265 billion the PNC left in 1992. So I urge our nation to keep an eye and ear out for that GY$433 billion number.
Mr. Singh’s attempt to engage in self-serving arguments about the currency in which our debt should be denominated is akin to trying to convince someone that there is a weight difference between a bag that weighs 18 kilos and one that weighs 40 pounds. But as the PPP discovered during the last elections, such subterfuge can’t work anymore.
Guyanese understand that a debt burden is a debt burden, no matter in what currency it is conveniently denominated.
Guyanese should also not fall into any delusion that Guyana can repay its debt because it has “higher wealth and income levels” than in 1992 due to “better” economic times.
We should be wary of thinking that Guyana is on sound economic footing, because the IMF and World Bank are uncritical of statistics provided to them by our government, or because of widespread availability of cheap goods from China, or because of high prices for our gold, or because of increased remittances from the many Guyanese who were allegedly driven abroad by Forbes Burnham’s policies (Burnham’s exports), or because of cheap oil on concessionary terms from Venezuela, or because of the almost-free labour of Cuban doctors, or because of the construction of buildings and other infrastructure by money sourced from grants and loans from foreign countries and the illegal drug trade. Our government only earned about US$50 million in taxes and royalties from the almost US$700 million in gold our nation produced in 2012, lacks the will to force the few rich folks to pay their fair share of taxes, and can only squeeze so much in VAT from the poor and barely-surviving remainder of the population. So we must not be fooled by deceitful arguments and misapplied statistics.
But a few more observations about the comparative statistics, denominated in US dollars that Mr. Singh released in his statement aimed at defending the minority government against charges of incompetence. He raved about gross domestic product ($371 million in 1992 vs. $2.8 billion in 2012); central government’s revenue ($141 million in 1992 vs. $637 million in 2012); exports ($382 million in 1992 vs. $1.4 billion in 2012); and foreign exchange reserves ($191 million in 1992 vs. $872 million in 2012).
Well, just as Mr. Singh has chosen to use the well-respected US$ to argue his case for PPP competence, I will use the cost of a barrel of oil, in US$, to argue that the PPP’s performance is not as impressive as it seems. I am going with the price of oil, because no nation can survive without it. I am also taking this approach because of a cautionary warning that Cheddi Jagan issued at GIMPEX during an open meeting I was invited to by a friend.
Mr. Jagan said that he had to remind some rice farmers not to get too excited over any price increases they received for a bag of rice or paddy. He said that he told them that the true value of any increase can only be determined after they calculated how many bags of rice or paddy they needed to sell to buy the tractor or combine they needed to plough their rice fields. If in spite of the price increases they had to sell a lot more bags of rice or paddy than they previously did to buy the last tractor, then there was really no need to get excited. It seems as though he never told this story to the present bunch in Freedom House or maybe they just forgot or are, just as I suspect, playing politics with statistics.
In 1992, a barrel of oil averaged about US$19 while it averaged about US$91 in 2012. So let’s see how many barrels of oil our nation could have purchased using its GDP, foreign exchange reserves, central government revenue and exports of 1992 and 2012. Our 1992 GDP would have gotten us 19.5 million barrels of oil, while our 2012 GDP would have gotten us 30.7 million barrels of oil (57% more than in 1992). Our 1992 foreign exchange reserves would have gotten us 10 million barrels of oil, while our 2012 reserves would have gotten us 9.5 million barrels of oil (about 5% less than in 1992); our 1992 central government revenue would have gotten us 7.4 million barrels of oil, while our 2012 central government revenue would have gotten us 7 million barrels of oil (about 5% less than in 1992); and our 1992 exports would have gotten us 20.1 million barrels of oil, while our 2012 exports would have gotten us 15.3 million barrels of oil (about 24% less than in 1992). These findings remind me of the uninformed youngsters who boast of their tens of thousands of US or Guyana dollars that can barely buy as much as twenty thousand US or Guyana dollars did in 1992.
So while our GDP and our per capita GDP have increased due to increases in the prices of our exports since 1992, the disproportionate increases in the cost of living have all but wiped out most meaningful economic reasons to compare our current economy to the one in 1992.
Lionel Lowe