Rebuilding Guyana’s economy was a herculean task

FROM a state of being internationally discredited, bankrupt and infrastructurally dilapidated just over two decades ago, Guyana today has been transformed with brighter prospects than ever before in its history.

Finance Minister, Dr. Ashni Singh said that this was a herculean task which the PPP/C Administration undertook imperviously over the past 22 years in Office.Speaking on the television programme “Political Scope” on the National Communications Network (NCN) yesterday, the Minister said that undemocratic rule under the PNC inflicted severe destruction on every aspect of national life.

Mismanagement
Every sector of the economy had declined dramatically. The imposition of a programme of mass nationalisation of industries saw foreign investors having their assets expropriated and forced out of Guyana. The financial struggles created by poor economic policies were compounded by mismanagement of public funds.

“It’s one thing to nationalise, but to nationalise and mismanage is worse. The environment was so unfavourable to investment that the domestic entrepreneurial class left because they could not survive in the environment of PNC misrule,” Minister Singh recalled.

By the time the PPP/C assumed office in 1992, the country was bankrupt. There were no foreign reserves, an accumulated foreign debt of over U.S. $2B and nothing to show for it.

Many institutions of State were non-functional and Guyanese citizens were extremely despondent. Minister Singh made reference to a report commissioned in 1990 by the Caribbean Council of Churches in which the state of despair and hopelessness among the populace was prominently mentioned.

Shifted priorities
With the restoration of democracy in 1992, came the reinstatement of hope and credibility in the country as well.

“I believe that much has been achieved. Today, institutions are largely rebuilt, democracy is alive and well, we have a free press, a vibrant parliament, a well-functioning and resourced elections commission and a judiciary that is highly modernised and independent,” the Finance Minister said.

While the PNC invested more on foreign services and the Office of the President than in the social sector, the new Administration shifted its expenditure priorities to invest more in infrastructure and human capital.

Minister Singh explained that more focus was placed on ensuring that basic needs of the people, like access to primary education, primary health care services and housing, were met.

“We first of all relooked at expenditure priorities to invest in things that matter. Today every single young employed person can realistically aspire to own their own home. We looked at establishing a legislative environment that would be conducive to private enterprise development. We removed all controls over the economy, and put in place a strong financial sector,” the Finance Minister outlined.

These efforts resulted in rebuilt infrastructure and a return of investors since the country was no longer viewed as a pariah State.

Reversing decline
Minister Singh noted that often times Guyana is ranked as below its sister CARICOM countries and he reminded that this country has traversed a different and arguably more difficult path than the rest of the Caribbean.

He explained that other countries in the Caribbean, since their independence, have been steadily growing; however, economic growth in Guyana declined steeply in 1990. This disparity in growth is clearly illustrated in the UNDP’s most recent Human Development Index (HDI) report.

“While the rest of the Caribbean was growing, we reached the bottom, and it was only with the restoration of democracy in 1992 that Guyana reversed that trend and started to grow again. For the greater part of post-1992, our efforts were devoted to playing catch-up and reversing the decline,” the Finance Minister said.

Having triumphed over those difficult years, the Guyanese economy is today more resilient and diversified than ever before, recording eight years of uninterrupted economic growth.

The Minister noted that while these are laudable achievements, “our work is not complete and as a Government we are under no illusions about that. We shouldn’t take for granted the progress that we have made. We need to work hard as a country to protect what we have achieved and to build on it.”

Debt management
Another marked accomplishment for the current Administration is the reduction of a tremendous debt burden that was inherited from the PNC. The country’s debt to GDP ratio was almost 700 percent; approximately 95 percent of Government revenue was spent servicing debt.

This meant that out of every dollar, 95 cents had to repay debt alone and the country had to borrow to pay public service wages and other routine services of Government. Today, 22 years later, debt to GDP ratio is in the vicinity of 60 percent. The country now spends less than 10 percent of revenue servicing debt.

Minister Singh said that this is by no mean, a trivial achievement; it is the result of hard work and a tremendous global effort of advocating debt relief. He noted that debt write-off is only possible if a country demonstrates credibility and a responsible policy framework.

Striking a balance
“To get to the point at which we are today, it took hard policy choices. Our Government did not shy away from making those difficult policy choices. There were times when there might have been things that were politically attractive and expedient to do, but they would have undermined our long-term fiscal viability,” he said.

“A responsible Government is not about doing what is popular, but about safeguarding the future of your country…the PPP has demonstrated that as a party in Government, we are about responsible leadership, striking the right balance between the demands of today and safeguarding the long-term future of our country,” Minister Singh said.

One of those difficult choices was the introduction of the Value Added Tax (VAT) of which the Opposition is highly critical. Today, VAT has not only contributed significantly to Government revenue, but has also allowed for a reduction in other taxes, such as the income and corporate taxes. Over the past six years, the income tax threshold has more than doubled.

Going forward, Minister Singh said that the Government is firmly committed to continuing the progress that has been made despite the challenges posed by the current parliamentary configuration.

He described the Opposition’s use of its parliamentary majority as reckless and obstructive, using blackmail politics to extract unreasonable political concessions in exchange for doing what is right for Guyana.

“At every step there have been attempts to frustrate. The Opposition is in the business of brandishing power; practicing politics of brute force and intimidation,” he said. (GINA)

Source - http://guyanachronicle.com/reb...as-a-herculean-task/