A natural resource windfall is an opportunity to transform a poor economy. Unfortunately, it is also an opportunity for plunder. The struggle between these options is existential: for example, the same resource discovery, diamonds, propelled Botswana from poverty to affluence, and convulsed Sierra Leone into violence and destitution. In that struggle, the best defence is a critical mass of citizens who understand the issues. But that critical mass has to be built: the siren call of plunder has often been powerfully seductive, and some of the choices that turn out to be key are not obvious. This guide is a timely and well-crafted step in building that citizen understanding. Opinion-leaders in Guyana, both in politics and the media, now have a responsibility to give it the attention it warrants.
The Government’s budget for 2019 continues a disturbing trend and vision for Guyana’s future. Despite promising “a good life” for Guyanese, the budget continues to shape a future in which the government is not accountable to taxpayers, where corruption and political nepotism are entrenched, and future oil revenues benefit only the governing political class. More troubling is that taxpayers’ money is used to pay for the government’s priorities at the expense of their own livelihood and success. Fortunately, there are common sense policies that can make the economy work for everyone and put it on a sustainable path.
Berbicians are in for more pain and economic hardship as the Berbice Bridge Company proposes tolls increases that are three times higher than current tolls. Families and businesses alike are already suffering from the ill-advised closure of multiple sugar factories that were the backbone of the County’s economy. The proposed tolls hike would devastate families, especially low-income and poor families, school children, and workers, and bring the County’s economy to a grinding halt unless the government takes the necessary steps to avoid the proposed toll increases.
The government should use a portion of oil revenues to fund an Earned Income Tax Credit (EITC) program to help lift families out of poverty and put them on a path to prosperity. It also incentivizes work as opposed to discouraging it resulting in greater labour market activities and improvement in social and economic well-being. The EITC is one of the most successful anti-poverty reduction policies and a better option than direct cash transfers. In addition to lifting poor and low-income families out of poverty, the EITC has been successful in growing the tax base and reign in informal activities in the formal economy.
Over the last five years, taxpayers funded more than $1.1 trillion in government spending, each year pumping more money into the government coffers than the previous year. Despite this, taxpayers received less and less in return. The government was simply unable to use taxpayers’ money to improve the economy and create opportunities for families and businesses to succeed. Moreover, its budget and policies undermined growth and began to reverse decades of positive economic momentum and social and economic progress. Government officials must start making better investment decisions to ensure taxpayers get a good return for their hard-earned dollars.
The government’s budget for the fiscal year 2018 essentially mortgaged the future of Guyanese and the economy. Despite record level spending, the budget cuts funding for the infrastructure and agriculture sectors that are critical for creating employment opportunities, mostly for low-skilled workers. Lawmakers continued to shift billions to shore up the government bureaucracy instead of better aligning spendings with social and economic needs. There are no major changes in policy direction to steer the economy away from its current downward trajectory.
Guyana: Taxpayers Lost Almost $1 Billion to Financial Waste and Abuse at the Ministry of Public Infrastructure Over Two Years
The Auditor General flagged almost $1 billion in Ministry of Public Infrastructure expenditures for financial mismanagement, waste, abuse, and non-compliance with the country’s fiscal management and accountability laws and standards during Fiscal Years 2015 and 2016. Almost $683 million represented “financial waste” and almost $243 million was “abuse,” and other forms of mismanagement. The Auditor General’s reports also identified serious concerns with widespread inefficiency and poor management of the Ministry. Lawmakers must amend or enact legislation, to end such waste, abuse, and mismanagement of public resources. These resources must deliver maximum public benefits to citizens and promote economic growth.
The level of poverty and associated levels of malnourishment will have dire consequences on the future health of the population and the potential for future economic growth in Guyana unless immediate steps are taken to address these issues. More than 36 percent of Guyanese or almost 4 in 10 people are living in poverty i.e. surviving on an income of U$1.75 per day or G$10,494 per month.
An unemployment rate of 11.4 percent represents a sizable portion of the labour force without the opportunity to pursue their own economic prosperity and contribute to the creation of wealth in the economy. Lawmakers concerned about improving the economic and social well-being of families and economic growth should adopt policies that would stimulate the economy, encourage private investments and create job good paying jobs.
Unbalanced Growth: Guyana’s Manufacturing and Agriculture Sectors Declined by 10 Percent Each, Despite Economic Growth of 3.3 Percent in 2016
The significant decline in manufacturing and agriculture output and the slowdown in services sector activities indicate a major shift from stable growth to more high-risk growth in the economy. Despite a positive overall growth, output in the manufacturing and agriculture sectors dropped by 10 percent each. The government should adopt policies to restore consumer confidence and thus private consumption spending, and attract new investments to boost growth.