February 9, 2016

Let the (economic) debate begin 

The Budget debate started yesterday and hopefully, the Government will be willing to go beyond gridlock this year of the Jubilee and take the Opposition’s critique of the Budget in good stead. Setting the framework for the minutiae of the line items is the macroeconomic framework of the present administration. It is a sign of the times in Guyana that while there is a worldwide debate on the efficacy of macroeconomic models during the present downturn, there is a deafening silence in Guyana.
The irony is that the present crisis up north has reduced the dominant orthodoxy of neo-classicism to a whimpering mass with the simple question: if the model was so perfect, how come it didn’t predict the present crisis? And an even more devastating follow up is: why hasn’t the model suggested a way out of the mess? The ‘science’ of macroeconomics is undoubtedly in deep trouble and its practitioners as policymakers, are in two diametrically opposed camps.
Take Government budget deficits. When the US and UK were into their slumps they allowed deficits to run as much as 10 per cent of their GDP but in Guyana the Government still hones to the orthodoxy of 3 per cent. One camp of macroeconomists claims that, if not quickly reversed, large deficits will lead to rising interest rates and a crowding out of private investment.
Instead of stimulating the economy, the deficits will lead to a new recession coupled with a surge in inflation. Wrong, says the other camp. There is no danger of inflation. These large deficits are necessary to avoid deflation. A clampdown on deficits would intensify the deflationary forces in the economy and would lead to a new and more intense recession.
Or take monetary policy. One camp warns that the build-up of massive amounts of liquidity is the surest road to hyperinflation and advises central banks to prepare an “exit strategy”.
Nonsense, the other camp retorts. The build-up of liquidity just reflects the fact that banks are hoarding funds to improve their balance sheets. They sit on this pile of cash but do not use it to increase credit. Once the economy picks up, central banks can withdraw the liquidity as fast as they injected it. The risk of inflation is zero. Then, of course, there is the anomaly of Guyana that has been awash in liquidity for a decade. What to do?
Let’s take the case of the Government increasing its spending as this Government has announced so as to “stimulate the economy”. In the US, the two camps of economists have wildly different estimates of the effect of a 1 per cent permanent increase in government spending on real GDP over the next four years. According to the first camp, the Ricardians, the multiplier is closer to zero than to one, ie 1 per cent extra spending generates much less than 1 per cent of extra GDP, producing little extra tax revenue. Thus budget deficits surge and become unsustainable.
By contrast, the second camp, the Keynesians, predict that the same 1 per cent of extra Government spending multiplies into significantly more than 1 per cent of extra GDP each year.
This is the stuff of dreams for governments, because such multiplier effects are likely to generate additional tax income so that budget deficits decline. What we would like to suggest to both sides (assuming we will have an ‘informed’ debate) is there are two areas that need rethinking.
Firstly that efficient markets would take care of themselves and not bothering to put financial markets and the banking sector into their models. We need strict regulation. This is a major flaw. Secondly and more fundamentally, the belief the economy is simply the sum of microeconomic decisions of “rational agents”.
The economy is more than that. We need to reduce the effects of ‘animal spirits’ by introducing a robust industrial policy.
And let loose the said “spirits” in Parliament.

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Business and Jubilee Independence

In the Budget debate starting today, we hope our political leaders will take stock that this is the golden jubilee of Independence and reconsider the role of business to help deliver real independence. The political leaders of 1966, were, at best, equivocal about that role in our economy. Accordingly, independence brought much experimentation with alternative means of economic development. When those failed rather disastrously, by 1989, the PNC conceded somewhat sheepishly that henceforth, “business would be the engine of growth”.
During the 23 years of PPP governance, we have had steady but not spectacular growth under this model, but unfortunately this has disappeared under the new APNU/AFC Government. However, the example of sustained double-digit growth rates in a host of countries during that time offers hope that we, too, could extricate ourselves from the economic basement into which the PNC’s experiments had plunged us. Since 2008, however, the inbuilt cycles of the business-centred growth model delivered a prolonged slump in Europe and the US that has affected all countries, including Guyana.
It is now accepted that businesses face deeper and shorter cycles than ever before with each subsequent revolution accelerating. This introduces a heightened range of economic risks and degrees of complexity that our businesses and political directorate must grapple with if our growth rate is to be maintained much less increased. The most volatile external factor is technology and this is expected to be the primary driver of change in organisations over the next three to five years. Technological advancements have driven a sudden convergence of digital, mobile and social spheres, resulting in a new dynamic in stakeholder relationships by connecting customers, employees and partners in new ways to organisations and to each other.
Companies looking to operate in Guyana cannot be guaranteed long-term certainty or a high degree of predictability as Guyana offers unique challenges. APNU/AFC, along with its partners in the media, created a perception of Guyana as a risky destination for business. The tenuous legislative framework in our country, exemplified by the then Opposition’s refusal to follow the advice of even external neutral agencies and sign the Anti-Money Laundering/Countering the Financing of Terrorism Bill Amendments, is a case in point. Such uncertainty makes strategic business decisions difficult in Guyana.
If we are ever to be truly independent, we have to deliver the promises of 1966 to our citizens: to bring us to the level of the developed countries in standard of living, health and welfare. The lack of solid, modern infrastructure remains a significant barrier for Guyanese operations beyond socio-economic and political complexities. Guyana’s required infrastructure capital since independence far exceeds the past and current spending. This substantial spending shortfall, which the Opposition has refused to accept, can only come from borrowing.
It kept harping on the absolute amounts to be borrowed, refusing to accept that the growing economy could service this higher level of debt. And that future higher income flows also help in that respect. Strategy is about making choices and is to be distinguished from short-term tactics. The complex operating environment in which Guyanese companies operate results in choices that are difficult to make. This necessitates a deep understanding of the factors that influence profitability, as well as the factors affecting the company’s reputation and relationship with stakeholders. Adopting a structured approach to making choices at a corporate and business unit level is necessary.
Poor strategy is often characterised by the failure to make choices and we can see this in the Government’s actions since last year. The closure of Wales is only the latest of a long list beginning with the killing of Amaila. Asking the right questions allows companies and the political class to successively focus on key aspects of our high-level and operational strategies which collectively form the basis for long-term strategic planning and short-term prioritisation. The Government must allow businesses to deliver real Independence to Guyana.

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Alternative to Wales shutdown

Back in the eighties, wags dubbed Britain’s Prime Minister Margaret Thatcher, “Tina”. It was an allusion to her fondness for the phrase, “There Is No Alternative – TINA) to explain her espousal of neo-liberal market fundamentalism as opposed to what she derided as “socialist hogwash”. From the latest explanation proffered by President David Granger and his Minister of Agriculture Noel Holder for the peremptory closure of Wales Estate, they clearly support the TINA doctrine.
To keep Wales going, the “old” factory would have to be rehabilitated, they claim, and funds would have to be “diverted from other estates” that are also in difficulties. Using a “triage” argument – in which the sickest patient might be allowed to die so others can be saved – Wales had to go. But was Wales, in fact, “the sickest estate”? The unchallenged figures supplied by GuySuCo’s $52 million CoI’s Report – not considered in the “Cabinet decision” and not recommending any closure at this time – does not support that assertion.
The field production of Uitvlugt, to which the workers as well as farmers’ cane from Wales are to be diverted, is at the same state of inefficiency as Wales. The Cabinet’s claim that the drainage and bridges to the fields, are in a terrible state of disrepair have been conclusively debunked. Wales drainage is completely gravity based and the land is much higher than the Demerara River into which it discharges. Wales’ factory is “old” from the time it was initially built, but its machines with moving parts, such as rollers, etc – have been replaced as a regular part of the maintenance schedule – and are delivering an extractive efficiency comparable to Uitvlugt.
The problem with Wales is the same with all the other estates – a precipitous fall in cane production per acre. From the standard 33+tons per acre (tpa) back in the colonial days, Wales and Uitvlugt have fallen to almost half of that – 17 tpa. There have been several instances when the cardinal “sin” of sugar production – shutting down and then having to “fire up” again – had to be committed because of a lack of cane. At Wales, the percentage of cane supplied by private farmers have risen from 30 per cent to 51 per cent.
Wales is therefore a metaphor for what ails Guyana’s sugar industry: a neglect of field operations. The alternative to closing Wales, therefore should begin with addressing this obstacle – which can then be used as a model for the other estates, including Uitvlugt. And the answer lies right at Wales: the private farmers, using contiguous land to the Wales fields are producing canes of better quality and quantity – while using the same labour pool and with less inputs.
One alternative therefore, would be to lease the Wales lands to private farmers and continue grinding the canes at the factory. The suggestion to ship present farmers’ canes to Uitvlugt would necessitate a road across the intervening Canal Polders and linking up with several estate dams that would have to be upgraded at a cost of approximately $1 billion. Farmer canes from the southern end of cultivation would demand transport by punts, then to tractors and again to punts, resulting in spillage and loss of sucrose content due to the longer layover.
To process the increased total production due to private farmers producing all the canes, Wales factory could be brought back to the 30,000 sugar production level achieved as recently as 2002. The factory can be privatised to a consortium of foreign/domestic investors for an initial investment of approximately US$2 million. The consortium could also be leased lands and act as private farmers.
The government’s adoption of the Thatcherite TINA philosophy that is driven by market fundamentalism is accordingly bereft of any social concerns and will collapse as it has done in Britain as well as the US. It has been replaced by TBTF – too big to fail – which accepts government intervention.

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Alternative to Wales shutdown

Back in the eighties, wags dubbed Britain’s Prime Minister Margaret Thatcher, “Tina”. It was an allusion to her fondness for the phrase, “There Is No Alternative – TINA) to explain her espousal of neo-liberal market fundamentalism as opposed to what she derided as “socialist hogwash”. From the latest explanation proffered by President David Granger and his Minister of Agriculture Noel Holder for the peremptory closure of Wales Estate, they clearly support the TINA doctrine.
To keep Wales going, the “old” factory would have to be rehabilitated, they claim, and funds would have to be “diverted from other estates” that are also in difficulties. Using a “triage” argument – in which the sickest patient might be allowed to die so others can be saved – Wales had to go. But was Wales, in fact, “the sickest estate”? The unchallenged figures supplied by GuySuCo’s $52 million CoI’s Report – not considered in the “Cabinet decision” and not recommending any closure at this time – does not support that assertion.
The field production of Uitvlugt, to which the workers as well as farmers’ cane from Wales are to be diverted, is at the same state of inefficiency as Wales. The Cabinet’s claim that the drainage and bridges to the fields, are in a terrible state of disrepair have been conclusively debunked. Wales drainage is completely gravity based and the land is much higher than the Demerara River into which it discharges. Wales’ factory is “old” from the time it was initially built, but its machines with moving parts, such as rollers, etc – have been replaced as a regular part of the maintenance schedule – and are delivering an extractive efficiency comparable to Uitvlugt.
The problem with Wales is the same with all the other estates – a precipitous fall in cane production per acre. From the standard 33+tons per acre (tpa) back in the colonial days, Wales and Uitvlugt have fallen to almost half of that – 17 tpa. There have been several instances when the cardinal “sin” of sugar production – shutting down and then having to “fire up” again – had to be committed because of a lack of cane. At Wales, the percentage of cane supplied by private farmers have risen from 30 per cent to 51 per cent.
Wales is therefore a metaphor for what ails Guyana’s sugar industry: a neglect of field operations. The alternative to closing Wales, therefore should begin with addressing this obstacle – which can then be used as a model for the other estates, including Uitvlugt. And the answer lies right at Wales: the private farmers, using contiguous land to the Wales fields are producing canes of better quality and quantity – while using the same labour pool and with less inputs.
One alternative therefore, would be to lease the Wales lands to private farmers and continue grinding the canes at the factory. The suggestion to ship present farmers’ canes to Uitvlugt would necessitate a road across the intervening Canal Polders and linking up with several estate dams that would have to be upgraded at a cost of approximately $1 billion. Farmer canes from the southern end of cultivation would demand transport by punts, then to tractors and again to punts, resulting in spillage and loss of sucrose content due to the longer layover.
To process the increased total production due to private farmers producing all the canes, Wales factory could be brought back to the 30,000 sugar production level achieved as recently as 2002. The factory can be privatised to a consortium of foreign/domestic investors for an initial investment of approximately US$2 million. The consortium could also be leased lands and act as private farmers.
The government’s adoption of the Thatcherite TINA philosophy that is driven by market fundamentalism is accordingly bereft of any social concerns and will collapse as it has done in Britain as well as the US. It has been replaced by TBTF – too big to fail – which accepts government intervention.

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Mental health in Guyana

The heart breaking incident of a mentally challenged young girl, rescued from her home on the Essequibo Coast, was brought to light in the media Friday. The young lady was forced to live in inhumane conditions for reason which the family attempted to justify, claiming that her mental condition was so severe that she was beyond control.

The World Health Organization (WHO) conceptualises mental health as a “state of well-being in which the individual realises his or her own abilities, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make a contribution to his or her community.” Mental disorders are highly prevalent throughout the world, however, the resources allocated by countries to tackle this burden are often times insufficient, inequitably distributed, and, at times, inefficiently used.

In 2015, the Public Health Ministry launched Guyana’s National Mental Health Strategy 2015-2020. While launching such a strategy is commendable, having a plan without proper execution is merely words without action.

A perusal of the Mental Health Action Plan 2015-2020 outlines a coherent strategic framework for guiding the development of new plans while bringing alignment and synergy to the Ministry’s national and international activities over the next five years. In addition, it will serve to coordinate development and technical assistance and other partnerships in health.

Among the programmes and services that are highlighted in the plan for implementation over the next five years are the National Suicide Prevention Programme, the Integration of Mental Health into Primary Care, Drug and Alcohol Prevention Programme, Psycho geriatric Clinic, extend  and enhance satellite clinics to communities (Diamond, Leonora, Mahaicony, Enmore and other communities with such needs) .

While we deal with these areas it is hoped that the Public Health Ministry also take into consideration the stigma, social exclusion, and discrimination that occur around people with mental disorders which compound the situation. Persons with mental disorders are reported to suffer discrimination in their communities, the workplace, educational institutions and the healthcare system. In the context of Guyana and more particularly with the plight of the young lady on the Essequibo Coast, it is apparent from media reports, that stigma may have been a contributing factor to the family’s decision to lock her away.

In moving forward, our officials must also deliberate on the outdated mental health law – the 1930 Mental Health Ordinance – which exists in Guyana. The Mental Health Ordinance of 1930, which is antiquated, does not have provisions for the protection of the rights of people with mental disorders. Given this factor, there is recognisable need for updated laws to be enacted to deal with safeguards to protect against abuse, appropriate and accessible care within communities, equality in opportunities for access to care, to employment, to shelter, to justice and consent.

There should also be independent review bodies established to protect the human rights of users of mental health services. Among some of the improvements that need to be adopted as highlighted in the Mental Health Action Plan 2015-2020 is that primary care personnel need to play a more pivotal role in the mental health area and mental health services should be made more available or accessible to the population.

The standard of the National Psychiatric Hospital (NPH) is in dire need of improvement with respect to policies and guidelines for the usage of psychotropic medications, the assessment, treatment, monitoring, and ongoing evaluation of patients with mental disorders, the charting of patient information and the maintenance of health records.

The key recommendation for Mental Health Action Plan 2015-2020 is that implementation must be evidence based, planned and managed within the resource base limitations and the policy and regulatory framework. This however must provide for strategic prioritisation and a long-term approach that provides sufficient room for capacity development, cultural and behavioural change.

As recommended communication and change management measures need to be incorporated in the strategic planning process to ensure sound understanding, buy-in, and support for the strategy among implementing partners.

It is time that as a nation we cater more for our brothers and sisters, who suffer from mental health illnesses regardless of their circumstances. While stigma associated with mental illness has malicious effects on the lives of those affected, we can move forward as a compassionate country and not have a repeat of the incident on the Essequibo Coast.

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Missing the message

Amid visions of green parks with relaxing areas for Georgetown’s residents, the Georgetown Mayor and City Council (M&CC) is spending enormous amounts of taxpayers’ money in their push for a “green environment”.

The public service announcements and media coverage of areas set out as examples of this effort are readily available. No doubt it is a gesture worthy of accolades from all and sundry.

But are the capital city’s residents getting the message?

If one walks around the city – not only the public areas recently cleaned up by the M&CC – it appears that few are listening or concerned enough to make the effort to take part in the “Green City” initiative.

One of the many hindrances is the fact that many city residents have certain businesses in residential areas that are not designed to cope with the amount of solid waste and drainage infrastructure these businesses produce and require.

The result is overflowing garbage bins that are emptied once a week (if they are emptied more often, the private collectors carry that waste to unofficial dump sites) and polluted and blocked drains that allow rapid flooding. Both situations that impact the notion of a ‘green environment’.

In fact, in certain areas it would appear that residents haven’t even heard the message.

Some residents still collect and store garbage in residential communities, daily lighting polluting bonfires which threaten other residents’ health, along with damage to property nearby in these dry-weather days.

Others simply toss their trash onto the street or in nearby trenches, creating frequent stenches as the wind blows.

Despite the council’s declaration of zero tolerance toward these environmental delinquents, hardly much has been publicised about penalties for these individuals and businesses, and the practice continues without interference from Council.

What is M&CC’s plan for such persons? A systematic search for such delinquents is needed if the council truly means what it says about encouraging a green city. Sporadic visits to certain city businesses is not the answer.

Weeding a field and decorating it does not a green city make. What has happened to the public health inspector who regularly visits each home in a community to inspect premises for polluting and potential public health hazards? Is he/she part of the plan for promoting a green city?

Surely a green city does not only mean regularly weeded parks and stemming the “culture of littering”? Does part of the M&CC’s “Green City” initiative include competent and qualified building engineers who objectively look at future city planning and buildings to ensure they will be eco-friendly?

The East Street car park is not the best example of city planning with the notion of a “Green City” by any means.

Unless the Government and Council are serious about this project and address the many aspects of environmental protection, residents of Georgetown may never get the message they, Government and council, are attempting to convey, or the message may be confusing or mixed as only some aspects are given attention. Under such circumstances it is not hard to see that sooner or later, residents will ignore future messages, and revert to this apparent culture of ignoring the environment for their own profit or gain. The Council’s noble idea of reclaiming the “Garden City” is still a long way away; its citizens don’t seem to be getting the message.

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That US Presidential Sweepstakes

Not unsurprisingly, the US is held up as a model for democracy and democratic practices here in Guyana. As the first colony in the Western Hemisphere to break free from the shackles of colonialism to chart a course for the improvement of the lives of its own citizens, she leads where we have to follow, in so many ways. The US focus on political democracy had been trenchantly criticised during the last century for its supposed neglect of economic democracy, but the alternatives offered by the critics have not fared too well and have largely been abandoned.
Recently, the undoubted economic gains have been exposed as so concentrated in the hands of a few as to make Louis XVI and Marie Antoinette look like radical egalitarians. By 2011, one per cent of Americans possessed 40 per cent of their nation’s wealth and were accruing 95 per cent of the income stream since 2009. Interestingly, the latter development came after the economic collapse of 2008   under Barack Obama, a President, who was widely expected to initiate and implement policies friendlier to the poor.
These developments have precipitated questions about the US political order which permitted such deep levels of inequality, which go against the grain of everything the US republic was supposed to represent. President Obama, admitting that as an individual, there is only so much even the President can accomplish, raised questions as to whether there might need to be more far-reaching change of the political system. This possibility was brought out very starkly in the positions of several contenders for the presidential candidacy of both the Democratic and Republican parties.
These two major American parties have distinguished themselves generally with the Democrats being to the “left” of the Republicans around a central core of issues that gave a wide consensus to American politics up to now. For instance, according to Wiki, “The contemporary centre-left usually defines itself as promoting government regulation of business, commerce and industry; protection of fundamental rights such as freedom of speech and freedom of religion; and government intervention on behalf of racial, ethnic, and sexual minorities and the working class.” These would usually be positions of persons identifying with the Democratic Party. The Republicans would generally be “contemporary centre-right… promoting deregulation of banking, commerce, and industry.” In other words, more “pro-business”.
Against the background of increasing economic and social inequality which led to pressures from both the upper and lower strata, one candidate from the Democratic Party, Bernie Sanders has staked out a position even further left than his major rival Hillary Clinton, who is more in the traditional Democratic mainstream. Defining himself as “socialist”, Sanders radically suggests he is even left of the “left wing” elements in the Democratic Party, who would have a broad commitment to egalitarianism and the ordinary workers. This is a rather anomalous position in American politics and most pundits initially dismissed his chances of success against Hillary Clinton.
Over in the Republican Party, non-politician billionaire real estate mogul Donald Trump seized its conservative right wing agenda, including support of the status quo in the economic system and “family values”. But he tapped into conservative fears by making populist appeals against immigrants in general and Muslims in particular. Trump represents the concerns expressed by philosophers and political theorists against democracy as a mechanism to choose governments: using demagoguery rather than reason to polarise the society and raise fears so as to capture votes.
In the first caucuses of Iowa – where only the parties’ hard core participate – Bernie Sanders came out in a virtual dead heat with Hillary Clinton. His expected win in the upcoming New Hampshire primary – where regular Democratic members vote – should give him the momentum to give the Democratic establishment a shakeup.
Donald Trump lost to a more mainstream Republican Ted Cruz in Iowa by four points, so he is still in the race. Whatever are the eventual outcomes of the selection process, US politics has changed.

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Striking the balance

The debate as to whether corporal punishment should or should not be allowed in our homes and schools will certainly once again pick up steam in the coming weeks, as no other than President David Granger himself has brought the issue into the national domain where it could be analysed and discussed by the relevant stakeholders.

On his weekly telecast ‘The Public Interest’, President Granger was quoted in this newspaper as saying he believes that corporal punishment “hurts rather than helps” and that it is time to throw the archaic proverb “spare the rod and spoil the child” out the window. In his view, while it may have been helpful in the olden days in ensuring children are brought up with good morals, it is no longer effective and could be viewed more as a violent response to certain kinds of behaviour by our youth.

Citing a number of reasons for arriving at such a view, the President made a passionate call for the immediate ban on the use of physical punishment in disciplining children, indicating that such actions eventually contribute significantly to the high domestic violence rate in the country.

It must be noted that corporal punishment was a common feature in Guyana’s schools up until a few years ago when there were certain policy changes as to how, when and who should administer this method of punishment. There is a view that for many years, corporal punishment as enforced with the whip, has been abused by persons administering it. Several incidents of teachers abusing this method of disciplinary action have been reported in the media and persons have used the opportunity to capitalise on these cases to argue for its abolition. Recently, Education Minister, Dr Rupert Roopnaraine committed himself to doing whatever was necessary to ensure this practice is completely eradicated in schools.

No doubt the issue of corporal punishment is debatable. Some groups advocate for the abolition of corporal punishment, arguing that it is damaging to children and a violation of children’s rights. These persons believe that corporal punishment can physically impair a child’s whole life and damage him/her psychologically by disturbing his mental balance. Proponents of this line of debate feel that parents and teachers should find alternative ways of enforcing disciplinary action and deal with children patiently, advising and guiding them in every sphere of life rather than “using the cane.” The question that should therefore be asked is; should corporal punishment be abolished simply because it has been “widely abused”?

Others argue in favour of retaining the right to use corporal punishment as a form of disciplining children.  For example, not so long ago, the Guyana Teachers Union (GTU) had opined that the abolition of corporal punishment may prove to be disastrous for teachers as there are many hostile children in their classrooms. The Union had suggested that the move to ban corporal punishment should be put on hold until the Education Ministry introduces an alternative method of disciplining children who fall out of line.

That said, we believe that what needs to be examined in the discussions, is the distinction between corporal punishment and physical abuse, and the relationship between corporal punishment and discipline. For example, the degree of physical punishment that a parent or teacher can use with a child is subject to legal regulation in some countries. In some countries, corporal punishment by a parent or teacher is lawful, providing that it is carried out for the purpose of correction, control or discipline, and that it is “reasonable” having regard to the age of the child, the method of punishment, the child’s capacity for reasoning, and the harm caused to the child. Corporal punishment that results in bruising, marking or other injury lasting longer than a 24-hour period may be deemed to be “unreasonable” and thus classified as physical abuse.

For us in Guyana, we believe that considering all the concerns for and against using physical punishment to discipline our children, the challenge for many will be striking the balance between when to use the whip and when to use other forms of corrective measures to get the desired results.

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Coalitions in Guyana

Opening a spanking new headquarters for the Alliance for Change (AFC) last weekend, President David Granger pronounced that “coalition politics is here to stay”. From the context of his remarks, while he not surprisingly referred to the coalition between his A Partnership for National Unity (APNU) and the AFC, it would appear that he was also alluding to coalition politics in Guyana in general.
In a polity that has been dominated by ethnic voting since before independence, the President might have been taking into cognisance recent demographic trends, which makes it clear there is no one ethnic group commanding a majority in the country any longer. Assuming then that the orientation to voting remains the same, the parties anchored in ethnic segments would be forced by the logic of majoritarian politics to form coalitions to form the government.
But the elections of 2011 and 2015 demonstrated that the issue might not be as clear-cut as that scenario and with our constitution declaring that the party with a plurality captures the Executive, it is quite possible that the outcome of 2011 might repeat itself: one party with the largest number of votes capturing the Executive and the other party/parties controlling the Legislature. While this proved to be a very unstable arrangement, barring an amendment to the constitution, lightning might very well strike again.
But within a polity with several groups needing to agglomerate together to secure even a plurality, this opens up another scenario: the possibility of political mobilisation becoming more fluid and our country breaking out at last from conducting elections that are mirror images of ethnic censuses. With no one group forming a majority, the major impediment that prevented cross ethnic voting through the years – being branded as “traitors” for “splitting” the vote – becomes irrelevant. Whether at the individual or group level, the imperative is to reach across the divide. Politics might then also become more moderate as platforms are adjusted for a wider appeal.
Within this wider lens, then, it might be useful to examine the specific APNU/AFC coalition that the President was ostensibly referring to. The question is whether its longevity is as extensive as the President might hope. And “hope” it has to be. It is widely conceded that it was the vote the AFC brought over from what used to be the PPP’s solid Berbice constituency that took the PNC-led APNU over the top by a mere 5000 votes. For APNU to have any chance of holding off the PPP’s charge in 2020, it would be critical for the AFC not only to remain in harness but to actually expand its reach.
However, the refusal of APNU since obtaining office in implementing the Cummingsburg Accord that was supposed to enumerate the specific conditions which had to be satisfied to consummate the coalition has to have cast a pall of the AFC’s leaders, even though they have to show a united front. At the opening of the AFC’s headquarters, as reported officially by GINA, “Co-Founder of the AFC and Minister of Public Security, Khemraj Ramjattan reminisced about the signing of the Cummingsburg Accord at the house of President Granger, who was Opposition Leader at the time, and said that in time all the promises in the Coalition’s Manifesto will be delivered. ‘We have made mistakes that we must be held accountable for it…’ said Ramjattan”.
Ramjattan was circumspect not to elaborate on the “mistakes” in not implementing the Accord but was sending a clear signal that he expected them to be “delivered”. Some of the “undelivered” would be for President Granger to “delegate”, as he had promised, chairing of the Cabinet to Prime Minister Nagamootoo, as well as to assign him some clear “line responsibilities”. Otherwise, the AFC stands in danger of fulfilling Ramjattan’s prediction that the AFC would become “dead meat” if it coalesced with APNU. And then so also would APNU.

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Budget 2016: Whither the engine?

Conceding that the traditional sectors of the Guyanese economy were “anaemic” long before the Budget was presented last Friday, it had been hoped by the private sector and economic analysts that government would have sought to augment its public investments programme by offering incentives to local and foreign private investors…Since both the APNU/AFC Government and the Opposition had deemed the Private Sector “the engine of growth”, the measures at the disposal of all Governments could have supplied some of the “fuel” to the engine.

Going all the way back to efforts to pull economies out of the doldrums during the Great Depression of the 1930s, Governments were shownif the supply of money to the banks were increased, the latter would lower interest rates. And encourage businesses to take loans, make investments, push up the employment rate, generate increased economic activity via spending by the new employees and a virtuous spiral could be initiated.

The mechanism to increase the supply of money works by the Central Bank buying T-Bills held by the Banks – giving the banks loanable funds for paper held by the latter. However, in the week leading up to the Budget, the Bank of Guyana actually SOLD $5B in T-Bills, effectively drawing that much money from the banking system, while paying the latter interest. Banks therefore have less incentive to lend private businesses, which have to carry SOME risk and would then only do so at a rate high enough to cover that risk.

The Finance Minister should issue a clear signal on what it would like the monetary targets the Bank of Guyana should aim for. While that institution is the sole determinant of the money supply and interests rates, like the Fed in the US, it would presumably take cognisance of the overall direction the government, which has been elected by the populace, would like it to head. And there is onlyone direction that Guyana needs right now as far as money supply is concerned, and that is up.

The other measure that could be considered to give a fillip to the economy would be to lower the corporate tax rate so that companies would retain more of their profits that could then be ploughed into investments to start the virtuous spiral. Guyana presently imposes a 40 per cent tax rate on the profits of “commercial companies” – those that generate more than 75 per cent of its gross revenues from trading in goods not manufactured by it (in other words, merchants engaged in telecommunication, banking or short-term insurance. Manufacturers are taxed at 30per cent.

In other countries that have been working their way out of a recession, even the developed countries like England have a corporate tax rate below ours of 30%. China weighs in at 25% and more aggressive jurisdictions like Hong Kong have gone down to 16.5% and Ireland 12.5%.

In addition to encouraging local companies to expand their operations, foreign entities will also find it more encouraging to invest in Guyana and retain more of their profits. While the Budget, for instance, caters for “diversification of agriculture” the imminent closure of Wales Estate demands that companies with capital and experience in large-scale agro-processing Go-Invest and its new CEO will need these inducements to have FDI show up on our shores.

It must be noted there is the very real possibility that companies might simply retain their increased profits and this brings up another possibility that our government might want to explore: simply print money and pump it into circulation through government spending. This “pump-priming” is not intended to replace private investment but to stimulate and supplement it.

The possible resulting inflation would encourage companies to save less and also banks to lend more. While traditionally inflation has been presented as a grave threat, “managed inflation” is now seen as a tool for growth.

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