On the road to massive indebtedness
I was taken aback as I looked at the front page of the November 20, 2017 Guyana Chronicle which screamed out “Public debt service down 41.2 per cent”. For me this was amazing statement and I immediately had to read the story on page three (3). Sadly, my enthusiasm was quickly deflated as I read the article. Immediately, I was reminded of the old adage “the devil is in the details”.
From what I read, the decline is due in large part to the reduction payments that accrued to the Petro-Caribe fuel/ rice trade agreement with Venezuela. With the cessation of the arrangement sometime in 2015, we stopped getting fuel on concessionary terms and our rice farmers lost a huge market. In fact, if we go by the figures in the article our farmers lost more than $9B dollars. This, undoubtedly, for the farmers was a steep decline and a very harsh shock. But as bad as that may be, it also means now that demand for foreign exchange has risen as our fuel purchases have to be paid up front. It is no surprise we have been experiencing foreign exchange shortages. Under the oil-for-rice arrangement, our farmers were paid in Guyana dollars relaxing pressures on the foreign exchange while at the same time providing employment and income for many Guyanese. Unfortunately, this lucrative arrangement was scrapped and there has been no replacement.
The article goes on making a lot of hullabaloo about the reduction in debt servicing seeming to indicate that it was the doing of the APNU+AFC. This is, however, downright deceitful and misleading. The reality is that the reduction in debt has to do largely with the massive debt write offs, a call that was initiated by Dr Cheddi Jagan. Concomitant with that call was the expansion of the economy which improved revenues which in turn was used to develop the country and thus further expanding the economy.
Today, however, if we go by the recent borrowing spree the Government has engaged in and the widening fiscal deficit it seems we are firmly on the road to massive indebtedness once more. I sincerely hope that I am wrong and that the fortunes of the economy will turnaround failing which Guyanese now and tomorrow are in for a rough and harrowing ride.
Yours faithfully, Patricia Persaud