On the road to mas­sive in­debt­ed­ness

Weekend Mirror - - EDITORIAL -

Dear Editor,

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

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