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22 October 2017

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Economic situation
(Aired 20 November 2001)

     There is little question that this country's economy in on the verge of collapse. Recently our minister of finance Mr. Kowlessar, issued a series of statements telling us, that everything, from the poor management of our local companies by THEIR managers to the Taliban and Bin Laden are responsible for the major part of our economic woes, but not his government.

    The press has doggedly reproduced Mr. Kowlessar's lame excuses without, I am afraid, examining the real reasons why we are declaring at least 150 major businesses, bankrupt this year. These bankrupt companies are diverse businesses ladies and gentlemen and not limited to a specific industry, which can be explained away due to serious market issues affecting ANY ONE industry. So let us look at our national performance BEFORE the infamous but convenient date of September 11th 2001.

    To do this we must turn to the figures in the half year report of the Bank of Guyana's Statistical Bulletin 2001, covering the period January to June 2001, and compare that with the half year performance of the previous year January to June 2000.

   Now remember, that, looking at half year performance ALONE, is fraught with some danger and should not be interpreted in absolutes but they are good indicators of what is coming, and we should watch them carefully. The budget came out in July 2001 so there is no excuse for overlooking what I will tell you next.

    Our total EXPORTS in the first half of 2000 was 244 million US dollars, in the first half of 2001 it was 214 million US dollars, 30 million US dollars or 5.7 billion Guyana dollars less. Nearly 9% LESS than our TOTAL annual 2001 budget, compared to the same period in 2000.

    IN the FIRST QUARTER January to March Bank of Guyana Bulletin, the indicators that sugar and Bauxite were not starting the year well, were already THERE; Minister Kowlessar like the US airline industry think that we are all fools, on the morning of September 11th 2001 at 8 AM, a perfectly normal day in the commerce of the US airline industry, four aircraft took off from the EAST coast of the US, bound for the WEST coast of the US, a distance of 3000 odd miles, these four planes A 747, two 757's and A 767 have a total seating capacity for over 1200 passengers, when all four planes were destroyed only 266 persons perished, including crew AND highjackers, a ridiculous 20% occupancy. The US airline industry was in trouble before the bombings and so was the Guyana economy.

   We have three major industries, which account for the bulk of our hard currency income, Sugar, Rice and Bauxite, how did these industries fare in the first half of the year? Let's see!     

   Rice. In the first half 2000, 108 thousand tons were exported.... 1st half 2001, 101 thousand tons were exported. 7% less than 2000.

   Sugar. In the first half 2000, 115 thousand tons were exported... first half 2001 only 82 thousand tons were exported. 27% less than 2000.

    Bauxite first Half 2000... 1.3 million tons were exported, in 2001.. 806 thousand tons were exported. 38% less than 2000.

    These are significant shortfalls, ladies and gentlemen, how can they possibly have been overlooked.

    Our 2001 annual budget calls for the expenditure of 65 billion Guyana dollars. The total current operational revenue is 44 billion, of this 44 billion 41.3 billion will be collected by the Guyana revenue authority [approximately Half or around 20 billion in income and other taxes, and the other 20 Billion from customs and other duties and consumption taxes on all of the goods we import and export] over 93 percent of our TOTAL operating revenue comes in direct taxation to our people.

  We are borrowing the rest, about 15 billion from all sorts of sources to make up the difference.

   All of this is in the 2001 budget, you distill it when you strip away all the rest of the rhetoric those things contain.

   In the Bank of Guyana statistics for 2001 published in July it is very clear that the domestic public debt interest now equals the foreign debt interest. The domestic debt has risen from 18 billion in 1992 to 50 billion in 2001. The consolidated fund is overdrawn by 57 billion.

   The indicators are therefore, that the country's economic situation after several years of mismanagement is now spiraling completely out of control. But tonight I will not address the mismanagement of the past, it will only cloud the issue; let us keep looking at 2001 to see how we managed it.

    Now ladies and gentlemen you are the Minister of Finance, you are being paid to run a business, your 2001 budget is 65 billion dollars, over 93% of which you have to collect from your citizens who own this company you are running, very early in the year your main industries SUGAR and BAUXITE are indicating clearly, alarmingly, that their performance in the first half of the year will not be good, if you are a good manager you must know that you have to moderate your spending to compensate for those shortfalls, I will not go into a long analysis of what all the Bank of Guyana figures ARE concerning government spending in the first half of 2001,... but under miscellaneous spending, Mis...ce...llain...ous spending ladies and gentlemen we spent 4.3 Billion under this head in 2001 compared to 899 million in 2000. 478 % more. Perhaps Minister Kowlessar would like to tell what this huge miscellaneous spending is all about.

   Central Government's total other expenditure for the first half of 2000 was 6.3 billion.... in 2001, despite clear indicators that the economy was in trouble, we spent 9.7 Billion. 153 % more.  He must now tell us why it was that he managed our affairs in this ridiculous way, was he sleeping when sugar and Bauxite were falling to pieces early this year? We don't pay salaries to people who are sleeping Minister; no other company would tolerate this sort of incompetence from its accounting offers, why are you asking us to???  I have been trying ladies and gentlemen, I really have, to be cool, analytical and objective in these comments, but it is difficult when faced with such monumental incompetence. 

    After the September 11th bombings, the US the federal Government to keep the US economy from collapsing dropped interest rates to 2%. If you live in the US and you had a loan for your house or your Business which is on a 30 year fixed rate your interest can be around 8 to 9.5 %, after the bombings the rate for 30 year fixed loans dropped to under 6%. Everyone in the US is now rushing to refinance loans to reap the benefits of this new lower rate, this spurs individuals and BUSINESSES into action, to refinance at the lower rate, as a result surplus money is left to embark on further spending.

    Let me put this another way for my brothers and sisters who like ME need this concept to be simple, you own a house, you have a 300,000 loan, your interest rate is 9.5%, your monthly mortgage payment is 3000 US dollars, the US federal Government drops prime rate to 2% so you put in a request to refinance that loan at say 5-6 %, your monthly interest payment then becomes only about 2000 US dollars, the 1000 US dollar difference is either a saving to YOU, or YOU decide that you can continue to pay the 3000 US dollars per month and buy a new car or get more money to renovate and improve your property or your business. That is the way things work in the real world. NOT so in GUYANA!!!  

    The commercial banks in this country require us to pay nearly 20 % interest on our loans, our government has turned a blind eye to this obscene and oppressive rate for long enough, it is what has contributed largely to the failure of so many businesses, compounded by the poor management of our National Economic affairs, this rate must go down, mechanisms MUST be found to do so immediately, I do not pretend to be qualified to offer an opinion as to how this must be done. But it MUST be done. If our Commercial Banks can borrow money from the US for 2% why are they charging us 20%, Ladies and gentlemen for those who do not understand what 20% compound interest means let me explain it, if you borrow 40 million dollars from a bank in this country, you will have to pay back over the 15 year loan period more than 4 times that amount, around 180 million.

    It is obscene and it is destroying our companies and our country because when companies close down, jobs are lost and our people suffer not only lost jobs, but even higher taxation to the rest of the population to make up the shortfall.

    Finally let me ask my viewers a few questions, over 93 % of all revenue required to run this country comes from direct taxation to us, all of us, do we have an affordable and reliable ELECTRICITY supply? Do we have a reliable and safe WATER supply? Do the health facilities for our citizens even approach an acceptable level? Have our police force, who we pay with our taxes, discharged their stated responsibility to protect and serve us? Is our judiciary acting in our interest dispensing equal justice to our people? Are our Schools educating our children at a level which justifies our high level of Taxation?  Are there good roads in front of our houses? Is our state SHARING the national economic pie, divided equally among ALL of its citizens? If you can honestly answer these questions, with a response, that is not a resounding NO. You are a better visionary than I am. Or you are blind. You CHOOSE! But do so HONESTLY. That is all that I ask!!!!

   In this country ladies and gentlemen, it is illegal to drive a motor vehicle without a license, and if you are a learner, you are required to put a red L on the vehicle you are driving to warn others to be careful around you, because you do not know what the hell you are doing, we should buy 5 gallons of red paint and paint a huge L on the building that houses our Ministry of Finance.