Tony Vieira's Comments
18 October 2017


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Debt write off
(Aired 15 June 2005)

    Recently Guyana was given a write off from our national debt of a little over 300 million US, now remember that since coming to power the PPP have borrowed over 600 million US but the International financial Institutions [IFIs] have been writing our debt over the past 10 years to the tune of nearly 1.6 Billion US, where are we in terms of development notwithstanding these write-offs since 1998? did you see your country developing? Did you see prosperity? Did you see better governance? Did you pay less taxes or duties on anything? Did you life improve? It did not? I wonder why? If you saw no change when they wrote off 1.6 Billion US, why would you see any when the write off the last 300 million? Did you do something to change the incompetent, corrupt people who run your country? No you did not!

   Today 41 of the world's poorest countries are bankrupt. These nations identified by the World Bank as heavily indebted poor countries [HIPC] owe some 170 Billion US dollars, while half of their 6 hundred million citizens get by on less than $1 US per day. Guyana is one such country, the only one in Caricom. The 170 billion is of course owed to the richest countries in the world and to qualify for this most recent write off, this country had to be one of the 18 poorest in the world at the bottom of heap.

   In September 2001professor M.A. Thomas an economist at the University of Maryland told us what causes a country to become HIPC.

    The sequence of events seem to be that a country which has a good financial structure commences ill-advised spending, because of a sudden upsurge in the price of one of its commodities in our case it was sugar in the 1980's. These unsustainable upsurges are transient but when prices normalize these countries instead of cutting back on their spending and tightening up their administration, borrow ever-larger amounts until they literally have a debt that they cannot repay.

    The 41 HIPC countries have much in common, many of them maintain money losing public enterprises, created government posts to provide employment for friends and family, imposed artificially high rates of import duties, taxes etc and thus created formidable trade barriers. Most HIPC governments have been found to be riddled with corruption, in a survey done by the Transparency International Journal in 2000 it was discovered that nine of the 15 HIPC's polled, ranked at the bottom of the pile of nations and were the most corrupt"   

     "At the same time the executive branch makes unbudgeted expenditures throughout the year, Mr. Jagdeo ladling money without parliament's permission all over the country is a good example, these loose practices make public spending data extremely spotty,  Thomas says that "when making government purchases HIPCs routinely violate the rules of public contracting, officials award contracts to favoured companies despite laws requiring competitive bidding, they manipulate criteria, violate the confidentiality of bid documents, and privately negotiate the terms of contracts after the contracts have been awarded. As a result these governments persistently purchase unnecessary, inappropriate, overpriced or low quality goods and services"

   Many HIPCs do not archive contract documents making subsequent audits impossible and HIPCs also fail to follow standard procedures of human resource management; recruitment is not transparent and does not correspond to actual staffing needs, minimum qualifications for positions often do not exist, and where they do, they are not respected. Thomas is suggesting that these hirings are intended to put in place persons who will aid and abet wrongdoing by the bosses rather than fill vacancies with competent persons"    

      Thomas says that "many governments do not close their books at the end of the fiscal year and some government units keep no books at all" every year since 2001 I have been telling you that Auditor General Goolsaran keeps complaining that every Ministry breaks our laws at the end of every year by not returning unspent money to the Consolidated Fund, the use of the lotto money by Jagdeo for political purposes to endear himself to some communities is also scandalous, unfair and discriminatory.

   Thomas tells us that "when government officials violate the law, justice systems often cannot hold them accountable. Police forces are untrained and unequipped, subject to political interference and no match for sophisticated white-collar criminals or drug dealers. Judiciaries are weak, under funded and corrupt, Judges lack access to law books and even paper on which to write opinions. The executive branch firmly controls judicial appointments and promotions and consequently interferes with the judicial process"

      "In many HIPCs Thomas tells us, illegality permeates the highest levels of government, implicating presidents, ministers, legislators and supreme court justices, these officials fill posts with cronies and pressure them to grant favours and remit money often collected through bribes and embezzlement. This top –down pressure for illegal activity trickles down to all levels of government creating hierarchies of wrongdoing"

   "At the same time governments officials protect themselves by deliberately destroying the fabric of accountability, it is misleading to simply say, that systems of accountability are weak or nonexistent, someone is actively deliberately weakening or neglecting them to hide the high levels of corruption and incompetence that exists. People charged with maintaining records falsify or destroy them, people who are responsible for nominating Judges choose those who are obedient rather than those who are independent and honest, people allocating resources starve judiciaries and audit offices of funds, I have given you first hand evidence of this undermining of the Legal system in this country by starving it for money, in the absence of the necessary controls all types of abuses become possible from petty corruption to human rights violations. When most of government is corrupt the government is rendered powerless to sanction its own members or reform itself"

     Thomas argues that "simply forgiving debt will not solve the problem since dept relief dollars rarely find their way to poverty relief programs in the HIPCs anyway" he puts it this way that "unless debt forgiveness is effectively conditioned on both the proper use of funds and the pursuit of structural reforms, it is unlikely to help the poor, even worse, debt relief funds may be used to support activities that actually aggravate poverty and fuel corruption. Debt relief packages do not go to the poor it goes to the same governments that racked up the debts in the first place, many of which are weak, corrupt and authoritarian, hardly the best intermediaries to carry out a philanthropic agenda"   

   "Such corruption is fuelled by the public's demand for private goods rather than public policies supporting a system of patronage or ethnic politics the very definition of corruption, the use of public office for private gain. Most HIPC government officials do not fear losing an election if they fail to respond to the people's needs. This lack of accountability plays out in the theft and waste of public resources, in routine torture and extrajudicial killings and in the prevalence of government operating with impunity"

      So will anything change because of this recent write off? Or will there just be more money to thief now, and probably less pressure from the IFI's to force good governance?

     The US Government is right, these write-offs if not accompanied by substantial changes to the way the governments of the HIPC nations conduct their business will change nothing, writing off the debt is not the answer, writing off the governments that create them are, you ladies and gentlemen have the power to do it, are you prepared to take the fist step next year?