Tuesday, November 25, 2008

Bigger vision - Stabroek News Editorial

Bigger vision
Stabroek News Editorial. November 24, 2008

Though it was tabled in Parliament quite late, the mid-year report by the Ministry of Finance for 2008 is useful as it gives an indication of whether economic targets are going to be met and the type of milieu in which next year’s budget would be presented.

The Ministry of Finance must be complimented for getting it out but it must do so on time in the future.
Some of the indicators were positive – projected GDP growth of 4.9% in these difficult economic circumstances would be welcomed while inflation is projected at a troubling 8.1% though with collapsing oil prices this would probably be adjusted downwards.
If one were to assess the results through the prism of how the bases of the economy have changed there would be very little refraction. There is a sameness in the constituents of the GDP and in relation to sugar there are enormous concerns.

Sugar, into which we have ploughed US$110M in a new ambitious factory as part of a strategic expansion plan, continues to underperform as in recent years and there are questions about whether its long-standing Booker Tate management will continue in this position for much longer.

Production has failed to veer towards the 400,000 tonnes that would guarantee the servicing of local, regional and international markets. The start-up of the new factory for this vital second crop has been badly delayed and will affect the annual production figure and cultivation plans at the estate. Both the start-up of the factory and the mobilizing of private cane farmers to supply the new mill have been troublesome and the government will certainly have to take some of the flak for not doing more to get around these problems.

Rice has boomed but there have been export market problems in Jamaica. This will hopefully not be the case next year since the signing this month of a one-year MOU with the Jamaica trade ministry. However, the uncertainty that attends the rice trade as exemplified by the implosion of the EU’s Other Countries and Territories route market in the mid 1990s and the reckless investment it prompted is a cautionery tale. In the region our own fellow Caricom members have been less than forthcoming with the necessary market information that would allow our industry to efficiently supply the market and so we must proceed carefully.
Other crops, which have been held out by successive PPP/C administrations as having enormous growth potential, have seen higher output but not in the leaps and bounds necessary to make it a new pillar of the economy. More money is to be spent on agricultural diversification through a foreign-funded programme and it is hoped this will lead to major developments.
The rest of the economy reads more or less the same. Forestry is down, bauxite (now completely in private hands) up, gold swelling with the boom in prices and livestock up, fisheries down. If one were to revisit the 1994 budget for a real review of the first full year of PPP/C governance one would see the same sectors – some in the ascendancy and some in decline.

The point is that 16 years after it took office the PPP/C has not managed to shift the fundamental bases of the economy from the old markers. Instead, a decision was made to harness the country’s future to sugar, the wisdom of which has been called into question by the upheaval in the European market and now the domestic issues surrounding the start-up of this much vaunted factory and the management of the industry.

For the sake of all concerned it is hoped that the sugar investment turns out to be sweet for the country but it still leaves the torturous question as to whether we want ensuing generations of Guyanese to be yoked to sugar for the rest of their productive lives. As was pointed out in the Stabroek Business editorial of November 14 “A critical question that arises out of this reality is whether or not it is our desire that our children and grandchildren be harvesters of sugar cane one hundred years hence. Our response to this question could provide a logical basis for a much needed national contemplation on the way forward for the sugar industry.”

That notwithstanding, there is no reason why President Jagdeo in the remainder of his term, the PPP/C government and all the other stakeholders couldn’t seriously again grapple with where economic growth should come from in the medium to long-term given the seismic shift in the prime sugar market, the malaise in the Caricom single market, the imperatives of the World Trade Organisation rules and the condition of under-development that Guyana finds itself in.

Much energy was expended this year on what from the outset appeared to be a hopelessly misplaced rearguard effort to stave off the Economic Partnership Agreement with the EU. There has been no similar effort evident this year or last or the year before that on facing up to what the future productive bases of this country’s economy should be in 5, 10 or 15 years from now. One pledging conference was held in relation to the Jagdeo agricultural initiative but it hasn’t translated into immediate plans for any major project here. Biofuel plans remain on the drawing board and the only other major possibility – the finding of oil remains years away. In terms of profiting from trade, the opening of the Takutu Bridge could provide a platform to tap the trade into northern Brazil but the requisite infrastructure is lacking.

There needs to be a bigger vision – not a new one. The vision has been argued for by regionalists for many decades now as Guyanese Havelock Brewster recently reminded in his address to the UWI (Mona) Graduating Class on the challenge that had been thrown out to lecturers like him at UWI 40 years ago.
“In the economics and social studies faculty, as in other faculties, we took up the challenge, and came up with a number of conclusions and recommendations. They included the need to: orient public policy to the eradication of persistent poverty, and the roots of the plantation system; to lessen dependence on primary commodities, like sugar and bananas, exported under preferential terms; to get greater returns and added-value out of our raw materials and services, like bauxite, petroleum, timber, fishery products, and tourism; to diversify the production structure; to rationalize our air and maritime transport; to combine our natural resources and aggregate demand through integrated policies for production and trade; to promote local ownership of Caribbean assets.”

Forty years on, much of this remains a barren expanse for Guyana and it behoves a governing party that has occupied office for 16 consecutive years to grapple with it seriously.

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