CaribWorldNews, NEW YORK, NY, Weds. Jan. 14, 2009: When it comes to
economic freedom globally, Guyana is even lower than Haiti, the country
deemed the poorest in the world.
According to the latest Index of Economic Freedom World Rankings, a
compilation of economic freedom globally by the Wall Street Journal and
the Heritage Foundation, Guyana is at 155 on the overall list, lower
than Haiti at 147. Overall, it scored 48.4 on the economic freedom
scale, meaning its freedom is repressed.
This makes it the worst CARICOM country for economic freedom in several
areas, including business, trade, government size, investment, property
rights, corruption and labor.
As analysts summarized in the report: `Guyana does not rank strongly in
any category of economic freedom and is slightly above the world average
only in labor freedom. Although macroeconomic and financial-sector
stability has been maintained, Guyana's average economic growth over the
past five years was only about 1 percent.`
The size of government was also slammed, with researchers saying
government's size is the biggest barrier to development since
expenditures exceed half of GDP.
Additionally, `Significant restrictions on foreign investment have been
addressed only marginally, and these restrictions, combined with an
inefficient bureaucracy, substantially limit investment and business
freedom,` the report added.
Analysts found that the overall freedom to conduct a business is
restricted by Guyana's regulatory environment since starting a business
takes an average of 40 days, which is roughly equal to the world average
of 38 days.
Further, obtaining a business license requires less than the world
average of 18 procedures while closing a business can be lengthy and costly.
The foreign investment approval process was found to be burdensome and
non-transparent, since according to the report, government still screens
most investments, and the relevant ministries have significant
discretion in issuing licenses and approvals.
he banking system was also dubbed as `inefficient,` since the percentage
of loans that are considered non-performing is relatively high at 14
percent, down from 25 percent during the mid-1990s.
Six commercial banks operate in Guyana, and the two largest are
High inflation, averaging 10.4 percent between 2005 and 2007, did not
help Guyana`s overall standings, since analysts claimed the Guyana
government still influences prices through the regulation of state-owned
utilities and enterprises. Ten points were deducted from Guyana's
monetary freedom score to adjust for measures that distort domestic prices.
There was also found to be burdensome standards and regulations when it
comes to the import and export business while researchers found
inefficient customs administration, inadequate infrastructure, and
corruption, factors of which all add to the cost of trade.
And corruption is perceived as widespread, and at every level of law
enforcement and government.
This widespread corruption perception undermines poverty-reduction
efforts by international aid donors and discourages potential foreign
investors, analysts said.
Guyana ranks 123rd out of 179 countries in Transparency International's
Corruption Perceptions Index for 2007. There is extensive corruption at
every level of law enforcement and government. Widespread corruption
undermines poverty-reduction efforts by international aid donors and
discourages potential foreign investors.
The country`s high tax rate of 33.3 percent for high income earners, and
35 percent for top corporations, also did not help its rank and neither
did its high government expenditures, including consumption and transfer
Researchers found poor management of public expenditures and constantly
increasing social spending which contribute to persistent fiscal
deficits. In the most recent year, government spending equaled 56.8
percent of GDP.
And Guyana's judicial system was criticized as often slow and
inefficient and according to researchers, `is also subject to corruption.`
`Law enforcement officials and prominent lawyers question the
independence of the judiciary and accuse the government of intervening
in some cases. A shortage of trained court personnel and magistrates,
poor resources, and persistent bribery prolong the resolution of court
cases unreasonably. There is no enforcement mechanism to protect
intellectual property rights,` researchers added.