Doing business in Guyana still tedious–ranked at 101 of 183 countries in World Bank report

Doing business in Guyana still tedious–ranked at 101 of 183 countries in World Bank report

Posted By Stabroek staff On September 11, 2009 @ 5:19 am In Local News | 15 Comments
http://www.stabroeknews.com/2009/stories/09/11/doing-business-in-guyana-still-tedious/


Guyana ranked 101 out of 183 economies surveyed in this year’s Doing Business report, the seventh in a series of annual reports prepared under the auspices of the World Bank.

Doing Business 2010: Reforming Through Difficult Times, released this month, investigates regulations that enhance business activity and those that constrain it. Guyana’s rank on this index last year was 105 of 181 countries, while for the previous year it was 95.

According to the report, between last year and this year Guyana implemented reforms in two areas that ease doing business here – starting a business and trading across borders.

With regard to starting a business, Guyana’s rank this year was 97, while last year it was 103 and for trading across borders it ranked 76 this year, the same as last year.

“Guyana eased business start-up by applying a flat registration fee for all companies, regardless of their capital amount, and removing the duty payable on incorporation,” the report said. “It also streamlined registration with the tax authorities with the introduction of a single tax identification number for corporate, value added, and labour taxes.

Implementation of an electronic declaration system reduced customs clearance times for exports and imports.”
Guyana’s ranks for the other business indicators this year were: dealing with construction permits (39), employing workers (87), registering property (72), getting credit (150), protecting investors (73), paying taxes (113), enforcing contracts (75) and closing a business (129).

The report noted that setting up a business in Guyana involved procedures that could take more than three months to complete. If for instance, the entrepreneur needed to build a warehouse s/he would have to obtain a building permit from Mayor and City Council which takes 90 days; obtain a planning permit from Central Housing and Planning Authority which takes 90 days and follow up with the Fire Department on a building permit which takes 90 days; receive inspection and obtain approval upon completion of a project from the fire department, which takes 60 days.

Sewage connection takes 43 days; electricity connection, 60 days; water, 14 days and telephone 30 days. It however noted that some of these tasks could be done simultaneously.

In terms of cost, the most prohibitive is electricity connection. This is because in the city enough electricity at the correct voltage is usually not available.

The business would need to secure a transformer and must pay the additional cost for it which is about $500,000.
Meanwhile, regionally, Guyana’s rank placed it at 19 among 32 Latin America and Caribbean countries surveyed. Puerto Rico, St Lucia, Colombia, Chile, Antigua and Barbuda and Mexico were the top five countries in the region. Guyana came in just below Panama, Belize, Trinidad and Tobago, the Dominican Republic and Grenada. The countries at the bottom of the regional table were Honduras, Haiti, Suriname, Bolivia and Venezuela.

The most reformed country in the ease of doing business this year was Rwanda, while Singapore continued to claim the top spot for the third year running. Central African Republic and the Democratic Republic of Congo occupied the bottom spots as they had for the past few years.
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15 Comments To "Doing business in Guyana still tedious"

#1 Comment By freespeech On September 11, 2009 @ 6:08 am

electricity 60 days, telephone 30 days.
what happen to 1 or 2 days. this is not rocket science.
every other bloody thing is 90 days.

i know the employees need their hands grease, for them to start working. “TOTALLY UNACCEPTABLE”
they need to place a bucket of grease at the door so they can use that each morning to get them going. lol.

#2 Comment By Brandon Samaroo (Dissent is the hightest form of patriotism) On September 11, 2009 @ 8:52 am

!7 years, what is the big hee can o mist doing?

Let me hear the stooges holler that I am being too critical of the big boy. 17 years what economic policies to encourage business growth and economic growth both organic and foreign has this government made easier or encouraged.

Please save me the goinvest nonsense that was a step in the right direction that however does not change the laws of the country and improve overall business process and lower the cost of doing business in GY. So save me the nonsense and oh forget the ow laudo 28 years phenc save all the excuses but them in a bank and let them earn lazy interest.

#3 Comment By Truth On September 11, 2009 @ 8:58 am

This report is a more accurate assessment of doing business in Guyana. It is impartial and free of political agenda, unlike the Heritage Foundation’s report which is a conservative think tank spreading unbridled capitalism. The same type of captialism that sent the world into a recession.

Investors take this report seriously when analyzing a country. This is an opportunity for the Government of Guyana to look at areas to improve. Their plan should be to be one to two points more competitive in each area next year.

#4 Comment By rasputin92 On September 11, 2009 @ 9:54 am

“Ask five economists and you’ll get five different answers – six if one went to Harvard.”
– Edgar R. Fiedler, economist.

#5 Comment By Brandon Samaroo (Dissent is the highest form of patriotism) On September 11, 2009 @ 10:19 am

What has the big economist been doing for the past 17 years?

#6 Comment By MXQBH(1 blood donation can save 3 lives) On September 11, 2009 @ 10:25 am

“Tedious” – a euphemism, unless you are able and willing to ‘lubricate’ the process …

#7 Comment By rasputin92 On September 11, 2009 @ 12:44 pm

“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office.”
– H.L. Mencken(1880-1956), American writer.

#8 Comment By amenra[jackass seh de wurl na level] On September 11, 2009 @ 2:01 pm

hey hackett what’s up man see you enjoying yuhself, don’t forget to bring me back some good gt pepper sauce when you coming back to canada, hee hee hee haw.

#9 Comment By amenra[jackass seh de wurl na level] On September 11, 2009 @ 2:02 pm

According to this report it seems guyana is improving alittle.

#10 Comment By Danny DeAbru On September 11, 2009 @ 3:26 pm

I don’t know who to believe because most guyanese that i meet says that they are ‘businessman’& how they know how to run their business’across the borders and in GT.They say ‘runnings always deh’& business is nice.

#11 Comment By Lam Debra On September 11, 2009 @ 3:34 pm

Since migrating I have visited Guyana several times and I must say that customer service is terrible….employees don’t have no hesitation in showing their displeasure at serving you….strupps teeth and rolling eyes of the eyes is not uncommon.These employees make it look as though they are doing you a favour in doing business with you and collecting your money….but the problem lies within management….no training what so ever.

For all that we have to say about the islands….their people are polite. In Barbados they stop for you to cross the road. In Guyana the drivers prefer to knock you down

I have travelled widely,but the worst service I”ve ever received was in Guyana. Ever tried getting info about the schools? Silence.We have a very long to to go in our business encouragement

#12 Comment By freespeech On September 11, 2009 @ 4:04 pm

cakeye it’s not the cost but the “TIME” it takes.
please stop trying to make things that??????????????????????????????????

#13 Comment By freespeech On September 11, 2009 @ 4:06 pm

supply them with some grease or differential gear oil.
ehehehehehehhhhhhhh

#14 Comment By Brandon Samaroo (Dissent is the hightest form of patriotism) On September 11, 2009 @ 5:42 pm

how much lube you need down there hack?

#15 Comment By Bung Nabel On September 11, 2009 @ 6:36 pm

Hey Brandon: Don’t forget that along with the lube, send some Preparation H. Doing business in GY in a pain in the exhaust system.

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Arson cripples Wales Estate

Arson cripples Wales Estate- workers sent home
August 26, 2009 | By knews | Filed Under News

http://www.kaieteurnewsonline.com/2009/08/26/arson-cripples-wales-estate/

Over 180 punts of cane were destroyed by arson as protests over inadequate remuneration in the sugar belt spilled over to West Demerara, crippling the Wales Estate.
The cane was reportedly set alight on Monday afternoon and the Guyana Sugar Corporation (GuySuCo), stands to suffer untold losses as the final crop of the year undergoes a torrid beginning.
Kaieteur News understands that several persons were seen by the GuySuCo security personnel shortly before the fire completely engulfed five fields of sugar cane.
The destruction of the cane came in the midst of a stifling strike by cane cutters, and this has forced the estate to completely shut down its entire operation.
According to a source, all the field and factory workers have been sent home until further notice and the only workers remaining on the estate are the security personnel, medical and some clerical employees who are responsible for preparing payments.
The source pointed out that should the cane cutters not return to work soon, more staff will have to be sent home.
“The estate is already in a very bad shape and the demands being made by the cane cutters is really taking a toll,” the source said
Kaieteur News understands that a meeting between the union representing the striking cane cutters, the Guyana Agricultural & General Workers Union (GAWU) and the management of the GuySuCo Wales Estate was held on Monday and it was agreed that work will resume after the sugar estate adjusted from its initial position.
However, yesterday none of the cane cutters turned up.
“Most of the workers sent home yesterday are members of GAWU, and they too will feel the effects of the stance taken by their cane cutter colleagues. The sugar estate cannot sustain those people who are not on strike,” the source told Kaieteur News.
This newspaper understands that the happenings at the Wales Estate have not been highlighted, since strikes have been occurring on and off since the start of the crop.
The cane cutters are claiming that a higher wage should be paid since the fields are full of obstacles (weeds, etc.), and have to be cleared in addition to the manual harvesting of the sugar cane.
The present situation at the Wales Estate appears worse than the out-of-crop season, when most of the workers are laid off.
According to a senior GuySuCo official, soon the estate will have to remove all of its equipment from the fields, and this could signal the possible closing of the estate.

Why are there so many sole bids?

Kaieteur News Letter to the Editor, Wednesday 26 August 2009 - "Why are there so many sole bids?" - http://www.kaieteurnewsonline.com/2009/08/26/why-are-there-so-many-sole-bids/

Dear Editor,
I note with amazement that quite recently, there have been a lot of single bids. It is as though there is a game going on in the tendering circle. It is as if the various contractors have marked off their territory.
I do not want to believe that things have reached the stage where Guyana has been partitioned into lots with various contractors having exclusive rights to certain tenders.
I do not want to believe that one contractor will have exclusive rights to sea defence works, another for road works, another for bridges, another for kokers, another for schools repairs, one for the construction of new schools, and one for hospitals. But this seems to be the case. If a contract pops for something they all seem to know that they should not compete against the other.
If this is the case then in some areas many have failed although given a free reign. The construction of the new Ministry on High Street is just an example. One got the job and cannot complete it. Perhaps this is why the contracts are so high so as to allow contractors a lot of latitude.
I say this because I noticed for some time that there is a single contractor for the roads programme. In the past there would be BK International and Courtney Benn Contracting Services. BK, with more equipment would do the major roads and Benn appeared to have the monopoly on the smaller roads like some in the city.
BK International also seems to have a monopoly on the sea defence projects these days although not so long ago there were others making a bid for such projects. But this could be understood since large projects demand a certain level of sophistication in equipment.
As an engineer I know and I have been coming to Guyana from time to time. I have visited projects and I have seen what happens, sometimes with sadness in my heart.
However, my major concern is about those projects that have to do with procurement. At one time the government would have done its own procurement and at a cheaper cost than to involve a middle man.
In every case, be it procurement for pump stations, public transport as we knew it then, equipment for the medical institutions and pharmaceuticals, the government kept a tight rein on these things. It sourced these things using the people in its employ. I lived in Guyana during those days.
The government procured generators for Guyana Power and Light as recently as a few months ago when it started its expansion programme. The new Kinston Power Station is just one case in point. The generators, when the nation was experiencing a serious generation shortfall, came in as a direct result of President Bharrat Jagdeo’s intervention. I follow these issues online.
I now wonder at the shift that allows a solitary bidder to import drainage components on behalf of the government. Only one person bids for those contracts - Harrychand Tulsie. Is it that he is the only person with access to the suppliers of drainage pumps?
Your newspaper was also able to access the suppliers, and Sir I hasten to say that I have been able to do the same with a query of my own. In these days of computers, the simple Google search engine affords anyone a chance to access suppliers in any part of the world.
As a friend jokingly told me, there must be only one pumper in Guyana. The government must explain why it relinquished procurement of such equipment. There is a procurement board. What are its functions?
Sadly, the government does not answer questions, but these are simple questions that should be answered.
Dexter Fordyce
Engineer and Guyanese
Belmont, Wisconsin

The Jagdeo 10 year economic report card

The Jagdeo 10 year economic report card

Posted By Stabroek staff On August 19, 2009 @ 5:01 am In Daily, Features | 17 Comments

Development Watch

By Tarron Khemraj

Introduction
This month marks ten years since Mr. Bharrat Jagdeo became President. I will dedicate this column to an analysis of several economic variables from 1999 to 2008. The indicators I have chosen are fundamental to the stability and well-being of a country. However, in order to perform a meaningful analysis of the President’s 10 years in office it requires that I compare the variables with other similar small countries like Guyana. I have chosen several sister CARICOM countries. The Caribbean Centre for Money and Finance (CCMF) has done a remarkable service by summarising the data on various Caribbean economies. I use the CCMF data for the Caribbean economies.
Tarron Khemraj [1]

Tarron Khemraj

However, I believe it is important that we look at other small developing economies such as Botswana, Mauritius and Fiji. Mauritius and Botswana are seen as two remarkable success stories in Africa. On the other hand, Fiji is a small Island economy (sugar-based like Guyana) that suffered from ethnic and political conflicts during the period of analysis. For these non-Caribbean countries, I sourced my data from the World Bank’s World Development Indicators (WDI electronic access). For all the economies, I obtained foreign direct investment (FDI) data from the same WDI electronic access.

It is important to use other small economies like Guyana when performing such an analysis. First, the economies are all susceptible to global shocks and harsh world price conditions. These economies take world prices rather than make prices. Second, one country, Suriname, also suffered from significant floods like Guyana. Other Caribbean Islands like Jamaica and Grenada suffered immensely from the destruction by hurricanes. Third, these economies have a similar British historical legacy.

Some economists would argue that it is important to “control” for geography/location when making these cross-country comparisons. I believe the geography variable is covered by my small sample – Suriname is also on the South American mainland right next to Guyana; Belize is on the mainland of Latin America. But I want to make it clear that the purpose of this column is not to explain economic variations across these economies; rather the column summarises several economic variables in order to place the Jagdeo years in office into context. It will take a lot more than a 1,200 word column to explain the stylised variations.

Nevertheless, some readers would have observed by now that my thesis for Guyana’s underdevelopment is rooted in policy failures – both political and economic in nature. In other words, policy matters in my analysis. For instance, our policy makers at Office of the President (OP) have constantly failed to grasp the purpose of IMF and World Bank policies which they follow like model students without a second thought (Yes, did the Leninists at Robb Street ever once ask the OP planners where is the industrial strategy?) The policy tools of the Bretton Woods institutions are meant for short-term stabilisation and palliative (pain-relieving) poverty reduction. The task of long-term transformation still rests with the government and people of Guyana.

The development economics literature has several candidate explanations for variation in economic performance among countries. These include investment rates, the level of financial development, natural resource endowment, geography/location, institutions (property rights, historical origins, etc), and education and skills of the workforce. On the other hand, a formidable list of heterodox scholars has emphasised the importance of getting policies right (and not only prices). Therefore, in my opinion both economic and political policies matter – Guyana has failed since 1966 on both fronts. I will continue to develop this thesis over the coming weeks, but for now let us observe the data.

Before we move on, I report data on the EC Currency Union, which is made up of eight member countries: Antigua and Barbuda, Anguilla, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. The CCMF reports aggregate data for this sub-regional grouping.

Macroeconomic performance
The average growth rate for the period 1999 to 2008 was calculated for each economy. This is reported in Table 1 below. The data revealed that only Jamaica and Barbados clocked a lower rate of growth over the ten years (there is a virtual tie with Barbados). However, this data should be interpreted with caution. The per capita GDP numbers show that Guyana is the least developed country in this list with an average for the 1999 – 2008 period of US$1, 076. Barbados and the Bahamas, while recording fairly lukewarm growth rates, have per capita GDP of US$9, 165 and US$17, 647, respectively. Both of these economies and most of the others (especially Mauritius) underwent important structural transformations through active policies since the early 1980s. It is well known that the rate of growth of an economy slows down the more developed it gets. However, Guyana is the poorest (on average) and grows at an anaemic average rate.

With respect to inflation, two countries recorded double digit inflation – Mauritius (10.66%) and Suriname (28.86%). All the others appear to have been quite stable from an inflation perspective as Guyana. Guyana has achieved a relatively low debt service ratio – that is the percentage of each export dollar spent on servicing the external debt. The significant debt relief Guyana received since 1996 has now reduced the debt service burden of the country. Significant amount of funds were released for social services, yet the country is still a mediocre growth performer. The point is the debt burden as an excuse ought not to be made for the mediocre performance over the past 10 years.

From a current account balance perspective, Guyana has the second most severe average deficit for the review period – minus 16.4% compared with the highest of minus 21.9% for the EC Currency Union. Remember, the current account balance measures how well the country is doing vis-à-vis the rest of the world.

Figure 1: Macroeconomic indicators – averages for the period 1999 to 2008

200908219GDP [2]

Table 2 reports average FDI inflows for the period 1999 to 2007 (note FDI data for 2008 are not available yet in WDI). Again I calculated the average over the period to make a comparison. It should be noted I could not obtain FDI data for the EC Currency Union as a whole. However, I am able to report this data for the following members – Antigua and Barbuda, Dominica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Guyana received more FDIs than two countries on the list – Dominica (US$24,762,317) and St. Vincent and the Grenadines (US$ 56,814,033).

Figure 2: Foreign Direct Investments (FDIs) – averages for the period 1999 to 2007
200908219FDI [3]

Conclusion
Once we strip away the PNC alibi and compare Guyana to its global peers of small open economies – which face the same global shocks – there is not much to shout about and celebrate. Also, as we saw last week “slow fiah, mo fiah” could not have been the only factor contributing to the post-1997 economic downturn.

You can send comments to: tarronkhemraj@gmail.com
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17 Comments To "The Jagdeo 10 year economic report card"

#1 Comment By Seopaul Singh On August 19, 2009 @ 7:58 am

Tarron Khemraj wrote:
“The indicators I have chosen are fundamental to the stability and well-being of a country. However, in order to perform a meaningful analysis of the President’s 10 years in office it requires that I compare the variables with other similar small countries like Guyana. I have chosen several sister CARICOM countries… In other words, policy matters in my analysis. For instance, our policy makers at Office of the President (OP) have constantly failed to grasp the purpose of IMF and World Bank policies which they follow like model students without a second thought (Yes, did the Leninists at Robb Street ever once ask the OP planners where is the industrial strategy?)” All of this is cheap pot shots at the President.
In reviewing the Ten Years of President Bharat Jagdeo’s Tenure, Tarron Khemraj did an astute analysis of the GDP Rate of Earnings between the years 1999 to 2008, but unwittingly sought to show the slow ‘anemic’ progress Guyana made over that period compared Guyana with, of all Countries among others in CARICOM, Barbados and Bahamas. What did all of this have to do with the President’s performance by the way? The relevant variables are there.
He slotted into his years of relief, the Debt Burden erased in 1996, to show a sort of impact on the debt-service relief on the overall performance of the Economic Sector of Guyana. This was good and bad for his otherwise frugal analysis. What was the idea behind bringing in 1996? It is clear he intended to show that relief had impacted the average indebtedness of the country somewhat more positively.
Tarron further noted, “These economies take world prices rather than make prices. First, the economies are all susceptible to global shocks and harsh world price conditions. Second, one country, Suriname, also suffered from significant floods like Guyana. Other Caribbean Islands like Jamaica and Grenada suffered immensely from the destruction by hurricanes. Third, these economies have a similar British historical legacy.”
What the analyst did not zero in on were the horrendous economic impact of the three major floods which rocked Guyana in 1996, 2005 and 2006. I am convinced that Suriname was not so adversely affected not according to the ECLAC Report on Guyana. Do not lump Guyana in the basket of misfortunes (global shocks) with others and tell us Suriname and Fiji were similarly affected.
We the readers also need to know what were the significant setbacks on the economy of the 1997-98 civil disturbances lead by the PNC after Mrs. Jagan’s election victory and the racial strife which ensued; and the 2002 East Coast Blockades by “Freedom Fighters” who were also politically motivated. May be as an Economist he is not required to compare these to the Fiji Civil Disturbances.
Added to this we still did not get the picture of the intermittent strikes in the Sugar Industry over those years and the losses the nation suffered as a result, not to mention the loss of the European Market. The Geographic variables would also spotlight a definite form of impact on the economy.
Could the analyst give us the details of the losses which affected the overall average over the years analyzed? Apart from the cyclic flooding The unseasonable Weather patterns account for hundreds of Millions of Dollars losses to Rice farmers yearly. This is needful data to understand the issue of Disaster Preparedness and National (Economic) Development.
I am no economist just a layman who wants to know in the economic equation how the losses to the nation set back the GDP average over the those years in question directly, and the succeeding years which were also adversely affected starting from 1996 as he had to refer to that year.

#2 Comment By Joe On August 19, 2009 @ 11:15 am

SS for a layman you offer an awesome counter argument. I like the presentation by TK rather than those produced by the government that presents fancy GDP graphs and other economic indicators in total isolation of other external factors.

That kind of information is good for the local bean counters, but a tally clerk can do that. One for me, one for you and so on and so the economic forecast looks great,until the people ask “what about us” Oops, sorry folks we forgot, listen next harvest season you will be inculded, promise, and remember you are the true heroes of the economy so keep up the good work.

Joe.

#3 Comment By Evan Thomas On August 19, 2009 @ 12:00 pm

Terron, given your limit of 1,200 words, I suggest you present your analysis instead on some seeming ‘antidotes’. It takes away from your essay and it looks devoid of sufficient evidence. Leave that for the blogs; there you can use those pieces to satiffy the likes of the Seopaul Singhs.

And to Seopaul: I prefer Disaster Management and Economic Development. This is where the realtionship is located. In Guyana’s case then the question becomes a matter of Business Continuity Planning (BCP). Disaster prepardeness is a part of BCP.

#4 Comment By Seopaul Singh On August 19, 2009 @ 12:46 pm

Hi Joe, Thanks for the compliment.

#5 Comment By tkhemraj On August 19, 2009 @ 1:55 pm

Seopaul Singh: “In reviewing the Ten Years of President Bharat Jagdeo’s Tenure, Tarron Khemraj did an astute analysis of the GDP Rate of Earnings between the years 1999 to 2008, but unwittingly sought to show the slow ‘anemic’ progress Guyana made over that period compared Guyana with, of all Countries among others in CARICOM, Barbados and Bahamas. What did all of this have to do with the President’s performance by the way? The relevant variables are there.”

MY RESPONSE: it is important to compare Guyana with other small economies. That is normal research procedure in economics. It also allows us to isolate relevant variables – in my case the policy failures. Of course, the President does not influence what goes on in Barbados or Botswana (that’s the whole point for using them as a context). Of course, we could also use the PNC’s 28 years as a benchmark. I have done that in previous columns and the government people do that all the time. Guyanese however also need to see how the country fares vis a vis other small developing economies. It is time the Guyanese masses start asking these questions.

Seopaul Singh: “what the analyst did not zero in on were the horrendous economic impact of the three major floods which rocked Guyana in 1996, 2005 and 2006. I am convinced that Suriname was not so adversely affected not according to the ECLAC Report on Guyana.”

MY RESPONSE: This would require finding out the average rail fall for both countries and for the said periods. Perhaps you are right that Suriname was not affected to the extent as Guyana. But what if the rain fall levels are the same? Could the difference in impact be attributed to the fact that the infrastructure in Paramaribo is better maintained? Could Suriname have done more to change the production structure of the economy that they are not affected to the extent as Guyana? In other words, could the difference in performance be attributed to policy choices? These questions deserve further analysis.

Seopaul Singh: “We the readers also need to know what were the significant setbacks on the economy of the 1997-98 civil disturbances lead by the PNC after Mrs. Jagan’s election victory and the racial strife which ensued; and the 2002 East Coast Blockades by “Freedom Fighters” who were also politically motivated. May be as an Economist he is not required to compare these to the Fiji Civil Disturbances.”

MY RESPONSE: Please note there is continuity in the different columns. Last week I addressed this issue. However, it is important when making global comparisons to use similar countries. I think Fiji faced ethnic conflicts, it is a bi-communal society, and it still has plantation mode of production.

Anyhow, on the issue of civil disturbances see the following: [4]

#6 Comment By tkhemraj On August 19, 2009 @ 2:02 pm

I need to make one comment about the article that I should have clarified. That is, the intention of providing the level of per capita GDP was not to suggest that the Jagdeo Presidency should have achieved that same level as some of these economies were ahead in level of per capita GDP by the time Jagdeo came to power. It would be unfair to suggest that. The levels were provided to show the context of the slower growth of the more developed economies like Barbados and the Bahamas. The latter economies would have already achieved some level of maturity and therefore could grow slower than Guyana.

#7 Comment By Evan Thomas On August 19, 2009 @ 3:50 pm

Editor, I still look to see my blog on this piece, the comments are fair and hope you publish it.

#8 Comment By Gerhard On August 19, 2009 @ 4:02 pm

Mr. Seopaul Singh while I am not in agreement with what you have said, I still tip my hat to you and I hope the Ghost-writers Club (GC) can learn from you.

The Gov’t’s writers, going under names such as Elizabeth Daly, Kimberly James, Erica Smith and now Todd Morgan simply go into personal attack mode and avoid addressing anything in a substantial manner. On the other hand, you use your real name and you attempt to deal with the issues under discussion.

I did not get a chance to respond to you in the discussion on my last letter because I was caught in the interior for a few days. What was supposed to be a one day trip ended in disaster for me because of the deplorable condition of the GT to Lethem road. The only thing I can say right now, is that us younger politicians, Raphael Trotman included, have enough time ahead of us to prove ourselves.

Anyway, please keep it up – it doesn’t matter that we don’t see eye to eye, but civil discourses are much needed in this time of high tensions.

#9 Comment By Cummins On August 19, 2009 @ 4:49 pm

I read two different viewpoints here on Guyana’s economy. Khemraj seems to think that it is policy failures by the government that is causing the economic stagnation; Seopual seems to think that Guyana is a very unlucky country where external(and internal) events, both manmade and natural, always affect its economy more than anywhere else.

I see Khemraj’s data and have no reason to dismiss them. Seopaul, can you prove to me and others that Guyana suffered the most on the list in question and under the period of consideration? I am interested in seeing DATA such as disaster relief expenditures as a percentage of the national budget, independent estimates from reputable bodies of the total economic loss caused by these events as a percentage of the GDP and how these values stack up against the countries on this list and for the same period. My thinking is that if these values were not recorded and are not available then the event was considered negligible. If the values are available then they must show substantial difference among the countries on the list for your argument to hold weight. In the absence of this data or if the data among the countries is changing in the same way(reason and assumptiom why similar geography/economies are used) one can conclude, like Khemraj did, that the economic shocks were on a similar (or lesser) scale hence need not be used in comparative analysis.

One of the things that frustrate me is the way the government always finds an event to blame for bad times in Guyana even without attaching an economic impact estimate for that event from some independent source. One would think that if major events are the norm in Guyana, as Seopaul is suggesting, then the government would want to budget for them and take the necessary steps to prepare for these events so that when they do come along the country is better prepared to absorb the shock . Nobody there is taking responsibility for anything that happens so either way the government is at fault. I know Seopual doesn’t think like that because he knows that working here in the states requires that the arguments you make be supported by evidence for it to make sense and for the people around take you seriously

#10 Comment By Seopaul Singh On August 19, 2009 @ 6:13 pm

In economic analyses we are fed with the same process as in comparing the behavoir of human beings. The assumption in such comparisons is that (though apologetocally acknowledged) the same conditionalities prevail in which the humans live.
Analysts seek desperately to fit all countries into a similar mold for the sake of applying common factors as measurements. This is grossly misleading regardless of the details which are common. The variables may be uneven or winding into different paths, which are not so easily straightened by the methodologies applied in economic analyses.
Every country is a ‘beast’ with its unique behavorial characteristics, its gamut of geographic conditions, its Physical / Relief structures, its colonial heritage , its Developmental history , its Political fragmentation, its ethnical/ cultural enclaves, its nationhal Academic / Technological achievements, its patriotism, its cohesion and collaboration etc. etc.
We are yet to find a Plitician who has been able to forge a more complete Union or unism of a Nation. Policies are therefore often onesided or more appropriately opposed by the otherside. So developmental goals are sidetracked and sometimes sabotaged.
So taken individually, we may be surprised by the Gigantic Strides we made as we weigh in our achievements compared to our own failures. It is like competing with the Joneses. Let every nation extol their own virtues and revel in their own successes.
We often have to stand back and agree with the view “Oh he has come a long way” as we reflect on a bungling youth as he approach manhood. This is by no means infering that President Jagdeo is so referred to, but for the analysts let the variables in each country determine their individual triumphs.

#11 Comment By Roger Williams On August 20, 2009 @ 3:52 am

I am not sure that the complimant was warranted … given some of the apologist nature of your observations.

When you say ” …What the analyst did not zero in on were the horrendous economic impact of the three major floods which rocked Guyana in 1996, 2005 and 2006. I am convinced that Suriname was not so adversely affected not according to the ECLAC Report on Guyana. Do not lump Guyana in the basket of misfortunes (global shocks) with others and tell us Suriname and Fiji were similarly affected … ” you are avoiding the more realistic position.

Perhaps your time would be better spent answering age-old questions resuscitated by Lall Kumar Ramsingh in the SN of January 7 (“If So Much Money Has Been Spent on Drainage, Why Is It Not Working?” ( [5] ).

Apart from the indictment the story provides itself, Hackett’s comments below on that page further illustrates the “strange explanations” being given to these developments regarding flooding rather than the more reasonable one: a stunning abdication of good policy in favour of … greed!

#12 Comment By Cummins On August 20, 2009 @ 10:46 am

Wow!!!………This is quite a move from your first blog Mr. Singh. Originally it was about economic policy analysis now it is about the evolution of a country and mankind. As you try to make a case against the established methods of economic analysis I suggest that you present your paper to the various bodies rather on this blog site.I am sure the guys here have no power to change those methods. You do sound like a very smart guy so I can’t understand what got you caught up in this mess. I know you are better than this blog suggest.

The three points you should take away from this discussion are:

i) Government should be making good economic policies at all times

ii) Government policies should prepare a country to absorb shocks, especially when they happen as often as you and others suggest they do in Guyana.

iii) Government is responsible, no matter what, for the country’s economy and should be held accountable. They can’t just past this off to somebody else or an event.

#13 Comment By Gerhard On August 20, 2009 @ 10:46 am

Well said Mr. Singh. Indeed, no one can dispute that there has been progress. Only yesterday my father was regaling me at the excellent treatment he received at the Licence Office, and he always tells how well he is treated at the Georgetown Hospital (I am sure you too will be shocked at the responses this statement might elicit from some of the hardcore PPP bloggers here, though of course, you will understand that these services are not gracious favours). My father, a long time supporter of the PPP (since 1946) is now with the AFC, having followed me there.

The issue my friend, is not that nothing has been done, but that we could have done better. Substantially so in my humble opinion. Further, to people like my dad and I who have known the PPP for most of our lives, what the PPP has become since the death of Dr. Jagan is too much to bear.

You can email me at any time Mr. Singh: [6]

#14 Comment By tkhemraj On August 20, 2009 @ 11:29 am

Seopaul: your point is well taken. However, very clever economists have utilized a method known as multiple regression analysis with suitable instruments to address your concern.

Once you have controlled for all the variables in your model, use the relevant instrument (s), and you have a well-behaved residual, then the analysts have a decent model.

As these columns are developed into a book manuscript,I am sure some of these concerns will be addressed in more detailed academic format. At this point I see no reason why Guyana should not be compared with its global peers of small open economy.

In my opinion, the PNC alibi stop flying a long time ago!

#15 Comment By Roger Williams On August 20, 2009 @ 11:43 am

This is another example of the apologist rhetoric … almost resembling intellectual gibberish … that Seopaul Singh has degenerated to.

Focus, man … address the details …

A crisis of leadership and credibility attends to a hapless Jagdeo. He has singlehandedly squandered 17 years of international and local goodwill on the altar of … greed!

We can only appreciate the stunning incompetence, or the criminal irresponsibility, associated with various iterations of the greed scenario by reading efforts like Tarron Khemraj’s above.

#16 Comment By Griot On August 20, 2009 @ 7:02 pm

Can you summarise this in plain english for us? Would it sound something like “The PPP has done better than the PNC did”?

#17 Comment By Somdat On August 21, 2009 @ 10:54 am

Tarron: Excellent analysis. I am particularly happy with the discussions. Regarding Mr.Seepaul’s concerns about other variables which I think from a mathematical point of view he means confounding variables that could affect the outcome, he should rest assured that not only multiple regression techniques would easily address this concern, but we can also tell to what extend any variable of interest contribute to an outcome. Of course, some people would never be satisfied even with established methodologies. Best!

Article printed from Stabroek News: http://www.stabroeknews.com

URL to article: http://www.stabroeknews.com/2009/features/08/19/the-jagdeo-10-year-economic-report-card/

"Too often we are guilty of not effectively enforcing our laws much to the detriment of society"

Guyana Chronicle Editorial, Thursday 20 August 2009. http://www.guyanachronicle.com/editorial.html. Countering the dreaded money laundering problem

Money laundering, which is defined as the practice of disguising illegally obtained funds so that they seem legal, is one of the huge problems facing the world today and has become even more complex with the growth of the illegal drug trade and terrorism.

In response to this growing problem the Global Programme against Money Laundering (GPML) was established in1997 in response to a mandate arising from the 1988 Convention under which Member States were required to criminalise money-laundering related to the proceeds of illicit trafficking in drugs and to put legal frameworks in place to facilitate the identification, freezing, seizing and confiscation of the proceeds of crime.

Touching on the macroeconomic effects of money laundering former Managing Director of the International Monetary Fund, Michel Camdessus in address to Plenary Meeting of the Financial Action Task Force (FATF) on Money Laundering in February 1998 asserted:

“I hardly need say that the IMF regards the anti-money laundering actions advocated by the FATF as crucial for the smooth functioning of the financial markets. While we cannot guarantee the accuracy of our figures—and you have certainly a better evaluation than us—the estimates of the present scale of money laundering transactions are almost beyond imagination—2 to 5 percent of global GDP would probably be a consensus range. This scale poses two sorts of risks: one prudential, the other macroeconomic. Markets and even smaller economies can be corrupted and destabilised. We have seen evidence of this in countries and regions which have harbored large-scale criminal organisations. In the beginning, good and bad monies intermingle, and the country or region appears to prosper, but in the end Gresham’s law operates, and there is a tremendous risk that only the corrupt financiers remain. Lasting damage can clearly be done, when the infrastructure that has been built up to guarantee the integrity of the markets is lost. Even in countries that have not reached this point, the available evidence suggests that the impact of money laundering is large enough that it must be taken into account by macroeconomic policy makers. Money subject to laundering behaves in accordance with particular management principles. There is evidence that it is less productive, and therefore that it contributes minimally, to say the least, to optimisation of economic growth. Potential macroeconomic consequences of money laundering include, but are not limited to: inexplicable changes in money demand, greater prudential risks to bank soundness, contamination effects on legal financial transactions, and greater volatility of international capital flows and exchange rates due to unanticipated cross-border asset transfers.”

In Guyana, the government has recognised the implications and harmful effects of money laundering on society and moved to introduce appropriate legislation to deal with it.

In this regard, therefore the announcement by the Minister of Finance, Dr. Ashni Singh that the Anti-Money Laundering and Countering of Terrorism Act was assented to by President Bharrat Jagdeo last Friday should be good news for most people.

According to the minister this has now set the stage for government to proceed with implementation of this important piece of financial sector legislation.

Dr. Singh described the Act as modern and comprehensive, and consistent with international standards. He also stated that the provisions of the Act had benefitted from extensive examination and consideration while the Bill was before Special Select Committee in the Parliament.

According to the legislation, a person who, knowingly or having reasonable grounds to believe that property (money, investments, holdings, possessions, assets and all other property movable or immovable) is the proceeds of crime, and engages to conceal or disguise the illicit origin of that property, will be guilty of money laundering. Terrorist financing has been defined as willfully providing or collecting funds with the unlawful intention that they should be used to aid the execution of terrorist acts or in support of terrorist organisations or individuals.

The important first step in combating this scourge has been made but equally important is that those tasked with the enforcement must do so with vigour and diligence because we will be back to square one if this legislation is not enforced rigidly.

Too often we are guilty of not effectively enforcing our laws much to the detriment of society. However, in this case the consequences of not effectively enforcing the financial regulations contained within the Act could be very telling and pose a serious threat to our macroeconomic framework.

Head of State assents to anti-money laundering legislation

Guyana Chronicle top story, Wednesday 19 August 2009 - "Head of State assents to anti-money laundering legislation" - http://www.guyanachronicle.com/topstory.html


Minister of Finance, Dr Ashni Singh, yesterday announced that the Anti-Money Laundering and Countering of Terrorism Act was assented to by President Bharrat Jagdeo last Friday, setting the stage for Government to proceed with implementation of this important piece of financial sector legislation.

Minister Singh described the Act as modern and comprehensive, and consistent with international standards. He also stated that the provisions of the Act had benefitted from extensive examination and consideration while the Bill was before Special Select Committee in the Parliament.

According to the legislation, a person who, knowingly or having reasonable grounds to believe that property (money, investments, holdings, possessions, assets and all other property movable or immovable) is the proceeds of crime, and engages to conceal or disguise the illicit origin of that property, will be guilty of money laundering. Terrorist financing has been defined as willfully providing or collecting funds with the unlawful intention that they should be used to aid the execution of terrorist acts or in support of terrorist organisations or individuals.

Role of the Ministry of Finance
Under the Act, the Financial Intelligence Unit (FIU) within the Ministry of Finance is responsible for requesting, receiving, analysing and disseminating of suspicious transaction reports and other information related to money laundering, terrorist financing or proceeds of crimes.

The FIU will also compile a report and send it to the appropriate law enforcement authorities, if, having conducted its analysis, it has reasonable grounds to suspect that the transaction involves money laundering, proceeds of crime or terrorist financing.

The FIU shall also compile statistics and records, disseminate information received, issue guidelines to reporting entities and advise Minister Singh accordingly, or may conduct research into trends and developments in the area of money laundering or terrorist financing and improved ways of detecting, preventing and deterring money laundering and terrorist financing, and may educate the public and create awareness on such matters.

The FIU will be staffed by an attorney-at-law and accountant appointed by Minister Singh, and personnel training in financial investigation appointed by the Unit’s Director.

Anonymous accounts and accounts with fictitious names
The legislation specifies that financial institutions shall not establish or keep anonymous accounts or accounts with fictitious names. They have to establish and verify the identity of any customer by requiring the applicant to produce an identification record or any other reliable, independent source documents as the FIU may request.

Customer accounts must be kept in the true name of the account holder.

In the case of existing customers, financial institutions have to verify the identity of the customer within six months from the commencement of the legislation, which would be February 14 of next year, unless the Finance Minister extends the period for a further three months.

If the agency is unable to verify the identity of the customer at the end of that nine-month period, they will be required to terminate the business relationship with that customer.

Where it is suspected that an applicant is acting on behalf of another person, the financial institution shall establish the true identity of the person for whose ultimate benefit the applicant may be acting in the proposed transaction, whether as a trustee, nominee, agent or otherwise.

Also, financial institutions shall not maintain any business relationship with other banks that do not maintain a physical presence under the laws of which they were established (the laws of Guyana), unless they are part of a financial group subject to effective consolidated supervision.

Reporting obligations
Reporting entities, which include financial institutions, real estate agents, precious metal dealers, betting shops and other similar entities, under the legislation, are required to establish and maintain records for seven years of all transactions they complete with a customer and that customer’s personal information including the name, date of birth, address and occupation or business activity.

Reporting entities are required to pay special attention to complex, unusually large business transactions or pattern of transactions that have no apparent economic or lawful purpose, and business relations and transactions with persons in jurisdictions that do not have adequate systems in place to prevent or deter money laundering or terrorist financing.

Whenever a reporting entity suspects or has reasonable grounds to suspect that funds, a transaction or attempted transaction is connected to the proceeds of criminal activity, money laundering or terrorist financing offences, it shall, not later than three days after forming that suspicion, take reasonable measures to ascertain the purpose of the transaction, the origin and ultimate destination of the funds involved and the identity and address of the ultimate beneficiary, and prepare a report of the transaction and submit it to the FIU.

This requirement is also applied to attorneys-at-law, notaries, other independent legal professionals and accountants when, on behalf of a client, they engage in buying and selling real estate, managing money or the creation, operation or management of companies.

If the FIU, after consulting the entity that reported the transaction, is of the opinion that the transaction is suspicious, the Unit may direct the reporting entity not to proceed with the transaction for a period of not more than five days to permit the Unit to make necessary inquiries concerning the transaction and if deemed appropriate, to advise a supervisory authority.

The reporting entity shall appoint a compliance officer to ensure that the entity is meeting the requirement of the legislation.

Also, it must establish and maintain internal policies, procedures, controls and systems to satisfy its obligations under the legislation, establish an audit function to test its anti-money laundering and countering of terrorism financing procedures and systems, and train its officers to recognise suspicious transactions.

Role of supervisory bodies
The Governor of the Bank of Guyana, the Commissioner of Insurance, the Guyana Securities Council and a Special Assistance Committee appointed by Minister Singh will be the supervisory authorities for the purposes of this legislation.

The supervisory authority will also issue instructions, guidelines and recommendations, cooperate and share information with other domestic competent authorities, develop standards applicable to the communication of suspicious activities, cooperate, request and exchange information with agencies performing similar functions in other countries and territories and maintain statistics concerning measures adopted and sanctions imposed.

For breaches of obligations under this legislation, the supervisory authority may impose written warnings, orders to comply with specific instructions, order regular reports from the reporting entity on the measures it is taking, prohibit convicted persons from employment in the sector or recommend the reporting entity’s licence be suspended, restricted or withdrawn.

The supervisory authority shall inform the FIU as to the sanction imposed and may order the publication of its decision.

A person who has been convicted of a serious offence under this legislation, whether in Guyana or elsewhere, shall not be eligible or licensed to carry on business of a financial institution.

The Anti-Money Laundering and Countering the Financing of Terrorism Act represents a great stride forward for Guyana in combating crime by preventing criminals from accessing the resources they need to finance their activities and preventing them from enjoying the results of their actions. (GINA)

Letter signed by Marissa Lowden, employee in the Office of the President

Guyana Chronicle Letter to the Editor, Thursday 06 August 2009 - "The challenge to sustain macroeconomic stability continues" - http://www.guyanachronicle.com/letters.html

ONE of the great achievements of Guyana is to acquire a stable macroeconomic environment which has stabilised price levels and exchange rates, control led fiscal deficit, reduced unemployment, and monitored the cost of borrowing money, enabled borrowing to be more attractive through a stable interest rate, and kept current balances within the balance of payments quite manageable.

And a country’s balance of payments shows the number of transactions between Guyana and overseas entities over a specified period. It is a record of all transactions between Guyana and the rest of the world. The government keeps track of the record of the actual transactions among countries, in order to know what is happening to their international trade.

The balance of payments is one of the macroeconomic fundamentals impacting economic and political stability through the country’s economic relationship with international trade.

At the end of 2008, Guyana recorded balance of payments of an overall surplus of US$7 million as opposed to a deficit of US$1.4 million in 2007.

Unfortunately last year, we saw higher import prices for the first half of the year, because of the rise in the cost of fuel and food, which led to a current account deficit of US$299.1 million, as against US$189.1 million in 2007.

Conversely, there were increases in export earnings, gold export earnings and rice export earnings, as shown in Table 1 below:

http://www.guyanachronicle.com/letter-challenge-1.jpg



On the other hand, as a result of declining exports and the European price cuts, export receipts from sugar suffered an 11.2% decline to US$133.4 million.

Our imports also saw increases, as shown in Table 2 below:

http://www.guyanachronicle.com/letter-challenge-2.jpg



Merchandise imports represent the freight values of goods acquired outside Guyana and it is valued in United States dollars ($US). Merchandise imports increased by 22.3% to US$1,300.2 million because of a 42.7% increase of imported fuel and lubricants. This eventually led to 18.3% increase in imports of non-fuel intermediate goods, a 17.2% increase in consumption goods, and a 9.1% increase in capital goods. However, for 2009, merchandise imports are projected to decline by 8.9% to US$1,184 million because of the reduction in fuel costs.

Net Current transfers are part of the balance of payments which stipulates the goods, services, income, or financial items provided and received by an economy without a quid pro quo. Our net current transfers inflated by 14.7% to US$328.8 million. On the other hand, worker remittances declined by 1.7%, but in-kind transfers increased.

Guyana’s outflow and inflow of financial securities are recorded in the Capital Account. In 2008, the capital account recorded a surplus of US$305.7 million as compared with US$168.7 million in 2007. This surplus was a result of a 78% increase in disbursements to the non-financial public sector of US$186.6 million at the end of 2008. Net private investments primarily occurred in the mining and telecommunications sectors, expanded to US$179.1 million

The current account shows the amount of goods and services transactions Guyana has had with foreign entities. The capital account improvements prevailed over the depreciation of the current account.

The external reserves of the Bank of Guyana increased to US$355.9 million as compared with US$312.5 million in 2007.

This year, expectations are that the overall balance of payments is expected to worsen to a deficit of US$13.9 million, while the current account should improve to US$288.7 million, as a result of lower oil imports. Should the current account attain a surplus, then the deficit will shrink.

The decline in gold, bauxite and rice export earnings is expected to be 18.8%, 12.5% and 3.7%, respectively. Private transfers will see a decline of 20.9% because of the reduction of worker remittances and in-kind transfers.

Because of the decline of foreign direct investments and capital transfers, the capital account will decline by 10.1% to a balance of US$278.4 million.

And for this reason, Government will continue to collaborate with the Bank of Guyana, so as to sustain the soundness of the country’s macroeconomic environment, despite the economic challenges posed by the global financial crisis. There are ongoing efforts to further stabilize price levels and exchange rates, control fiscal deficit, reduce unemployment, monitor the cost of borrowing money, and keep a lid on inflation.
MARISSA LOWDEN

Elizabeth Daly, brainless ghostwriter, on remittances

Carping against remittances is brainless
July 16, 2009 | By Christopher | Filed Under Letters

Dear Editor,
It is distasteful to see people like Gerhard Ramsaroop and others writing against a financial source for development; and I am still trying to comprehend their reasoning behind their hypercritical writings. Gerhard Ramsaroop and others are comparing remittances with other financial sources for developing countries; instead, they should try and see remittances as a complementary financial source.
It is impossible to ignore the positives remittances offer to the development of poor nations like Guyana. The reality is that, developing countries depend on remittances as one financial source, especially for the benefit of their people, and also the spin offs from the multiplier effects are important.

We must note that remittances are not the only financial source for developing countries, since we also depend on other important sources, such as Foreign Direct Investment (FDI) and official development assistance. Remittances should be viewed as another branch on the tree of financial sources complementing the other financial branches with the objective to produce ripe financial fruits. The multiplier effect of remittances should be promoted and any negative spin on the positives of remittances is obtuse. Today, nitpickers are trying to contend that remittances only benefit pro-government people; I must say, this thinking has reached the peak of ignorance.
Remittances have been claimed as not being critical towards the development of Guyana. It is obvious that this flawed rationale for remittances, which are seen as competing with other financial avenues; instead, it must be seen as a complementing financial source working together with the other sources to achieve long-term growth and development for the country. Remittances are more stable than private capital flows and in the recipient country it is less affected by economic cycles.

When people spend remittances on basic needs, retail sales are boosted, which will lead to an increase in demand for more goods and services, which in turn will fuel output and unemployment. Remittances should be seen as a tool used to balance the inequalities caused by the decline in output experienced by developing countries, loss of trade opportunities and emigration.
These nitpickers who shun their light against remittances deliberately fail to acknowledge the positives of remittances to the developing world. In 2005, the Caribbean recorded a total of US$6.4 billion making remittances the second largest source of foreign finance for the region after private capital flows.
Remittances can boost a country’s Gross National Product (GNP) and can assist by reducing the shortage of foreign exchange, counterbalancing the balance of payments (BOP) deficits. The positive outcomes of remittances on production, inflation and imports will depend on how they are spent and invested.

Migrant remittances are a very stable financial source for developing countries and even though they might not be as important as FDIs, they do however, surpass the amount of FDIs received, development assistance, and capital market flows. And remittances are beginning in countries like India, China, Jamaica, etc., to be perceived as a long-term development tool; and some of the more relatively recent recipients of remittances, like Guyana, St. Vincent and the Grenadines, are restructuring aspects of their financial system to make remittances more attractive to donors in the Diaspora; and this would include creating banking incentives that would be mutually attractive to both donors and recipients.
Remittances help to reduce poverty, level consumption, create jobs, provide working capital, etc. It also affords people living in developing country to invest in human capital, such as, education, health and better nutrition. Remittances are fast becoming a development tool for long-term development.
Elizabeth Daly

Remittances and the ghost writers club

The loss of human capital will make it difficult to harness remittances for the purpose of spurring national development

Posted By Stabroek staff On July 14, 2009 @ 5:06 am In Letters | 19 Comments

Dear Editor,
There is an interesting discussion underway with reference to remittances and their impact on our economy, and I have been reading Dr Prem Misir, Emile Mervin, Dr Tarron Khemraj (in particular his SN column, July 8) and a recent letter by one Kimberly James on this issue (KN and GC July 10). I rather suspect the latter to be from the Ghost-writers Club (GC). Kimberly James’ arguments are text book and coherent, with the exception of one off-target insinuation that there is someone out there that spits on remittances. In my reading I cannot figure out who is meant by that remark, clearly meant to target someone – that notwithstanding, the general thrust of ‘her’ letter is worth responding to.
Unfortunately, I did not ascertain any effort on Dr Misir’s part, nor Ms James’, in dealing with Guyana’s country specifics as Dr Khemraj did. General references were made by Dr Misir to India, China, Mexico, Latin America and the Caribbean, and by Ms James to the Eastern Europe and Central Asia (ECA) region, citing Egypt, India, Mexico, Portugal and Turkey as the countries that have incorporated remittances as a developmental tool for long-term sustainable development.

Guyana is quite unlike these countries in many ways, and India in particular has a surplus of engineers and other professional, first-rate engineering and business schools, and first-rate universities such as the University of Delhi. Guyana on the other hand, has a struggling university that does not serve our national interest as it could, and exports 83% of its skilled population. We therefore have an extreme dearth of engineers and professionals that is becoming ever increasingly profound with each departing flight out of CBJ, Timehri. Clearly, this ongoing haemorrhage of human capital will make harnessing remittances most difficult to spur national development – more especially, in the bid to serve long-term goals.

Presently, remittances are not causing large-scale production as there is no mechanism that mobilizes the small amounts to a large investment even though in aggregate, remittances exceed FDIs (Foreign Direct Investments). I was therefore most relieved that so far I couldn’t glean any disagreement in the discussion that FDIs are less important than remittances. However, given the present global economic situation exacerbated by our local state of corruption, crime, unreliable and insufficient electrical power and a lack of skills, it is not entirely surprising that FDIs are not easy to come by.

I find also Ms James’ multiplier argument to be very weak in our specific circumstances because of the high levels of imports (consumer goods, fuels and lubricants). This simply means that a lot of the foreign exchange gained from remittances is pretty much repatriated immediately, as opposed to being stimulatingly utilised within our economy. Again, under these Guyana specific circumstances, one wonders on the effectiveness of long-term remittances policies without sufficiently addressing this. The government has however become proactive on the alternative energy issue, albeit belatedly, and I do look forward to their success.
I doubt whether there would be any opposition from sensible quarters to me saying that it would be profoundly better for us to try to keep our skills at home, as opposed to relying on these persons to send what they can from the countries they are helping to build, such as Trinidad and Barbados (the latter which most abhorrently harasses and shows disdain for us because of our own disgraceful domestic situation).

I am worried about us resting on our laurels just because remittances have become so high – World Bank estimates place it at a little over 20% of our GDP, while other estimates that include barrels and hand delivered cash, are as high as 40%. I believe unharnessed remittances contribute to our social ills, one of which can be exemplified by the prevalence of the street corner limer who is reluctant to work, and often has other socially debilitating vices. Another social ill stems from the ruling elite and friends having ready access to the increased foreign exchange garnered from remittances to support their lifestyle. Their type of living is an incentive to crime and corruption as other sections of the society feel the urge to do likewise (no longer seeing the virtues of hard work and honest living). These local phenomena would be most appropriate for UG to research.

Foreign economic downturns and remittance fatigue (which I predict if social values continue to spiral downward) could cause shocks to our economy. We would without doubt be better off not being as reliant on remittances as we are now, and I would be careful about loudly touting the benefits while so much else is left undone – especially the shortage of human capital.

I am most certainly not knocking remittances, nor the potential to further our development, and I commend both Ms James and Dr Khemraj for presenting ideas on harnessing them. Dr Khemraj urges the government to come up with a comprehensive plan to engage the diaspora which can include knowledge transfer (brain gain or brain circulation), inward diaspora investments, and even special diaspora financial products (it therefore could not have been him that spat on remittances, and I would be grateful, if Ms James could qualify her statement). Ms James proposes financial incentive schemes to increase the volume of remittances via commercial banks, matching the development investments of migrant associations with government funds, and improving the investment climate for small and medium enterprises. She is also keen to engage the diaspora. However, as Dr Khemraj noted, the main constraint is the lack of business investment demand, which goes back to the shortage of human capital.

I would be most interested in Dr Misir’s take on the specific issues raised, since he can give a clearer idea of the government’s strategy to deal with our local specifics. Remittances have been significant for quite a few years now and since it is better late than never, kudos to the government for finally lending some thought to its harnessing – the AFC, almost four years ago, had made this a pivotal part of its elections campaign.
Yours faithfully,
Gerhard Ramsaroop
19 Comments (Open | Close)


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Development Watch by Tarron Khemraj. Are remittances pivotal to Guyana’s development?

Stabroek News Features - Development Watch by Tarron Khemraj. Are remittances pivotal to Guyana’s development? July 8, 2009. URL to article: http://www.stabroeknews.com/2009/features/07/08/are-remittances-pivotal-to-guyana%e2%80%99s-development/

Several commentators have recently expressed the view that remittances are important for Guyana’s economic development. Indeed, one pro-government commentator noted remittances are “pivotal to development” (Misir 2009). Of course, the latter view is not altogether unfounded as there are several cross-country regression studies and reports from international organizations that tend to support that view. However, I am not convinced by these cross-country studies and will explain why it is misleading to extrapolate the conclusions of these studies to the Guyana context. I frame my arguments by taking into consideration the underlying structural characteristics of the Guyana economy. These structures mitigate the long-term positive effects remittances could have in our context. The key argument of this column is remittances are not pivotal to Guyana’s development but rather are engendered by our perpetual underdevelopment.

Confusing the long-term with the short-term

One of the misconceptions emanating from pro-government letter writers is they constantly fail to grasp the difference between long-term growth strategies and short-term stabilisation policies or mechanisms. As a result, remittances – which certainly have a favourable short-term effect by stabilising the local foreign exchange market – are seen as a positive for creating long-term growth and development. I would outline below how one can make erroneous conclusions when only focusing on the short-term.

Human capital and development

Guyana is considered to be one of the highest exporters in percentage terms of its skilled workforce. This outward migration depreciates the human capital base of the country. It is now a truism in economics that human capital is critical for the growth of the aggregate productivity of a nation. It is this growth in aggregate productivity that causes per capita GDP (real GDP divided by population) to grow over time. Moreover, it is the growth of aggregate productivity that enables a country to circumvent the diminishing production returns from sectors that have passed their productive prime decades ago. Some examples of sectors susceptible to diminishing production returns (per unit of labour and capital employed) in the Guyana context would be sugar, timber, rice and minimally processed bauxite – the core of the economy.

Human capital is also important for building suitable institutions that are critical for long-term growth (in economics institutions are things that reduce transaction costs and minimise societal inefficiencies; for instance, institutions can be laws, rules and the system of government). That institutions are critical for development is now conventional wisdom in economics. Talented home grown individuals, who understand the domestic circumstances (and not necessarily super-salaried foreign consultants), are required to run schools and hospitals, become university professors and researchers, supervise building infrastructures, conduct research relevant to the private sector, conduct analysis for government, run banks, etc.

Entrepreneurs are needed to build new productive sectors and take the economy away from the diminishing returns or low productivity sectors. These people are critical for changing the industrial landscape and breaking into new markets. Talents are required in private business to employ the researchers at the university level to seek solutions and new ways and techniques of production.

We can continue to enumerate the fundamental role human capital plays. But the key point is remittances are not enough to compensate for the immediate loss of human capital. The critical point, moreover, is if Guyana’s productivity continues to stagnate (as several studies have shown), then the perpetual status of underdevelopment will continue. Thus, while remittances may ease short-term foreign exchange constraints, the country is hurt at greater levels in the long-term by the dearth of entrepreneurs, innovators, researchers and administrators. In other words, the talents are not there to even optimally utilise the remittances.

Structure of production and multiplier effect

Professor Clive Thomas has long ago noted that Guyana imports a significant percentage of what it consumes, although this percentage has fallen over time. For instance, if we consult the Bank of Guyana statistics we will see the percentage of end-use consumer goods imports relative to the private consumption component of GDP to be 40% as at 2008. One has to be careful here, however, as imports cannot be part of Guyana’s GDP. But the point is the country continues to import a significant percentage of consumer goods that could probably be produced at home. The same conclusion can be made with respect to the imports of fuel and lubricants, which amount to 22.8% of GDP at end 2008. On the other hand, capital goods imports – things that go into the production process and stuff which the country cannot stop importing – amounts to 14.3% of GDP.

The reasons for citing these percentages are two-fold. First, a significant multiplier effect from remittances does not accumulate in the domestic economy but rather leaks out as imports of consumer goods and fuel. Therefore, remittances assuage short-term foreign exchange bottlenecks and furthermore furnish a false sense of success. Second, if government really has a long-term industrial strategy the country could save significantly from importing food and fuels that can be made at home. As it relates to fuel, I would argue for a renewable energy industrial policy framework utilising wind energy, ethanol and bagasse (the latter has already been in use in Skeldon but there is potential to generate many more MWs as Mauritius has shown) in the interim before hydro-electricity can come on stream. But then again the country would need the human capital and private entrepreneurs to pull this off as Mauritius has done.

Savings or investment constraint?

Several economists at the international stage have argued that remittances can increase domestic savings and promote financial deepening and intermediation in developing countries. However, I am quite sceptical of this view in the Guyana context. Indeed, I have noted in the past that remittances can contribute to the increase of bank deposits, excess bank reserves and domestic savings. But the latter does not imply the savings are channelled to investment projects with high rates of return. The main reason why an increase in domestic financial savings really does not matter has to do with the fact that business demand for investment rather than savings is likely to be the binding constraint (Rodrik and Subramanian 2009). Because investment demand is constrained, higher savings are just not intermediated or channelled into high productivity investments. As a result, we tend to see the society’s savings being channelled into foreign assets, excess liquidity and low productivity but safe traditional production sectors (Khemraj 2008).

Investment demand can be constrained for several reasons. First, poor institutions – which the economics literature has indicated as poor specification of property rights protection, weak contract enforcement, and fear of expropriation of profits by the State or some other entity or individual – retard investment demand (Acemoglu et al 2001; Rodrik et al 2004). In the case of Guyana, however, the notion of institution has to be widened to include a Constitution that is not suited to the bi-communal ethnic nature of the population. In addition, our current titivated 1980 Burnham Constitution has made it possible for the ruling party’s democratic centralism to create a paramount ruling structure over the private sector. In other words, while the PNC once used the army and paramilitary to enforce its party paramountcy; the current PPP government uses the supposed legitimacy of the conflict-generating Burnham Constitution to sustain its paramountcy (of course there are now other clandestine operations that became clear after the Roger Khan trials). Second, investment demand is constrained by the scarcity of entrepreneurs and limited human capital base that we have noted above is weakened by outward migration.

Third, investment demand is constrained by high lending rates and interest rate mark-ups over the cost of fund. This stems from the oligopolistic nature of banking in small economies like Guyana. One of my studies has also indicated a stable relationship between the investment in foreign assets by financial institutions and the existence of surpluses and shortages of hard currencies in the domestic foreign exchange market (Khemraj 2009). Therefore, to the extent remittances are channelled into foreign assets by financial institutions, the much touted multiplier effect of remittances is diminished.

Fourth, investment demand is constrained by the appreciation of the real exchange rate (Rodrik and Subramanian 2009) owing to the inflows of capital whether from short-term hot money inflows or more stable and altruistic remittance inflows. As an aside, one study has shown that Guyana’s remittance inflows are derived from altruistic motives (Agarwal and Horowitz 2002). When the real exchange rate appreciates, it impedes the competitiveness of the export sector – particularly new sectors not dependent on preferential prices. However, published data on Guyana’s real effective exchange rate indicate this latter constraint might not be as serious in the Guyanese context.

Remittances cannot replace FDIs

Several pro-government letter writers have implied that because remittances have surpassed FDIs it should be seen as a critical source of development funds. But we need to get
perspectives straight. Although remittances aggregate to be larger than FDIs, they enter the economy in small units that go directly to families and individuals to prop up private consumption. We have already noted several reasons why the production multiplier effect of remittances is dampened. In other words, these micro quantities are never aggregated into a large high productivity investment project.

On the other hand, FDIs are lumpy and go directly to the production enterprise for which they are intended. FDIs engender direct job creation from which taxes are raised by the State. Remittances are not taxed directly and some economists have actually noted that these inflows could lead to an incentive to reduce work effort by people (in other words some people might prefer to wait on the next handout from abroad rather than seek work). FDIs can have a direct and profound positive effect on development if the government has a clearly defined industrial policy framework (see Lall 2004 for experiences around the world with integrating FDIs with an industrial policy framework). If the government really knows what it wants, FDIs could lead to technology transfers, bring in new management skills, and provide a direct boost for a renewable energy industrial strategy. The latter cannot be gained by the multiple small inflows of remittances as there is no existing mechanism that serves to pool together remittance inflows for large scale development projects.

Political economy issues

The local elites and friends of the ruling semi-oligarchy certainly would find remittances to be beneficial. Perhaps this explains why they have tended to conflate the long-term with the short-term when it comes to the true benefits. Remittances provide a stable source of foreign exchange, which enable those who are elected in an ethnically bi-communal society to be able to further divorce themselves from the public facilities. They are able to obtain immediate foreign exchange to send children to foreign universities; they can seek medical help from abroad; they can remit funds abroad; and overall divorce themselves from the local reality. Overall, remittances, provide a false sense of success given the stable and altruistic nature of the flows; and importantly these inflows could very well postpone the need for serious political reforms.

A better role for the Diaspora

Instead of viewing the Diaspora’s role as one of financing private consumption through remittances (and of course contributions at election time), it would be better for the government to come up with a comprehensive plan to engage the Diaspora. This can include knowledge transfer (brain gain or brain circulation), inward Diaspora investments and even special Diaspora financial products.

Conclusion

The remittance phenomenon is a reflection of Guyana’s perpetual underdevelopment rather than a cause of development. The poverty that remittances might reduce in the short-term is caused by Guyana’s production of things that are not important in the global continuum of products. As we have noted above, remittances cannot correct and transform this production structure without a clear and realistic development strategy by the government. Therefore, any short-term reduction in poverty via the subsidy on private consumption – without production transformation – is false success. Also, many government representatives see remittances as beneficial because they confuse short-term stabilisation with long-term production oriented policies.

References

Acemoglu, Daron; Simon Johnson and James A. Robinson. 2001. The colonial origins of comparative development: an empirical investigation. The American Economic Review 91 (5): 1369-1401.

Agarwal, Reena and Andrew Horowitz. 2002. Are international remittances altruism or insurance? Evidence from Guyana using multiple-migrant households. World Development 30 (11): 2033-2044.

Khemraj, Tarron. 2009. Excess liquidity and the foreign currency constraint: the case of monetary management in Guyana. Applied Economics 41 (16): 2073 – 2084.

Khemraj, Tarron. 2008. The missing link: the finance growth nexus and the Guyanese growth stagnation. Social and Economic Studies 57 (3&4): 105-129.

Lall, Sanjaya. 2004. Selective industrial and trade policies in developing countries: theoretical and empirical issues. In: S. Soludo; O. Ogbu and H. Chang (editors), The Politics of Trade and Industrial Policy in Africa: Forced Consensus? Trenton NJ: Africa World Press.

Misir, Prem. 2009. Remittances are pivotal to development. Kaieteur News, June 25, Letter Column.

Rodrik, Dani and Arvind Subramanian. 2009. Why did financial globalization disappoint? IMF Staff Papers 56 (2): 112-138.

Rodrik, Dani; Arvind Subramanian and Francesco Trebbi. 2004. Institutions rule: the primacy of institutions over geography and integration in economic development. Journal of Economic Growth 9: 131-165.
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1 Comment To "Are remittances pivotal to Guyana’s development?"

#1 Comment By bakr On July 8, 2009 @ 6:05 am

Interesting. One concludes from observation of the Dominican Republic, Morocco, Senegal, Congo, that beyond these effects Khemraj described here,remittances serve to re-orient economic and social activity towards emigration and expatriation of
-human capital
-investments which follow the human capital. And these are investments that locals would have made at home. In short you buy a business or house in Miami because the mentality is foreign-oriented.

But a lot depends on the country and the history of emigration. The Moroccans and Algerians and Turks in Europe may be different from Guyanese and Dominicans. This piece requires wide discussion and comment.

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Report of the Auditor General 2007: Different year, same mess

Business Page

Posted By Christopher Ram On July 5, 2009 @ 5:09 am In Features, Sunday | No Comments
Report of the Auditor General 2007: Different year, same mess
http://www.stabroeknews.com/2009/features/07/05/business-page-67/

No change

The report of the Auditor General on the Public Accounts of the country for 2007 has been tabled in the National Assembly and is now officially available to the taxpaying public and commendably on the Audit Office’s website. The story is no different from that of last year, from that of the year before, or from that of the year before that: late by ten months beyond the statutory deadline; a story of reckless abuse of the public funds; condemnation and threats from the opposition; and the nine-day outrage by the public followed by whatever revelation inevitably comes to light. Let us go back to the report for 2000 which was reviewed in Business Page of May 19, 2002 in the form of an imaginary letter to Mr Stanley Ming, then a member of the Public Accounts Committee which is mandated to review and report on the report. In part, this is what the ‘letter’ said:

“A significant number of bank accounts currently in use, including the Guyana High Commission London Account, as well as non-operational accounts were allowed to be overdrawn by large amounts in contravention of Section 22 of the Financial Administration & Audit Act (FAA). Continues.

“The Consolidated Fund is overdrawn by tens of billions while the sum total of all bank accounts (including the overdrawn balance on the Consolidated Fund but excluding the balances on the bank accounts special projects) reflects a positive balance. Continues.

“The State continues to provide funding annually to several public entities even though they do not comply with their statutory duty to submit audited financial statements. Continues.

“The Contingencies Fund continues to be abused despite repeated negative comments on this practice. Continues.

“ Proceeds from the Guyana Lotteries are not being paid over to the Consolidated Fund but are kept in a ‘special bank account’ held at the Central Bank and used to meet public expenditure without parliamentary approval… despite the public commitment given by the President and de facto Minister of Finance that this would be corrected.”

Some change

Some things have changed. The report has been cut down in size – the 2000 report contained 2,120 paragraphs; now it is 557 paragraphs. Government expenditure has jumped from $47 billion in 2000 to $101 billion, or more than double. Reports of corruption no longer make news. There has been a Financial Management and Accountability Act that demands more not less accountability, and an Audit Act that sets greater obligations and higher standards on the Audit Office. Have things got better? I do not think so. Back then, we had a professionally qualified accountant heading the office, now we do not. The independence of the office is now more compromised than it was with Mr Deodat Sharma, Auditor General (ag) reporting that he was summoned for instructions by President Jagdeo, clearly in breach of the constitutional provision that the Audit Office should “not [be] subject to the control or direction of any person or authority.” Egregiously, the wife of the Finance Minister is now in a position to give professional guidance to the Auditor General (ag) by virtue of her position as his qualified assistant.

The administration’s response

Predictably and once again, the Minister of Finance Dr Ashni Singh has criticised the report for not reflecting the comments and responses of the various budget agencies and accounting officers. He cannot be serious. The report is in fact full of such comments, even when they make little sense or are misleading. For example on page 5, the Ministry of Finance’s response to the absence of end of year outcomes required under section 68 of the Fiscal Management and Accountability Act 2003 is that the information was not forthcoming from the ministries, agencies and departments. That obligation falls on the Minister of Finance who has more than an adequate set of sanctions to ensure that he gets the information he needs.

But I suspect that the reason is more political. One of the major variances is the revenue collected from the new VAT and Excise Tax introduced in 2007. A single agency over which the Ministry of Finance exercises controls administers those taxes. More than one of them knows that the reason for the massive surplus is that the VAT rate had been incorrectly calculated, but that despite the early detection of the error, the government persisted in what some may consider a fraud on the nation. This information was around and an independent Audit Office should have done its own assessment and put the findings to the ministry.

Indifference

A constant refrain in the responses is that the Head of the Budget Agency had indicated that this matter was being addressed by the Ministry of Finance; that these were presently engaging the attention of the Ministry of Finance; that the Head of the Budget Agency had indicated that this issue was being addressed by the Minister of Finance; and that the Head of Budget Agency had explained that the administration had since written the Finance Secretary to have this matter rectified and was awaiting a response (they are all in the same building). The state of the audits for entities coming under the Office of the President and for which reports have not been laid in the National Assembly deteriorated, while the excuse by the budget agency that “every effort is being made” to do so was met with a further comment from the Auditor General (ag) calling for “special effort” – at best an apparent form of indifference by the Audit Office. But can society be so indifferent about the failure by the administration to properly account for public funds? Since the Minister would also have been aware that a substantial part of the report is of prior year matters which have not been resolved, his response to the report can only be seen as a political rather than technocratic reaction, confident that all will soon be forgotten.

New GPC again

For all the apparent sound and fury generated by the report, all it does is identify some of the better known examples of gross financial irregularities and improprieties that feed the public’s appetite for scandal. Advances of hundreds of millions of dollars to the New GPC, friends of the President, continue to be made for the company to buy drugs for the Guyana Public Hospital Corporation in breach of the tender procedures. One of GPC’s senior officials sits on the board of the hospital, which also does not maintain proper accounting records so that both the non-receipt of items and their issue cannot be determined. What successive reports have failed to do is cause any change in behaviour by a government whose financial management is repeatedly endorsed by the electorate. Perhaps the President was right when he described segments of the public as financially illiterate.

By now the public is well aware of the breach of the constitution regarding the Lotto funds and one wonders why the report only mentions the amount over a ten-year period rather than the period covered by the audit. The report also does not state that the Lotto money is being spent by a person who has no authority under the law to spend any money. There is no great virtue in repeating the statement that the Lotto funds are not being put into the Consolidated Fund as required by the constitution. It is not that it is being held safely in trust or investments – the money is being spent by President Jagdeo as he pleases.

Tardiness and illegality

Where are the sugar unions in the face of the continuing failure to provide satisfactory evidence of $1.451 billion as deposits held for investments on behalf of the Sugar Industry Labour Welfare Fund, the Sugar Industry Rehabilitation Fund and the Sugar Industry Price Stabilisation Fund, two of which have not been audited for twenty-eight years and the other for eleven years? One of the ironies is that GINA, which is being used to defend the government’s record of financial management is itself in breach of the audit requirement.

The report also highlights a transaction involving Region 6 that smells of illegality including differences in vehicle chassis number and full up-front payment when the contract calls for progress payments. If the Customs officers could be referred to the DPP why not those involved in this purchase? And why has the Guyana Elections Commission not taken action against the “firm” that took 268 cartons of Polaroid film valued at $30.485 million which it has failed to recover from the “firm”?

Value for money

Once again the report announces that a Value-for-Money Unit (VFM) is being set up and after four years we can expect a VFM report. That we had to get assistance from Canada to achieve this is bad enough, but the choice of entity makes the idea into a mockery. I visited the Palms briefly not too long ago, and it was shocking to see the conditions under which the residents are housed and the staff have to work. The laundry, kitchen, sleeping and dining facilities are all in a state of disrepair, strangled for cash and other resources. What the Palms requires is not a Value-for-Money audit, but a money-for-value audit, refurbishment, additional staffing, new equipment for the kitchen and laundry, etc.

Conclusion

The recurrence of the egregious weaknesses and exorbitant losses resulting from poor financial administration and a weakened Audit Office suggests either an unwillingness to deal with the problem or a ‘we-like-it-so’ attitude by the government. Even the superficial enhancements in the Audit Office have to be financed with grants and loans, and in 2007 a second grant was obtained from the IDB to implement certain aspects of the office’s three-year Strategic Plan. Unable to do some of the most basic audit functions, to discharge the office’s obligations under various legislation and to complete the audits of the state entities in a timely manner, the Audit Office is now about to establish a Forensic Audit and Quality Assurance section.

How that will solve the problems that have persisted for more than ten years is anyone’s guess. Meanwhile the Auditor General tells us he cannot be sure about the accounts presented to him for audit by the Ministry of Finance.

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Four parties, GTUC appeal to Caricom heads to ‘rekindle hope’ among Guyanese

Four parties, GTUC appeal to Caricom heads to ‘rekindle hope’ among Guyanese
Posted By Stabroek staff On July 5, 2009 @ 5:09 am In Local News | 1 Comment
http://www.stabroeknews.com/2009/news/local/07/05/four-parties-gtuc-appeal-to-caricom-heads-to-%e2%80%98rekindle-hope%e2%80%99-among-guyanese/


An appeal to the Caricom Heads of Government to “rekindle hope” among Guyanese citizens was made yesterday via a full-page advertisement in the local newspapers placed by four political parties and a trade union body.

They cited Guyana’s steadily declining population whose young people did not see the country as an option, and the loss of hope in the reconciliation process which was to flow from the Herdmanston Accord and St Lucia Statement.

The Alliance for Change (AFC), GAP-ROAR, the Working People’s Alliance (WPA), the United Party, and the Guyana Trades Union Congress said that the hopes that Guyanese had placed in the Herdmanston Accord and St Lucia Statement had gone and the promise of the heads “to remain engaged with our reconciliation process” had not been met. “Guyana continues to hemorrhage,” the advertisement said.

And yesterday President Bharrat Jagdeo responded to the issues of governance and immigration raised in the ad, and singled out the AFC and one of its leaders Khemraj Ramjattan for personal criticism. He lauded Guyana’s democracy, and said the country was in the top 30 where press freedom was concerned.

The advertisement captioned an ‘Open Letter to Caricom Heads of Government’ was placed in yesterday’s edition of the Stabroek News, and expressed the view that the small Guyanese population was not interested in any of the pronouncements of the Heads of Government Conference except the “single issue of the new Barbados immigration practices which make illegal immigrants out of West Indians born in the West Indies.”

“Unlike other crises confronting the region, this one touches intimately and immediately on what our increasingly desperate people see as their very survival,” the advertisement said.

“The hopes that Guyanese had placed in the Herdmanston Accord and St Lucia Statement have been dashed. After a full decade the promise of the Heads of Government to remain engaged with our reconciliation process has been unfulfilled,” and many Guyanese felt “deeply betrayed by the process,” the advertisement said.

The sponsors also stated that the lack of interest shown “is nothing new, since the masses of the Caribbean have long been disconnected from your discussions and decisions about the future. So, whether it be the global financial crisis or the failure of regional regulatory mechanisms to prevent the banditry of a CLICO or a Stanford, the broad masses of Guyanese are unlikely to be distracted from their day to day agonies.”

According to the advertisement:

“The reality is that Guyana is a society in the process of disintegration. Lawlessness stalks the land. Rape and murder of women and girls are on the rise. Guyana is not alone in the region with the growth of violent gun crimes, including extra-judicial murder by elements of the security forces and by private armies of drug lords, protected and cosseted by sections of the state. Well documented instances of torture by elements of the army and police are dismissed as ‘roughing up.’”

The statement identified “cronyism and financial skullduggery” as major issues within the country, and referred to “the looting of the public purse” which was confirmed year after year by the Auditor General. The collapse of the country’s education system and the “terminal decline” of the administration of justice were two other issues that were also identified.

Further, the statement said that the trade union movement was “a sad shadow of its former self, its impotence on show with every passing day, bludgeoned into submission in the face of blatant union-busting and subversion of the industrial relations process.” Additionally, the government was accused of “seeking to increase its control of the minds of its citizens by extending its domination over as many sources of information as possible, while restricting the right of citizens to free access to information by owning and controlling the single radio monopoly in the country and stymieing freedom of information legislation.”

The sponsors also said that “a movement is under way to restore hope and re-open the doors of opportunity here in our own country. Such a movement begins with the belief that Guyanese in and out of Guyana have a duty to remove the blight that has settled over the land.”

The advertisement made reference to the right of citizens to control their affairs, which was enshrined in Article 13 of the Constitution which states:

“The principal objective of the political system of the State is to establish an inclusionary democracy by providing increasing opportunities for the participation of citizens, and their organizations in the management and decision-making processes of the State, with particular emphasis on those areas of decision-making that directly affect their well-being.”

“It will not be easy”, the sponsors noted, “but the work of national revival must begin now. In order to ensure success, it needs the involvement of all Guyanese throughout Guyana and the Diaspora, regardless of race, class or religious belief”, they added.

According to a release from the Government Information Agency (GINA), in responding to the immigration issue, the President said that political parties had to act in the best interest of the people, and try to avoid “public hysteria” or use complex regional issues for political purposes. “I think Raphael Trotman and the AFC are using this issue politically. The last thing I want is for that to happen. The government doesn’t have that luxury,” GINA quoted him as saying.

He went on to say that Guyana cannot “determine the immigration policies of Barbados outside of those that are provided in the Revised Treaty of Chaguaramas,” but would continue to try and ensure that Guyanese were treated “fairly and with dignity.”

Where issues of governance were concerned, he was reported as saying that Guyana was one of the most democratic countries in the hemisphere. “Of the top 192 countries in the world, we’re in the top 30 for the freedom of the press,” he said.

According to the release, Jagdeo said the AFC’s “antics” were intended to create the impression among heads of government that Guyana was violating democratic norms, but that his fellow heads were wise politicians who would recognize that the AFC was trying to exploit the occasion of the conference.
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1 Comment To "Four parties, GTUC appeal to Caricom heads to ‘rekindle hope’ among Guyanese"

#1 Comment By BORAPORK On July 5, 2009 @ 8:53 am

Guyana is doomed as long as the tyranny of the majority rules supreme. Until such time as the majority population groups stop ethnic voting Guyana will be parasitic. When is the World number one beggar leaving to berate some other group for a handout?

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