Dear Editor,
Government people, as is expected, have defended the budget as a plan for growth. They say it is people centered. It puts people first, focusing on economic well-being of the country rather than any one particular segment of the population. No doubt, the budget seeks to keep GDP growth and inflation stable. It reflects the resilience of the economy and its capacity for sustained rapid growth.
A large chunk of the budget is deficit financed; US$2.6 billion (over half a trillion). Budgets of almost every country are heavily deficit funded. The Vice President (Jagdeo), the President, and the Finance Minister would have paid careful attention to the deficit and borrowing; Jagdeo is smart when it comes to borrowing to grow the economy, generating revenues and creating jobs. Guyana’s debt is sustainable because of the long term projected revenues from oil and mining sectors.
But government has to be careful because debt is now US$10.3.billion. Interest payments are climbing rapidly; we have to take cognizance of what happened prior to 1992 and curtail borrowing. We have to pursue strategic measures on borrowing. We should borrow less and use our own financing from the heritage fund or some other means. Instead of foreign (high interest) borrowing, borrow from local sources and encourage foreign currency accounts from the diaspora in our local banks from which we can borrow. Or the diaspora can loan directly to the government through accounts in banks as used by India some 25 years ago.
The general consensus is it is a growth and people centered budget. The business community has expressed optimism. The poor are happy for increased handouts. The deficit is problematic as expressed by objective economists and concerned business people. The advice is that Government has to keep tab of global energy fluctuations and lingering vulnerabilities of the lower class or poor. We must grow the non-oil revenue sector. We must bolster the non-energy sectors, further diversify the economy. We must encourage more people from the lower and working class to get into small business. Larger businesses should pursue asset divestments aimed at generating greater revenues and export more to bring in foreign currency. We have to grow more food to cut the food import bill that is soaking up our foreign currency.
The many initiatives announced by the Finance Minister are expected to add to the buoyancy of the economy and yield significant economic benefits. They will create employment opportunities and contribute to a more resilient, stable, and diversified economy. Growth will continue perhaps beyond what government projects.