What we must remember is he is a failed economist with a stellar record to prove it.
Economic growth during the years the PPP imposed government upon the people of Guyana showed steady Gross Domestic Product (GDP) growth to their grantors and debtors. Importing cars and building materials was used as a leading indicator and the increase in businesses and increased bank deposits were pointed to as progress.
What was not told in lay man’s terms was that the rice contract with Venezuela was a partial barter system which gave them rice for oil but there was never enough rice delivered, per delivery, to wipe the slate clean, so, there is a continuous forward balance.
What was not told was that the importing of cars and building materials was the privilege of a certain demographic, mostly of a specific political persuasion and the car selling and construction business was mom and pop in nature, so, the few jobs that were created were not of significant impact to the economy.
What was not told was that lots of the investment money was not borrowed from banks so that there was no return on funds borrowed to be injected in to the economy.
What was not told was that there were several businesses that did not quite fit the definition as prescribed by Guyana Revenue Authority and their deposits in to banks were often a bare minimum to deflect attention from their alternate form .
So, to give the agencies that gave the country grants and the loans the impression that their funds were required and at work in the Guyana economy, Mr. Jagdeo developed a very clever scheme of creative accounting; showing Guyana on a steady trajectory upwards with growth in Production and Mining sectors.
But even as he deceived with his charts and graphs, he couldn’t remove the fact that 30 % of the work force remained unemployed inclusive of 40% amongst youth. He couldn’t camouflage the shadow economy when the DEA labeled the country a drug hub or could he avoid the label of money laundry when the Financial Action Task Force demanded that the PPP government create a more robust anti money laundering bill. And, when his PPP lost the Presidential elections in 2015 the general observation from the business community was that sales had come to an abrupt halt as the shadow economy lay low hiding their funds lest it led to the nature of their business and piqued the interest of the Guyana Revenue Authority.
Mr. Jagdeo is right when he says that private investment, private consumption, government spending and net exports are ways to fuel the economy but he hasn’t said this because he is a keen economist watching out for the good of Guyana. He has said this because he knows private investment and private consumption are the domains of an ethnic enclave that has withdrawn from investment because of ‘ethno’ fears of the Coalition Government. This is ideology fulfilling so Jagdeo is gloating, more than he is advising.
Minister Gaskin will be wise in working to make private investment in Guyana attractive. Along with improved government investment , revising the bank credit module with stricter and practically enforceable penalties to private investors, will certainly impact the economy positively . This will have to be a delicate dance; one that extends comfort to the investor without compromising the legalities of the system and the investment returns to the nation.
And he should also push to increase private consumption which will require the government to increase minimum wage to a livable level. The principle of buying is, people increase their wants when they have access to wanting and that access is availability of goods and services and money. A living wage will grease this squeaky wheel.
And, the warm fuzzy predictions of Minister Jordan should be replaced with practical and realistic economic detail. Saying that things “appear to be picking up”, is a safe statement of dubious fact and the reliance on “anecdotal evidence” would only be relevant if it represented a cross section of the consumers.
Christmas, particularly, sees an upswing in spending but this spending is not to be conflated with economic confidence. It is an ingrained tradition coupled with Diaspora input in the form of remittances and vacations. Guyana’s financial problems go well beyond consumer confidence and investment. It includes the lack of international confidence and the withdrawal of international banks from a country that was once a feared for its march to “own and control”.
This dance, going forward, will have to be a delicate one.
The Ministers, whose efficiency is now built in to their fifty percent pay hike, will have to deliver what they are being paid for – in full.
This could actually be a plus.