GEORGETOWN: Businessmen’s uncertainty and lack of trust in the economy is a contributing factor to the economic downturn currently being experienced. So says Foreign Affairs Minister Carl Greenidge, who has expert knowledge in the field of finance and business.
Previously, many experts struggled to give reasons for the economic slump. Businessman and politician Clinton Urling recently told the Guyana Times that “I would have thought that given the fact that the elections are over and we have a new Government, that consumers’ confidence would have been restored, but businesses, especially for the retail stores, is really slow. I don’t understand and I don’t have an explanation as to why.”
Business Minister Dominic Gaskin appeared reluctant to accept that economic activity was dwindling, claiming that this notion was just a perception and that there was no credible data to support this concept.
But Greenidge, who had served as Finance Minister under the People’s National Congress (PNC) Administration, believes that the economic downtown was more of a run-on of what was already happening in the fiscal year of 2014.
“After the budget of 2014, I don’t think the rate of growth has been the same because of the uncertainty as regards the date of an elections, the parliamentary standing of the Government, the disputes over the budget, a number of projects couldn’t go forward because they were cut, and the Government itself although it did go spending in areas where monies weren’t approve, did not actually continue with the same rate of spending on capital as they had perhaps done in the previous years,” he suspected.
Greenidge, who is also a Vice President, assured that the Finance Minister “knows what he is doing and he is fully aware of what concerns exercise the minds of businessmen and the business community”.
On that note, the Minister believes that businessmen were basically waiting to see what the 2015 budget will offer before they decide on their next course of economic action.
Private Sector Commission (PSC) Chairman Norman Mc Lean agreed that businessmen’s uncertainty about the economy, especially during the pre- and post-elections period, have contributed significantly towards the current state of the economy, but he pointed out that there are many other contributing factors.
“It is part of the situation. Remember, the Government has a situation where they haven’t put forward a budget as yet, so all the spending they are doing is 1/3 of what was put forth by the previous Government and Government’s spending is critical to any economy. So a lot of people are anxiously waiting on Government to make an injection…into the economy to rebuild that confidence so I think when the budget is presented, it will kick start the economy,” McLean said.
Gold, sugar, rice
While the presentation of the budget can contribute to a better economy, Mc Lean reminded that the three main industries that drive the economy –mining, sugar and rice were simultaneously experiencing turmoil.
He alluded to the drop in the world market price for gold, which is now US$1094.5 per ounce and contended that there is a high possibility that the precious metal could plunge to a detrimental US$1000 per ounce- putting the local industry under serious pressure as the cost of production for small and medium scale miners remain stubbornly high amid the falling gold prices.
The Guyana Gold and Diamond Miners Association (GGDMA) noted that there was already a noticeable downturn in the economy of many hinterland mining communities such as Bartica, Port Kaituma, and Mahdia. Other communities such as Linden, Diamond, Beehive, Anns’ Grove, Essequibo Coast villages and other coastal communities where miners generally reside are also seriously affected, as there is a visible reduction in their spending power.
This situation can gravely impact the livelihood of over 100,000 Guyanese who depend both directly and indirectly on the industry.
Similar circumstances have befallen the sugar industry. The Guyana Sugar Corporation (GuySuCo) was, in fact, on the verge of closure due to lack of funding. If the company had not received the necessary finances to extend operations, thousands of Guyanese would have been out of jobs.
The rice industry too is struggling to survive, especially with the recent collapse of the PetroCaribe deal with Venezuela – which had guaranteed a significant portion of the local product’s market – 30 per cent – with a bumper harvest expected.
With this lucrative market no longer available, rice experts predict that millers will reduce the amount of paddy they purchase from farmers, leaving the farmers with a surplus. The situation is compounded by the fact millers are often paid belatedly and this affects farmers who are also waiting to be paid by the millers.
The limited cash flow in this industry, therefore, is a contributing factor to the downturn in the economy.
Drugs bust
Recently, proprietor of the Jerries Restaurant and Bar, Jerry Bacchus stated that the increased drug busts over the years have also played a role in the downturn of the economy.
“The drugs bust, some people tend to laugh and scoff that this could be a factor … Our economy thrives off of those in the drugs business and the drug money is spent back here so the more drug bust there are, the less money is spending,” he reasoned.
