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Part 1: How They See It (Cont'd)Economic Outlook
Respondents were asked how confident they were that the economy would improve in 2001 Only one of the forty-five respondents to this question was very confident about the future. Seventeen (17) or thirty-eight percent (38%) were either confident or fairly confident of an improvement. Eleven (11) or twenty-four percent (24%) were not confident whilst one third said that they were not very confident. Thirteen (13) or twenty-nine percent (29%) of the Survey group felt that conditions would be more favourable for privately owned businesses, six or thirteen percent (13%) expected that conditions would be less favourable whilst twenty-five (25) or fifty-six percent (56%) anticipated that they would be neither less nor more favourable in 2001. Ram & McRae’s Comments Businesses act on expectations which overall are not positive. They are not impressed with official pronouncements and promises. President Jagdeo’s efforts to work with the private sector is only one of the factors which can build confidence. From a list of twenty-one items, respondents were asked to rate what national or international events, if any, made them more or less optimistic about the economy The respondents expressed greater optimism than pessimism about the privatisation of the GEC (27/3/13)1, the presidential change (20/6/16), constitutional change (20/8/14), government’s support for business and investment (18/8/16), and the impact of technology (18/11/12). The areas which cause a great deal of pessimism are crime/drugs (0/35/6), the value of the Guyana dollar (1/33/10), the public sector strike (1/32/9), corruption (0/31/11) and smuggling (0/30/12). (1) More optimistic/ less optimistic/ no changeRam & McRae’s Comments On the negative issues, there generally was greater certainty among respondents and their pessimism was almost overwhelming. With the exception of the privatisation of the GEC, there was no issue on which there was overwhelming optimism. Interestingly, of the five issues on which there was substantial pessimism, three were of a law and order nature. Although optimists/ pessimists about the Presidential change was three to one, almost as many - sixteen (16) - saw no change as those who expected positive changes (20). Businesses’ Expectations From a list of eighteen measures, companies were asked to rank five on which they wanted to see the Government take action. On a weighted basis, steps to lower direct taxes was ranked by twenty-nine (29) respondents or sixty-four percent (64%) as the measure that they most wanted Government to take. Twenty-four (24) companies or fifty-three percent (53%) of the respondents would like steps to reduce exchange rates and twenty-two (22) respondents or forty-eight percent (48%) would like interest rates cut. Forty percent (40%) of the respondents call for the expansion of tax holidays as an investment incentive, a long-term plan to assist manufacturing and controlling inflation. Between 33-37% of the surveyed group would like expanded export incentives, more expenditure on capital projects/public works, lower indirect taxes and the provision of investment incentives by improved duty free incentives. The least favoured options were the re-introduction of exchange and trade license controls.
Ram& McRae’s Comments Calls for tax reduction seldom find favour in the context of budget deficits. Yet the empirical evidence suggests that lowering of tax rates augment, not reduce revenues. The soon to be established Revenue Authority will offer an opportunity for bold and imaginative action by the Government.
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