Minister Kowlessar’s Challenge
Business Page extends its congratulations to Mr.
Saisnarine Kowlessar as substantive Minister of Finance. He was brought in
midway in the previous Administration as a Minister in the Office of the
President with responsibility for Finance. In its commentary on the 2000
Budget, Ram & McRae had noted that the state of the economy required
that Mr. Kowlessar be given more authority and that he could not be held
responsible for the shortcomings of that Budget since “the institutional
arrangements for his effective functioning are just not present”. The
elevation of Mr. Kowlessar is a positive step in at least two ways. It
demonstrates that President Jagdeo who naturally takes the Finance Ministry
to heart believes that Mr. Kowlessar can now do the job on his own and it
also allows the President to concentrate on the increasingly weighty tasks
of the presidency.
The appointment comes at a time of frightening
difficulties which make the effective functioning of the government more
than the usual challenge. It must be almost impossible for the Ministers,
both old and new, to function and Business Page hopes for the earliest
return to normalcy. With sections of the capital city lying in ruins as a
result of the ill-advised work of arsonists and fears of further unrest,
business activity is declining. Confidence is fast evaporating and nothing
that the Minister can do can reverse the trend.
The fires in Georgetown have had a devastating effect on
the country. The cost is more than financial. It is psychological and
personal. It is also not discriminating. It consumes all in its path. The
image of the country is being tarnished and its credit rating would have
sunk to an unprecedented low. A number of store owners have expressed doubts
about whether they will rebuild even if they can afford to. There is little
productive activity taking place as workers from outside Georgetown and from
the East Coast of Demerara in particular stay away from work in the city.
The unregulated roadblocks on the East Coast create unease and fear and
there is a reluctance to venture far from one’s base.
Commodity prices on the world market have had a negative
effect on the economy and declining performance is becoming a regular
feature. Investment will dry up and with it the prospects for jobs, growth
and revenue. There will be a rush to the exit and the brain drain will
continue. Can we afford this? Can we not stop it?
Insurance companies, which constitute an important part
of the financial sector, must now liquidate its investments to settle the
claims which they face. This will hit them hard. But there are other
consequences as well. Premiums will inevitably increase perhaps outside the
reach of many of the persons most at risk. Their participation in any
investment opportunities including privatisations in which they have shown
an increasing interest, will similarly be affected.
Both existing and future jobs are at risk and suppliers,
intermediaries and consumers are disappearing and the prospects of further
job losses are not distant. The fires have not been very discriminating and
persons of various political affiliation have suffered either as owners or
A political solution has to be found sooner rather than
later. It is the responsibility of our leaders to bring the situation under
some control. It may not be easy but that makes the need to act all the more
urgent. Is there something that prevents the two principal actors from
making a joint appeal to the nation and to getting down to addressing the
problems facing the country? That both sides have agreed to meet is a good
development and it is important that the arrangements are designed to
prevent a breakdown in the talks. However the situation demands a more
urgent approach by those who have been assigned responsibility to organise
Despite these overwhelming conditions, the Minister has
to carry out the mandate with which he has been charged. During the past
year much of the work that took place in Main Street was shifted to the
Office of the President and this will now have to be reversed. It is not
clear what the President’s ideas on the Ministry are but it would seem
necessary that Mr. Kowlessar will have to rebuild a team of experience,
ability and energy.
The planning capability needs to be addressed and there
was even an expectation that there would be either a component or separate
ministry responsible for planning and economic development. If we are to put
the National Development Strategy to work someone of authority has to be
assigned that responsibility. The annual budget exercise loses its
effectiveness without a longer term framework out of which it is drawn. A
study of the recommendations of the NDS has to be given top priority to so
that an implementation schedule can be drawn up. We cannot afford to allow
the work that went into the NDS to become dated for lack of action.
There is constant talk of tax reform and prior to the
publication of the last Budget President Bharrat Jagdeo at a press
conference had indicated that the 2000 Budget would address tax reform. It
did not do so and the country’s tax system remains characterised by a
narrow base, high rates, evasion, exemption and distortion. However, neither
the information nor the Tax Policy infrastructure has been established that
will enable meaningful tax reform to take place. He has to treat tax reform
and not only VAT as a major priority. He must appoint a Commission made up
of the best talent on the subject to run with the ball.
One of the benefits of the elections campaign were the
extremely good ideas contained in the manifestoes. The Minister should
review them adopting the best ideas for implementation. Among these is a
National Economic Council made up of various interest groups. This body will
address issues and make recommendations to the Minister and indeed to
Every sector of the economy has been affected by
international developments. Rice, sugar, bauxite, gold and timber are all
facing difficulties. A Council would be a good vehicle to develop a strategy
to address those problems. As we have seen the problems will not go away. It
may be that drastic surgery and action is necessary. Painful though that may
be early and more co-coordinated action is what is required.
The difficulties which the economy has gone through are
reflected in the banking sector which has been reporting reduced profits.
Perhaps the Minister’s options here are more limited but the automatic
rescheduling of debts will merely postpone the difficulties. There is
fortunately no danger of a collapse of any of our financial institutions and
the Financial Institutions Act has forced them to look critically at the
loan component of their operations.
As Minister in the Office of the President, Mr. Kowlessar’s
authority was necessarily restricted. He must now show to the country that
he is fully in charge and be accessible to the business community and all
stakeholders. The 2001 Budget is a great opportunity for him to truly assert
himself and to put the economy back on track so far as the conditions