For those who
believe that the World Bank and IMF policies are the panacea and indeed the
only way out of poverty, May has not been a very good month. The findings of
a recent study have shown that countries which pursued independent,
home-grown, sensible paths to economic recovery were more likely to succeed
than those which accepted the IMF medicine. In our case, not only has that
medicine seen us selling off some of our more valuable assets for a
pittance, and opening our economy to all and sundry, but it also appears
that the medicine is addictive - we now seem unable to survive without it.
And the poor in India - the country which only this week was the recipient
of encomiums from the Economist for its consistently high growth rate -
voted out the government which practised privatisation, liberalisation,
high-growth, etc, in the belief that wealth automatically trickles down. Is
there a lesson for us or do we continue to march merrily to the IMF tune?
It seems that for
us there is no change, even though since the recent round of consultations
and comments - several very critical - on the Progress Report (PR) of the
Poverty Reduction Strategy (PRS), there has been no word on whether the
comments on the draft have led to any fundamental reconsideration. While we
are quick to describe any consultations by the government as opportunistic
and cosmetic, we should not underestimate the importance of the Progress
Report, nor should the government feed such cynicism by ignoring the results
of the consultations.
in one of the consultations, I considered it inevitable that participants
would focus on issues that directly affected them, that as usual partisan
politics would cloud the integrity of the discussions, that there was too
little time for participants to discuss such a formidable document and that
the draft had far too many deficiencies to allow for proper debate. But it
was as a big-picture document that the draft had its biggest limitations.
committed ourselves to an IMF programme for the past fourteen years, there
still seems to be considerable ambivalence at all levels of our society,
including the government and political opposition, that we are not too
comfortable about an open economy whether it is at the regional level or
internationally. One only has to look at our attitude to Caribbean
businesses to recognise how insular our business community and our
population are, or how we feign national hurt at the suggestion that
external advice or assistance could help in resolving some of our entrenched
The irony is that
we have no such compunctions about seeking aid, whether by way of loans,
write-offs, concessional borrowings, or assistance on how to formulate a
national tax policy, to name a few. This irony is evident in the very
opening section of the Progress Report which, without specifying where our
performance fell short, immediately blames "donor aid as [having been]
especially slow and oftentimes focused heavily on structural reforms and
less on programmes that generated quick supply responses in poverty
reduction with serious implications for the achievement of the Millennium
Development Goals (MDG)."
No one is quite
sure who the authors of the Progress Report are, but their mixing of one
document with another, the absence of any indication of what the progress is
being measured against, and the casual use and often misuse of language,
restricted the scope for meaningful comments or a proper evaluation of the
PR. For a discussion on the Guyana MDG, please refer to Business Page of
October 13, 2002, which can be found at ramandmcrae.com.
In the article
referred to, we noted, "Just by way of example, for Guyana to achieve its
poverty-reduction goal, economic growth has to be in the region of six per
cent annually which in the current situation is highly unlikely." The truth
is that the chances of Guyana achieving its goals are nil, but even this the
Progress Report acknowledges only half-heartedly.
consultation, I submitted written comments on the PR noting that it was a
"fairly large document containing a number of both subjective and objective
statements," and that I proposed dealing with a limited number of issues
only. Here are some of my comments:
1. There is an
absence of the targets against which the achievements set out in the PR are
to be measured. I was unable to find these in any clear manner, if at all.
The same problem arises in respect of the future - what are the quantifiable
goals and targets and over what time-frame? What steps are proposed to put
the PRS and the MDG's back on track?
2. Civil society
seems to be largely excluded from the PRS on a continuous basis.
3. Governance and
management are paid far too little attention in the PR. The suffocating
influence of politics over competence, and the lack of transparency and
accountability are sources of frustration, suspicion and hopelessness among
4. There is no
strategy to deal with the brain drain or to analyse the reasons for the high
rate of migration if the country is doing better. While crime is an
important factor, it is simplistic to think that it is the only one. It is
clear that the constitutional reforms have not been bold enough or at all
effective in dealing with the historical, perpetual insecurities of the
5. While on the one
hand we benefit from debt relief, we borrow and spend without any serious
attempt at public-sector investment analysis. We borrow for some projects
simply because the money is there, rather than for the net benefits of the
investment. In this regard, the international lenders like the IDB have to
accept some responsibility for the almost cavalier way in which it is
prepared to extend credit to the country.
6. The PRS
Programme began in 2000. Yet the public is only now being advised that a
Monitoring Unit was established "in 2003." Not only is this putting the cart
before the horse, but it is widely considered that the Office of the
President is one of the most inaccessible places in Guyana - as formidable
as Fort Knox. Two of the leading lights in the PRS - both foreigners -
advised me that they could not speak to me without the approval of either Dr
Roger Luncheon or the Minister of Finance!
7. We cannot speak
of the absence of data without acknowledging that the necessary resources
have not been provided to the Bureau of Statistics, and yet we seem so
willing to use the "flawed statistics" to make a political point. Despite
the claims of the "halving of poverty,' the public finds it difficult to
understand how even as the economy fails to grow, the poorer people are
doing better. Is it true that as a general rule of thumb it takes a growth
rate of 2%-2.5% to reduce poverty by 1 per cent?
8. The Government
regularly lists the laws it has passed without ever acknowledging the
deficiencies in many of them, or their slow pace of implementation. These
include the Companies Act 1991, the Money Laundering Act, the Integrity Act
and the Procurement Act.
9. The PRS does not
adequately address the problem of growing unemployment, and makes no
provision for ensuring that the National Insurance Scheme remains solvent. I
recommended that part of the debt relief should be applied to re-financing
the scheme to return it to long-term viability.
10. While the
heinous nature of crime understandably preoccupies the nation, it seems that
no attention is paid to the level of lawlessness in the society - ignoring
building codes, flagrant breaches of the traffic laws, noise nuisance, etc,
many of which disproportionably affect the poor.
11. There seems to
be very little attention paid to public health, which again
disproportionably affects the poor.
The government has
its work cut out to convince the population that its poverty strategy is
working and that in fact it is not inherently flawed. There needs to be more
emphasis on growth rather than poverty, income generation rather than
distribution, private sector rather than public-sector investment. The PR
inadequately addresses the concerns of the private sector, including the
heavy hand of the bureaucracy, punitive tax rates, partisan political
considerations in decision-making and the overall high cost of doing
business in Guyana.
It seems that
poverty reduction should be a consequence of sound economic management
rather than the centerpiece of economic policy. What we need, therefore, is
to develop an economic plan centred on growth and development with the PRSP
as a subset thereof. Maybe the time for economic planning has returned.
1. BP last week had
indicated that it would be reviewing GT&T this week. We found it very
difficult to access current information, but the company has indicated its
willingness to co-operate. It is definitely on next week.
2. Correction to
assertion made in my review of GBTI's Annual Report 2003 (Sunday Stabroek
May 2, 2004). Mr R K Sharma, CEO of GBTI indicated to me that his report was
written prior to the Budget Speech 2004 in which the Minister reported a
decline in GDP, rather than growth for the economy as stated in Mr Sharma's
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