Dear Editor,
I’m no economist in the academic nor professional sense of the word but like many Guyanese I am one by virtue of common sense. For upwards of five years now, a global food crisis has been forecast and most, if not all governments throughout the world were conscious of this looming scenario with some even taking proactive measures to cushion the impact on their citizens.
The recent introduction of VAT has undoubtedly caused a “homegrown” increase of prices for basic and secondary goods and services which is distinct from the larger global context in terms of origin and cause.
This scenario, resulting from a number of factors not excluding the greed, fear and ignorance of many proprietors, and the haste and methodology employed by the implementers of VAT led to a sharp increase of the inflation rate noted from the second quarter of 2007 and remaining consistent until the last quarter of the year.
More importantly, many families experienced added financial stress while the revenues generated from the introduction of VAT and re-vitalized tax collections significantly surpassed projections.
To digress a bit, just how government plans to reward its citizens, perhaps through tax breaks, refunds, or other types of economic measures to increase real incomes. The current ad hoc interventions being pursued during this threatening crisis is a separate line of enquiry that should be shared with the Guyanese public and investigated by interested parties.
With Guyana currently experiencing another sudden, sharp and rapid increase of essential goods and services, the citizens, particularly the vulnerable consumer have essentially been confronted by two sharp increases of commodity and services prices within the space of one year.
The first was the direct result of VAT and the second, is rooted in the growing volatility and shifting structures of the global economy.
In addressing this situation that is projected to increase in severity, we need solid, well thought-out long-term solutions that can be implemented today and not solely short-term acts of benevolence. While I understand the latter in theory serve as an immediate cushion, if we fail to address the root causes and take critical action, such measures amount to a wastage of resources and lead to an increased dependency of the population.
A first fundamental step toward reducing the impacts of this scenario is to form a bi-partisan working group, comprised of policy-makers, senior economists and technocrats alike. One constant that continues to under-value the currency and development of our nation has been our seeming inability to find a suitable modus vivendi when it matters most. As this situation is projected to continue downward, what strategies are we pursuing, and should we have been pursuing since 2002 to alleviate the effects on our citizens?
Yours faithfully,
R Small
