Dear Editor,
Sometime last year the prices for food, fuel and other basic items increased sharply. Families around the world, including Guyana, were reeling from the effects as they helplessly watched their disposable income and savings/investments disappeared. It is confirmed we are in a global recession.
According to AFP/London: “The IMF’s top economist, Olivier Blanchard, warned governments around the world [to] boost domestic demand in order to avoid a Great Depression similar to the downturn that shook the world in the 1930s. ‘Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad,’ Blanchard said in an interview with the French newspaper Le Monde. “It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression.”
Recently President Jagdeo told us the global recession will not affect us. The President made this remark inspite of the fact we live in a global economy and its interconnectedness will impact on every country that does global trading. It is hoped the warning of Olivier Blanchard may cause President Jagdeo to acknowledge what families knew all along.
Around the world governments are fighting their hardest to prevent their economies’ bottom from falling out, by injecting millions, billions and trillions of dollars. Some have chosen stimulus packages such as massive spending on infrastructure, education, housing, healthcare; cutting interest rates; extending unemployment benefits, giving loans to banking and other business sectors; and reducing utilities.
There is much President Jagdeo can learn from pro-active governments. In the USA the Bush Administration injected US $750 billion to save the financial sector. The incoming Obama Administration made public its “Economic Recovery Plan” and intent to spend up to US $ 1 trillion to create and save three million jobs. In the Caribbean, for example, Jamaica and Barbados have announced similar aggressive stimulus packages.
In Guyana President Jagdeo does nothing “to boost domestic demand.” For years there has been no substantial Economic Plan to create and/or save jobs, except for the sugar industry. Food prices are out of control. Persons cannot afford the draconian 16 percent VAT. This year public servants were denied the customary back-pay, a yearly practice going back to the Burnham Administration.
Global fuel prices declined but the government is yet to make GPL and the Water Authority give consumers relief by decreasing electricity and water rates.
The USA government saves their banks; couldn’t President Jagdeo save Globe Trust.
The public knows VAT revenue surpassed government’s expectations. In the absence of an Economic Recovery/Development Program VAT remains the government milking cow. But this is a very inhumane and unconscionable act given the economic crisis.
This policy leads to increased poverty, unemployment, hunger/nutritional deficiency, homelessness, and crime; creating more socio-economic ills and political upheaval.
Reduce VAT to a low single digit or suspend it for at least a year. When workers have more disposable income they spend more and that money goes back to the Treasury. At the same time this boosts GDP, allows workers to properly feed their family, commute to work, keep businesses/jobs, pay their bills, and maintain their dignity.
President Jagdeo should be agonizing over the suffering of the nation’s people. He cannot focus only on saving the sugar industry, but must save every sector, community and worker, who all need assistance in this recession. We urgently need an economic stimulus package to jolt the economy and “boost domestic demand.” And we need it now.
Yours faithfully,
M. A. Bacchus