Dear Editor,
The Guyana Chronicle of February 2, reported that Minister of Finance Winston Jordan informed the Cabinet about the “disequilibrium in the foreign exchange market” and offered as a policy response, more regulations and guidelines to ensure that “exporters repatriate their export earnings to the banking system”. Knowing that a badly designed exchange control policy in the past was one of the main reasons that contributed to Guyana’s state of un-creditworthiness in the international community under the Burnham regime, one wonders why are we back here?
Minister Jordan claimed he was cutting his teeth in the Ministry of Finance in those dark days of the early 1980s and thus he more than many ought to have been aware of the foolhardiness of that strategy then and now. If this is his policy response, I am shocked, because he clearly wasted his years in the Ministry of Finance. His action today in the face of widespread rejection of these measures from the business community will only guarantee a path to economic meltdown over the next 2-3 years, which even the promised oil money in 2022 cannot help. Has he learnt nothing from Desmond Hoyte, the intellectual architect who turned around Guyana’s economy?
The private sector issued a firm statement which “strongly condemns this move by the Government”. In the words of the PSC, this move “would have the certain effect of accelerating the capital flight which has already begun with the erosion of confidence in the economy.” Two phrases in that PSC statement send shivers down my spine: acceleration of capital flight and erosion of confidence.
Knowing the information put out by the private sector is grounded in economic truth and it corroborates what I have already published on the state of the investment portfolio, I am now calling on President Granger as Head of State to seek alternative advice on this issue. This recommended policy action exposes a situation where there is policy paralysis in the office of the Minister of Finance. I am absolutely sure that even the President’s son-in-law, a longstanding businessman, Minister Dominic Gaskin, has a better grasp of this situation.
What is required are policy actions to drive the economic reforms needed to bring back confidence in the economy and stem the capital flight that is now well advanced. Bullyism and regulations to control are not the answer; understanding the real problem is the first step.
Hard-nosed non-political answers to these questions will go a far way in helping the President. Why has the private sector lost confidence in the Granger administration? Why is there a shortage of foreign currency today compared to May 2015 when there was not? How should the private sector’s confidence in the economy be rebuilt? The ball now is in President Granger’s court.
As a guideline, the foundation of this problem is the state of the net international reserves in the banking system at the end of December 2016. The facts are that Guyana lost some US$60 million of its reserves between May 2015 and Decem-ber 2016 as reported in the Bank of Guyana Statistical Abstract. Understand-ing what is driving the inflows and outflows is critical to driving the required policy actions. Also understanding why GuySuCo, SARU, SOCU and the GRA are in the middle of the solution is also of critical importance.
Yours faithfully,
Sase Singh
