Dear Editor,
Within the context of his busted 2017 Budget, I could not help noticing the Minister of Finance trying to say something sensible about the economy having to “right itself” in the March 14 edition of the Guyana Chronicle. One of the last things the Minister will come to realize during his tenure as Minister of Finance is that Guyana has moved forward in how it conducts its business affairs.
Global business is now being run on what are called trust relationships. This in itself is self-explanatory, and failure is costly, because breaches in this trust relationship among participants to negotiations usually result in a suspension of negotiations to pursue interests with other parties who respond appropriately to trust relationships.
One of the things about which the Minister of Finance can be sure is that the high-handed manner in which he handled the consultations and presentation of Budget 2017 has caused a fatal breach in the latent trust relationship between himself, the private sector and the people of Guyana. By forcing through the VAT policies within the budget the Minister has done himself serious political damage.
The Japanese are a fascinating people who regard trust and honour very highly. If one party to negotiations fumbles, he is considered to have ‘lost face’. If he is unable to ‘save face’, he honourably exits.
The Minister added in his remarks that, “If we ourselves don’t adjust the economy, then we are just going to have to hand it over to somebody else to do it.” One thing Guyanese can agree on for sure is that the VAT policies for 2017 are sucking on their welfare and consumption patterns. This has the effect of contracting national expenditure. The Minister’s idea of channelling these monies through projects back into the economy to stimulate it is nothing short of lunatic, because one billion dollars in the hands of consumers will be spent much faster and will be more beneficial to a wider cross-section of society than if it landed in the hands of two or three businesses who won the Minister’s contracts.
Finally, the Minister of Finance should realize that he has lost the confidence of the private sector. Even if he spends the one billion dollars he receives in VAT on his pet projects, the contractors aren’t going to invest in the hope of getting increased business in an overtaxed economy with a Finance Minister schooled in taxing to spend. The money therefore finds itself lodged in the bank accounts of these contractors, who look to the next contract. The Minister has had more than ample free advice to get things right. It is very clear by now whether he and his policies will sink or swim.
Yours faithfully,
Lance Cumberbatch
