The Private Sector Com-mission (PSC) has voiced concerns to a visiting International Monetary Fund (IMF) mission about increased taxation, the declining value of the Guyanese dollar and uncertainty about the direction of the economy.
In a press release issued after the meeting, the PSC, however, said that it expressed to the IMF its willingness to co-operate with government in the national interest and to assist in helping to right the economy.
The PSC said the decline in the value of the Guyana dollar was also discussed with the team suggesting that a flexible exchange rate, which allowed the currency to revalue itself in response to market forces, was ideal.
In response to questions from the IMF Mission as to the cause of a loss of investor confidence, the PSC said it pointed to increased taxation and a degree of uncertainty as to the direction in which the economy is moving.
The PSC release noted that the organisation expressed its satisfaction with the government’s operationalising of the Public Procurement Com-mission but expressed concern over instances of sole sourcing of contracts which have occurred despite its the existence. It also voiced satisfaction over the government’s facilitation of local government elections, which had not been held for many years.
Chairman of the PSC Eddie Boyer told Stabroek News that the IMF team was provided with “a good understanding of what the PSC needs government to do.”
Asked to explain what exactly that is, Boyer said that it must provide incentives to investors and create a forward looking economic plan.
“There has been a decline in the economy. We don’t have a sustainable growth rate and both the government and the PSC must work to fix this. I would like to see the government offer business incentives and work to create a stable environment where businesses can operate,” Boyer explained.
He stressed that the present environment “with all of these forensic audits and the SARA (state assets recovery) bill” is not such an environment.
“Yes pursue the corrupt acquisition of state assets but don’t focus so strongly on all these little details. The totality of these audits and what they yield is not helpful. Let it go. We need to look forward not back at every fine thing,” he explained.
In relation to the decline in the value of the Guyana dollar, Boyer noted that while Minister of Finance Winston Jordan continues to say that foreign exchange is available, the banks are saying it is not and this lack of supply is affecting the rate.
“Right now the rate is free floating, so it will go up and down based on the relationship between supply and demand and we are concerned about the rapid decline we have been seeing. The change in value means that someone who today buys supplies and raw materials will pay one rate and a month later he may have to use his profits to buy currency to make the same purchases because the value of the currency has declined,” Boyer explained
Similar sentiments were expressed by President of the Georgetown Chamber of Commerce and Industry (GCCI) Vishnu Doerga, who told Stabroek News that unless an environment conducive to investment is created, Guyana will continue to bleed foreign exchange and the exchange rate will suffer.
“The fundamental thing is making sure we earn more foreign exchange and for that we need to increase exports. The public sector needs to create a more facilitative environment and private sector needs to invest in that environment to accomplish this,” he explained on the sidelines of the Chamber’s 127th Annual General Meeting.
GCCI members, he explained, have reported buying currency at rates between GY$210 to GY$220 for US$1 depending on the volume of currency. It is a variation that Doerga said “stems from not having the level of foreign exchange earnings that [the country] should have.”
He acknowledged that the Central Bank has been working to stabilise the rate and availability of currency but noted that it would not be wise to plug all of the country’s reserves into the economy.
“Creating an environment where more investment can take place will see us return to a position where supply matches demand. If supply goes up then prices will drop,” he said.
