Dear Editor,
Since taking up office in 2015, the government has failed miserably in managing the nation’s key traditional sectors of rice, sugar, bauxite and timber. At the end of 2017, just over two years after, the state of our economy under the new government was as follow:
1. From 2014 to 2017, total non-performing loans increased by $10.6 billion, for business enterprises and households by $7.1 billion and $3.1 billion, respectively. Overall, non-performing loans increased from 7% in 2014 to 14.1% in 2017. (More businesses are failing).
2. Return on equity of our major commercial banks in Guyana fell from an average of 22.3% in 2014, to 3% in 2017, which is a sign of acute economic hardship.
3. Gold reserves fell from $25 billion in 2014 to $3 billion, as of September 2018.
4. Government deposits at the Bank of Guyana fell from $21.4 billion in 2014, to an overdraft of $61 billion as of September 2018 (sign of overspending).
5. International reserves at Bank of Guyana fell from US$652 million in 2014 to US$447, as of August 2018. In 2018 thus far, the government used up in excess of US$137 million (lack of foreign exchange due to ailing rice and sugar industries).
6. The forestry and bauxite sectors lost in excess of US$37.8 million and US$86.6 million in foreign exchange, during the period 2014 to 2017, which is GYD$25.8 billion.
7. Bank of Guyana profit fell by 26.3% by the end of 2017, when compared to 2014, or $1.3 billion.
8. To finance the government budget deficit, the government borrowed locally, $22.7 billion between 2014 to 2017, an increase of 201% (funds that could have otherwise been used by our local investors to expand their businesses and create jobs).
9. Private enterprises moved from producing a surplus of $8B in 2015, to a deficit of $12.8B at the end of 2017. In 2018, the deficit is anticipated to further increase by another $10 billion, to 22.8 billion.
10. The deficit in Central Government increased from $9.3B in 2015 to $34B or 277% by end 2017 and is expected to increase by another $9B by end 2018, to $43 billion.
11. In 2017 lending to the manufacturing sector contracted by $4.2 billion or 14.6%. Moreover, in mid-2018 the manufacturing sector contracted by 5.7% to $26.0 billion; credit to the beverages, food and tobacco industry, and construction and engineering, decreased by $2.6 billion (39 percent) and $1.8 billion (15 percent), respectively.
These are the facts as to the state of our economy. Can the Government outline what measures and policies would be implemented to correct this downturn.
Yours faithfully,
Mohamed Irfaan Ali
PPP/CMP