Dear Editor,
The recent sitting of the Parliament on the 4th of February was very informative, helpful and clear on the macro level as to the intent of the current Administration, and the perspective held by the Opposition. However, many details are yet to be clearly outlined and discussed.
The ministers over infrastructure and finance have outlined a much needed long term developmental agenda, and, I agree that the financial markets do currently provide a very attractive line of credit with their respective interest rates. Similarly, attractive rates were available prior to the pandemic and the current global economic crisis, as indicated by the discussion on the $30 billion loan undertaken by the APNU+AFC. It is clear that such an enormous blunder which will probably be investigated will not reoccur under the PPP/C. There does appear to be a linkage with the mismanagement of the airport expansion project.
The point made about the lack of cash flow in the produce markets and the example given of a vendor’s inability to sell vegetables, which are usually $100 a parcel, is very telling, and an experience that has been shared across the country for quite some time. Keeping this perspective in mind, we must accept that the building of a new Demerara bridge will lead to an increase in toll, which will drive fares up, and ultimately hit the pockets of workers. Fixing of bus fares to prevent an increased burden upon workers will require a reduction at the gas station. Becoming a net exporter of oil & gas does provide room for some flexibility in price at the pump. However, this could lead to an income shortfall for the country, if not properly managed. On the contrary, allowing free market forces to continue will require salary increases, and most likely an increase in minimum wage, accompanied by improved tax collection. The underlying factor at risk will be inflation. Thus the discussion on currency strength comes into play once again.
Alternatively, the approach of placing more money in the pockets of workers, first via employment and investment in the revenue generating sectors, will increase cash flow and reactivate the village economy. This will shore up the revenue streams available and then provide the income via taxes to invest in development while maintaining free market forces in the oil & gas sector. The question being answered is whether to build it, and then wait for business to come, vs. building the business, and then build the additional developmental infrastructure to support the expansion of a growing business, the latter being CRG’s preferred approach. Some very good examples of the late President Jagan’s philosophy on spending were shared, and should give pause to taking a more aggressive approach to development, especially during uncertain and fragile economic times such as this current period. Obtaining key long term agreements/contracts in the productive sectors, such as agriculture, will allow for guaranteed revenue streams to be established with known margins and required capacity, after which developmental plans can then be designed to support without the risk of becoming a financial burden upon the nation.
To put it simply, get the customer, agree on the business and then build the infrastructure to support delivering the goods to the customer at the agreed upon terms while ensuring a profit is made. The current proposed approach being taken does leave quite a bit of room for risk. Japan and Brazil’s experiences with their Olympics is a great example of what can go wrong by placing infrastructural development ahead of sales. What the ministers have mentioned concerning containers being able to move easier to Brazil and reduced travel time to the airport is good, but it is unclear from the discussion how much additional income these improvements will generate for our economy. CRG’s recommendation to first strengthen the revenue streams of the productive sectors, increase the cash flow of the village economy and place more earned income into the pockets of the workers will help avoid the pitfalls faced by placing infrastructural expansionary development ahead of securing earnings. A lot of the current infrastructure we have in place today will require massive investment to bring it back up to a high standard, and supply contracts at profitable prices for sugar, bauxite and agricultural products requires significant direct investment; therefore, we should as a nation make this a higher priority. Those infrastructure projects that directly aid in reducing the cost of goods sold in our productive sectors should have a clear link showing the financial impact on the sector and the long term agreement/contract which it supports. These considerations do not exclude other productive sectors such as forestry, fishing, mining, etc….
The discussion in the last sitting of parliament does show an improvement in the communication between both sides of the house. Congratulations on a giant step forward towards an improved discussion concerning the future growth of our nation.
Best regards,
Jamil Changlee
