Development Watch

In our last two columns, we emphasized the need for political parties to prepare and submit their election manifestos to guide the electorate in their choice as to which party they will support in the forthcoming elections constitutionally due by 20 March, following the successful vote of no confidence in the APNU+AFC Coalition.

News coming out of Guyana over the past two and a half years point out that money is not being circulated, the expression often used by the man and woman on the street to describe their economic feelings.

The crucial issue of constitutional reform (CR) is once again being discussed by several notable commentators and individuals in civil society.

The Minister of Finance made it clear that a reduction in the VAT rate would require that the list of taxable items be expanded.

The previous five columns explored several recent developments in the foreign exchange market.

Part 5 Last week the Bank of Guyana announced via one of the local daily newspapers that the foreign exchange market situation is stabilizing.

Mr Jagdeo has been blamed recently by government officials and supporters alike for instigating a capital strike.

The supposed decline in the narco economy since APNU+AFC came to power in 2015 is often proposed by two very vocal members of SOCU – Mr Eric Phillips and Mr Tacuma Ogunseye – as the main factor for the depreciation of the Guyana dollar.

In this second part, I want to start addressing some of the possible causes of the depreciation of the foreign exchange rate since 2015.

Part 1 Guyana is not a country with rapidly adjusting or flexible financial prices, such as a main stock market index or bond yields.

Anyone following my columns and letters in the last 10 years would know that I am strongly in favour of a middle group of voters who will swing their votes willingly as a disciplining mechanism of the entrenched political class.

Last week the Private Sector Commission (PSC) urged the government to increase its spending to stimulate the needed aggregate demand to sustain business activity.

In recent months several international commentators have called for central banks in emerging market economies to hold a higher percentage of gold as part of foreign exchange (FX) reserves.

I was going to write this week about whether the Bank of Guyana should take up the role of the Guyana Gold Board by purchasing gold from local miners.

Gary Becker, the economist, established the benchmark model for studying crime from an economic perspective.

The previous two essays in this series express the point that government officials have an inherent incentive to renege on promises of good governance once they attain power.

The previous column makes the point that accountability requires that the government signals clearly its policies and intentions.

The forensic audits to date, as reported in the media, have found little evidence of widespread government theft.

The Guyana dollar to US$ exchange rate depreciated slightly from $204.5 in 2012 to $206.1 by the end of 2013.

Recently the Stabroek News (Feb 28, 2016) reported President Granger saying: “I have no interest in having an unprofessional Public Service… I also said that I did not just want an efficient public service but an ‘unbribable’ public service; professional people, people who can do their trade and people who are prepared to do their jobs without fear or favour.”