By Bibi Khanam
Some food for thought -- They say that figures themselves do not lie, but people sometimes lie about figures!
I would like to share some basic facts and figures regarding the recent articles and letters on Guyana’s mounting public external debt, vis-à-vis the announcement made by Ashni Singh, that “Guyana’s current debt burden is sustainable” which at the end of March 2011 was at the level of US$1.7 billion. Singh did acknowledge that in Guyana dollar terms the country’s debt already exceeded the level incurred by the PNC.
Bibi Khanam is a statistical analyst who has worked with the UNDP in New York for almost 20 years. She has a BSc in Economics and Certification in Disaster Preparedness.
According to a 2011 joint IMF/World Bank analysis on Guyana’s Debt Sustainability, based on their findings the report concluded that “at the current level the external debt sustainability places Guyana at a moderate risk of debt distress with the total external debt in 2011 representing 50.2% of Guyana’s GDP”. It is estimated that the debt to GDP ratio at the end of 2012 is expected to be close to 75%.
The figures presented in the table below will attest to the fact that one thing is for certain -- over the past two decades the PPP’s external debt at the end of 2011 surpassed the total PNC’s debt both in terms of nominal US dollars and Guyana dollars amounts.
While due recognition must be given to two of our former presidents in their efforts to reduce our debt burden, given the current high unemployment rate and the increasing level of poverty, there is no way Singh can convince some of Guyanese people that our debt is sustainable and that extreme economic hardship is not waiting for us right around the corner. We are looking at several generations of our poor Guyanese workers, our children and our children’s children who will have to “tighten their collective belts” to pay off the PPP’s debt.
At the increasing rate of our ballooning debt Guyana is no doubt on the backward path sliding towards the status yet again to that of a Heavily Indebted Poor Country (HIPC) if something is not done urgently to arrest this regression.
When faced with the reality of the current increasing debt burden being placed on the backs of Guyanese taxpayers maybe the PPP believe that by making continued reference to the PNC’s US$2.1 billion debt they inherited in 1992 that they can “confuse the ordinary Guyanese people” into thinking that Burnham received the total amount in cold hard cash when the PPP are fully cognizant of the fact that just under three-quarters of that amount represented compounded/accumulated interest that accrued from May 1966 to December 1991.
Gross official development assistance (ODA), in nominal terms, which comprised both grants (free money) and loans extended to the government of Guyana for the period 1966 through 2011 from OECD/DAC donors and multilateral organizations are presented in the table below.
I also wish to point out that from the period 1964 until May 26, 1966, Burnham did not have free access to the nation’s treasury, as all major expenditures and incomes were under the control of the colonial government, so for a more factual comparison the figures for the PNC era for 1966 is from the period June through December of the same year.
These figures do not include loans received during the same period through South-South cooperation partners, which are by definition not considered ODA and therefore not included in the figures. Maybe if time permits I will do a follow-up article on this, as well as the annual amounts of Guyana’s domestic debt accrued over the same timeframe.
The most recent domestic debt incurred by the PPP is the ‘raiding’ (almost G$2 billion) of the NIS funds for the construction of the Berbice River Bridge, which has led to some disastrous consequences, not just for the NIS but for some Guyanese. And a few years ago we witnessed the collapse of CLICO which resulted in the loss of almost G$5 billion of NIS funds that were invested in CLICO; plus the PPP borrowed another US$4 million towards co-financing of the CARICOM Headquarters. All of these ‘raids’ on the NIS have pushed the scheme to the brink of bankruptcy.
Some extrapolation and comments on the data:
• During the entire Burnham and Hoyte regime the PNC received a combined total of US$1,104.82 million in ODA, which comprised of US$490 million in grants (free money) and US$614.82 million in loans.
• While during the combined period of the PPP/C regime total ODA, in nominal terms, amounted to US$3,812.89 million that is just over 3.5 times more than what the PNC received during the entire period they were in office. Of the US$3,812.89 million, US$2,477.67 million was in the form of grants, which is more than 5.5 times more free money that the PPP received as compared to the amount the PNC received; while the US$1,335.22 million in loans the PPP received is just over two times more than what the PNC received (i.e.US$614.82 million) during their reign.
• Simply put, every Guyanese would be responsible to pay US$1,780 (equivalent to G$363,180 based on current exchange rate) just to pay off the nominal value of the PPP ODA loans (US$1,335.22 million); this figure does not include the loans the PPP borrowed through South-South channels or domestic entities.
• We know that during the PNC reign a number of the various infrastructures constructed then are still standing today, which is testament to the high quality of work the contractors in those days used to deliver. We cannot say the same of most of what the PPP “built” since 1992, as Guyanese are aware of how many times the PPP has been paying and repaying to fix jobs when their contractors messed up in the first place and then they reward those same contractors with additional million/billion dollar contract(s), not to mention the overpayment to some contractors for incomplete work and the millions/billions unaccounted for as reported in the annual Auditor General’s reports for the past several years. The blatant abuse of these funds should not be taken lightly given the recent disclosure by Winston Brassington and Nanda Gopaul that Guyanese are lazy and not qualified to work on the construction of the Marriott hotel (which ironically is partly funded by Guyanese taxpayers), and given the fact that former President Jagdeo had announced that when construction work commenced it would provide employment for several hundred Guyanese and upon completion another several hundred jobs would be opening up in other areas including the hospitality sector for local Guyanese. And to add insult to injury on December 10, 2012, when President Ramotar visited the construction site he expressed great satisfaction with the ‘work-in-progress’. His comments were that “a lot has been accomplished already and the contour of a beautiful edifice is taking shape.” While this may be true he did not even seemed to notice that NO Guyanese was employed there.
In looking at our revenue side (the Guyana Revenue Authority was created 13 years ago), every year the Commissioner General has been reporting a progressive growth rate in the collection of revenue from various taxes, especially VAT. Just to give an illustration on the volume of how much GRA collected over the past three years:
• 2010: G$94.567 billion (which consisted of VAT and revenue from renewing/granting motor vehicle licenses);
• 2011: G$111 billion;
• 2012: G$116 billion (estimated)
Also, every year Ashni Singh (and recently Robert Persaud) has also been reporting increases in total export earnings over the past several years and to illustrate here again, the revenue earned just on gold export alone is as follows:
• 2010: US$346.4 million (equivalent G$69.63 billion)
• 2011: US$517.1 million (equivalent to G$104.45 billion)
• 2012: US$600 million (estimated) (equivalent to G$122.40 billion)
That is a combined total of G$618 billion in revenue collected just from VAT, other taxes and gold earnings over the past three years alone. In juxtaposing this total next to the total gross ODA (G$696.64 billion) the PPP collected from 1992 to 2011, a very clear picture emerges. There is no need for me to ask the obvious question which I am sure is also on the minds of many. The figures speak for themselves while “we are far from being an extremely poor nation” it is unfortunate that extreme poverty still plague our land for a growing number of our people.
To put this in its proper perspective - we have the Guyanese workers struggling to earn a livable wage/salary; we have chronically ill sugar workers who are denied NIS benefits and forced to work; we have pensioners who are also forced to work as security guards, risking their lives (within the past several months at least two of them were murdered whilst on the job) to supplement their meager G$10,000 a month pension, and the list of the abuse of workers’ rights does not end with these few examples.
Somewhere along the road the “new” PPP has deviated from the path of what the “old” PPP had fought for – workers’ rights and decent wages!
The government first owes it to its citizens to not shift the weight of the debt burden onto us and our future generations to come since the “balance sheet” is showing annual increases in revenue and none of these gains are trickling down to the disadvantaged. Something needs to be done urgently to rectify the income inequality so as to reduce the widening gap between the rich and poor. I dread to think of what Guyana might be without annual remittances, which account for almost a quarter of the country’s GDP in 2011.
Development is not just the erection of farcical palatial concrete structures; real development is to ensure that all Guyanese have equal access to basic education, health care and sanitation which are the foundation for a decent quality of life. Is this asking too much of the PPP? Or, will they continue to look backwards and continue to blame the PNC 20 years after they were booted from office, even though some of their records are worse than the PNC? It is time all the political parties work together for the common good of our people and country.