A recent report from the International Monetary Fund (IMF) has highlighted the state of the Guyanese economy, which Opposition Leader Dr Bharrat Jagdeo says careful attention should be paid to.

Having looked at the report in its entirety, Jagdeo said it has highlighted some important facts and is also “ringing some bells about our future and state of our economy.”

In referring to that report, Jagdeo noted that it highlighted the fact that the credit to business sector grew by 0.9 per cent in 2017, which is less than one per cent.

“That’s less than inflation. That there is a high level of nonperforming loans. That we have a large exposure as a percentage of capital,” he read from the report.

Jagdeo bemoaned the fact that the report noted that the IMF looked at several countries where the average is 20 per cent, but in Guyana’s case it is 160 per cent of capital (level of exposure).

He also pointed to another fact in the report, which is the low level of provisioning coverage as a percentage of non-performing loans. “So if you have to provide for them, it will affect seriously the profitability of most of our banks. These are very important points in that report,” he added.

According to the IMF “Growth in monetary aggregates and credit has been subdued due to the economic slowdown and lower lending from banks seeking to strengthen their balance sheets. Private credit growth further declined to 2.1 per cent in 2016 from 6.2 per cent in 2015 mainly owing to a significant fall in credit to businesses (-2.9 per cent) and reduced lending to households and the real estate sector. The 91-day Treasury rate declined to 1.68 percent at end-2016 from 1.9 percent at end-2015, implying an ex ante real rate close to zero.”

Moreover the IMF disclosed that “The risks to the banking system have increased with weak activity in key sectors of the economy. The non-performing loan (NPL) ratio rose to 12.9 percent of total loans at end-December 2016 up from 11.5 percent at end-2015 and provisioning remains very low. Banks continue to respond by tightening credit. One domestic bank accounts for about a half of NPLs, though it has extended only a fifth of loans. The banking system reports high profitability and capital buffers, which for some banks are overstated due to underprovisioning, loan misclassifications and unrecorded related-party exposures”.

In addition to that, the report also pointed to corresponding banking relationships still being an issue.

The IMF noted that fiscal deficit remained stable in 2017. The Government deficit was 4.5 per cent of Gross Domestic Product (GDP), lower than the budgeted 5.6 per cent.

This better than expected out-turn was largely supported by higher revenue arising from improvements in tax administration.

In 2018, the deficit is projected to widen to 5.4 per cent of GDP due to the cost of restructuring the sugar industry, including severance payments to displaced workers, as well as an increase in infrastructure related capital expenditure.

Guyana’s last best growth rate was 5.2 per cent in 2013. World Bank records show Guyana’s growth rates in 2014 was 3.8 per cent, 2015 3.2 per cent, 2016 3.3 per cent and  2.1 per cent in 2017.

Finance Minister Winston Jordan had claimed that the poor performance was linked the dismal figures to sectors including sugar.

However, as the IMF focused on the fiscal outlook for Guyana in its recent report, it noted that the country’s medium-term prospects are favourable.

The commencement of oil production in 2020 is expected be a turning point.

The main direct effect on the domestic economy will be through higher fiscal revenue, and spillovers to supporting activities.

“Oil revenue significantly improves the fiscal outlook, and is expected to place the public debt on a downward trajectory. The mission welcomed the progress made on establishing a comprehensive fiscal framework for managing oil wealth,” IMF explained.

An important point made by the IMF was the fact that debt sustainability concerns are weakened by future oil revenues, but it warned that the financing of short-term deficits should be carefully managed.

Nevertheless, Jagdeo and his party has long argued that the coalition Government does not have what it takes to manage the affairs of the local economy.

He has spoken repeatedly about the increasing debt portfolio by constantly borrowing millions ahead of the impending oil and gas sector.

The former Head of State maintains that the People’s Progressive Party is best suited to handle both the economic and social affairs of the country on any given day.

https://www.inewsguyana.com/ja...omy-future-worrying/

– Jagdeo says he “lacks reason”, comments illogical

Opposition Leader Bharrat Jagdeo has taken Finance Minister Winston Jordan to task over comments he made at a recent public event about the Amaila Falls Hydroelectricity Project (AFHP), which he said lacked veracity and did not conform to logic as reasons for halting the project.
While Jagdeo admitted that the coalition Government’s intention not to pursue the AFHP has been made known before, he accused Jordan of providing insubstantial evidence and reasoning as to why the now Government has decided not to continue with the project’s full implementation.
The Opposition Leader was making reference to Jordan’s speech made at a recent Guyana Manufacturing and Services Association (GMSA) event. While many people were frowning over the speech, according to Jagdeo, policy-wise, it lacked substance and vision. “Not a single attempt to address any of the concerns of the manufacturing sector and the services sector in a tangible way, just platitudes,” he added.

The AFHP, which formed part of Guyana’s Low Carbon Development Strategy (LCDS), was the brainchild of Jagdeo, and was commissioned in 2009. And having taken up office in 2015, the now Government had repeatedly stated its disapproval of resurrecting the project.
But the former President believes that the coalition Government has killed the project, although it was set to provide Guyana with a massive source of electricity. “This is the year we would have turned on the switch and hydropower would have flowed through the country,” he said.

No debt
Jagdeo reminded that arrangements under the People’s Progressive Party/Civic (PPP/C) Government would have guaranteed that the Government would not have incurred any debt for this project.
In fact, part of the financing was expected to come from a Norwegian grant to buy equity into the project. The remainder would have been private funding from the contractors, who were expected to sell power to Government, some through equity and some through a loan.
Jagdeo said, “But we would have bought power at half of the price that we were generating power at 2012 because of the price of oil at that time which was about 20 cents per kilowatt hour…we would have bought power at 10 cents per kilowatt hour.”
Although there were concerns about some technical issues with the project, Jagdeo explained that these were dealt with. An evaluation found that a reservoir could have been constructed to facilitate the continuous flow of power, in the event the dry season stepped in.
Addressing the issue of alleged corruption associated with the AFHP, which Jordan sought to address during the Private Sector event, Jagdeo said although there were some concerns raised about the then contract associated with Fip Motilall, he has repeatedly called on the Government to release the evaluation report done by a technical team when the bids were received.
“They have a copy of the report and you would see that the politicians had no role in evaluating the bid. We gave it to the lowest tender and I saw some pictures of the road, the roads done by that contract are holding up strongly,” Jagdeo further added.
The allegation that PPP/C Government sought financing for the project through multilateral banks is untrue, Jagdeo said, explaining that his Government never approached any multilateral financial institution except the Inter-American Development Bank (IDB) for some equity, but not on a major scale. He said most funds were expected to come from the Private Sector.

Cut cost
Making reference to the independent review of the AFHP which was conducted by Norconsult, a reputable consultancy firm out of Norway contracted by the Government of Norway, Jagdeo said Jordan’s argument did not coincide with what is contained in the 3000 pages of the comprehensive report.
Picking up on the statement made by the Finance Minister that “Norway no longer has the appetite for the proposed 165-kilowatt Amaila Falls hydropower station, because Norwegian officials have found some areas of concern,” Jagdeo said Jordan’s comments were distasteful.
According to Jagdeo, the Norwegian report in Government’s mind is “useless”. However, he believes that someone should advise the Minister and his Cabinet colleagues to read the report and look at the Engineering, Procurement, and Construction (EPC) contract, the environmental and feasibility studies. “None of them read it. I talk to MPs and they still repeat it will be a big debt,” he contended.
While referring to various pages of the report, Jagdeo also believes that the only realistic path for Guyana towards an emissions-free electricity sector is the development of its hydropower potential. He also pointed to the report which stated the coalition Government’s commitment to resume the project.
More importantly however, the former President quoted a section of page 32 of the report which stated that constructing Amaila would have helped to cut electricity costs by more than 50 per cent for the energy produced by the AFHP or US$3.3 billion over 20 years.
“Jordan is talking about saving money and reducing cost. The figure is US$3.3 billion in 20 years nearly G$700 billion by building Amaila. And you know who would have saved it? The consumers of this country. We can’t find $9 billion to keep sugar alive for the next couple of years or the $1.7 billion grant to schoolchildren. But we killed an opportunity that would have saved us that much.”
The Opposition Leader has repeatedly called on Government to restart the AFHP immediately, and has said that he was willing to engage in discussions on all the recommendations set out in the report.

It is too obscene for anyone to miss. The A Partnership for National Unity/Alliance For Change (APNU/AFC) has effectively incorporated double standards in its arsenal of weapons to consolidate dictatorship in Guyana. They campaigned in 2015 on an agenda of change.
But the May 2015 change of Government allowed dictatorship to return to Guyana. For those who still only see the threat of dictatorship, the bad news is Guyana has already become a dictatorship. The double standards we see being practiced every day are instruments of power perverted. These double standards represent yet another stark demonstration that Guyana has already become enmeshed into the dark days of dictatorship, days reminiscent of the Burnham/Hoyte People’s National Congress (PNC) authoritarian regime.
APNU/AFC, similar to the PNC Governments between 1964 and 1992, simply do not care if anyone trusts them or not, they are only interested in maximising the use of any instrument that will reinforce their power. Those who, or those actions which are supportive of the Government, even if laws are broken and even if the actions are absolutely corrupted, are protected by “sovereign immunity”, a powerful weapon the State uses to enforce its dictatorial power. APNU/AFC is determined that it will govern, surpassing the PNC in its enforcement of the principle “the King can do no wrong”. That immunity extends to the “King’s” people.
No one denies that high officials linked to APNU/AFC are associated with the ship recently caught with smuggled fuel. The Head of the Guyana Revenue Authority (GRA) conceded that it was a criminal fuel smuggling operation. Yet the owners of the operation are getting away “scotch-free” – no punishment, nada. For this serious crime on the high seas, the owners simply have to pay the taxes owed for the fuel that the ship was caught with. Who believes this was the first ever smuggled fuel this ship was involved in? Was this smuggling operation not an open secret all along? What if the people associated with this ship with smuggled fuel were not linked to the Government? Without double-standards, the minimum would have been seizure of the ship and criminal charges against the owners or the operators.
Blatant double standards are evident in the news that three low-level Police officers were transferred after a routine sitting of candidates for a drivers licence examination revealed there were 106 persons who physically took the exams, but there were 207 written exams at the end, 101 extra non-present candidates. How did this happen? To make matters worse, the three Policemen had no official or unofficial role to be present. Assuming, they were involved in the skullduggery all by themselves, why is it they are simply transferred? This is a crime and they should be charged with a crime. The soft-landing “punishment” is merely hiding the crime and allowing a pass.
The issue of Government’s response to Rusal versus sugar workers provides a sinister insight into the muddy mind of this Government. We commend the Government for quickly meeting with the Rusal bauxite workers whose jobs are on the line because of the American sanctions against Rusal. The quick response by APNU/AFC to establish a task force that will seek to provide necessary support for the 200 plus Rusal workers, if and when they would have lost their jobs, is the right thing. The question is why no one in this Government thought of a similar task force, why they rejected a task force proposal in December 2016 and why the livelihood of 7000 sugar workers did not elicit a similar urgent response from APNU/AFC. There is a worrying double standard in APNU/AFC’s response in the case of the 200 Rusal workers whose jobs are on the line versus the 7000 sugar workers who have lost their jobs.
Frighteningly, these few examples of double standards are just from this past week. If one cares to look, we will see the double standards every day. When Juan Edghill demanded to speak in Parliament, even as the Speaker was denying him his rights, Police was brought in to arrest him and his colleagues who joined him in standing up. The APNU/AFC leaders accused the PPP MPs of being disrespectful and undemocratic. Yet these same leaders smile when their Councillors refuse to allow any civil meeting of the Regional Democratic Councils in Regions Two and Five. Most Guyanese are willing to simply “smh” in disgust. APNU/AFC, however, is “lol” as they wreak havoc with disgusting double standards.