GUYANA IS NO CHINA

April 25, 2015 | By KNews | Filed Under Features / Columnists, Peeping Tom, Source

The People’s Progressive Party Civic (PPPC) has a point. It is hard to reconcile how the APNU+AFC coalition arrived at a projected 7% average economic growth when one of its proposals is to develop an economic programme for the country within the first one hundred days of assuming office.

What the PPPC is saying is this: how can APNU+AFC project such growth when it has not as yet developed an economic plan for the country?

There is considerable merit in this criticism. After all how can assumptions be made that would yield a projected average growth rate of 7% when there is no economic plan from which these assumptions can be drawn.

The coalition should be allowed to explain how it arrived at this seven per cent. But knowing the coalition, it is not likely that it will wish to be drawn into justifying its projected average growth rate, economic plan or no economic plan.

The coalition clearly did not have enough time to develop a detailed economic plan. The coalition was only formed weeks after the announcement of the date of the elections and since the coalition involved undertaking a series of frenzied actions, it would have been hard pressed to develop a full-fledged economic plan. But because the coalition did not have adequate time to develop an economic plan, it should have stayed clear of giving a projected growth figure. It makes it seems as if APNU+AFC is engaging in a guessing game or wishful thinking when it comes to economic growth.

It may however be that APNU+AFC is working backwards. It may be that they are attempting to do what Kenneth King did with the National Development Strategy. It may be that APNU+AFC have decided on a growth rate that Guyana needs to achieve and will develop a plan to supposedly achieve that growth rate.

This of course is courting disaster. It is case of working backwards. Such an approach will lead to a discredited economic plan because instead of growth rates being premised on assumptions, it is a case of the plan being developed after the numbers have been fixed. If however the economy cannot sustain the projected growth rates, then the economic plan would be discredited.

The experience of the late Kenneth King is instructive on this issue. When the PPPC along with the Carter Center and hundreds of local Guyanese developed the National Development Strategy, it was hoped that this would form the basis of national consensus.

The then opposition leader, Desmond Hoyte, would, however, have none of it. He simply was not keen on the idea of a national development strategy having the support of the opposition. As far as he was concerned this was the PPPC’s pet project and therefore he did not wish to have anything to do with it. And so he rejected the NDS and refused to give his party’s approval.

The Carter Center was keen on building national consensus for the plan and so they brokered a compromise with the main opposition party. They would have Dr. Kenneth King, the architect of the PNC’s failed Feed, Clothe and House the National Development Plan, involved.

King would review the plan and present a version that would form the basis of a consensus. King of course had his own ideas and to how much the country needed to grow. And so he did what APNU+AFC are doing now. He came up with a growth figure of 9% and said this is what Guyana needs to grow by. He then cobbled aspects of the original National Development Strategy NDS and produced the revised NDS on the premise that the 9% would be achieved.

It could never have worked. Nine per cent growth could never be sustained and the PPPC was never going to be interested.

King’s handiwork marked the end of the National Development Strategy. It died a natural death, neglected in part because by that time other developments had superseded the plan. But it was also neglected primarily because by projecting an unrealistic growth rate of 9%, the entire plan was discredited. There was no way that the country could have achieved that growth rate over an extended period.

Some people like to look at the growth rates between 1989- 1992 to point to the potential for such high levels of growth being sustained. But when you hit rock bottom as the economy did by the time 1989 came around, there was only one way to go: upwards. It is easy when you are starting from a low base to grow rapidly. But it is another thing to sustain that growth over a number of years.

Guyana‘s economy has enjoyed sustained moderate growth for many years now. The economy is at its strongest ever. The country is no longer certified as a low income country. But for that reason also Guyana’s economy, small as it is, cannot sustain levels of growth that average 7% for any extended period unless of course we discover oil or one of the richest diamond mines in the world.  Thus, it is contended that 7% growth is wholly unrealistic in Guyana and cannot be achieved for any extended period.

I do not know if APNU+ AFC feels Guyana is China. But even China which has enjoyed phenomenal growth over the past decade will find it difficult to continue to grow at the rates it has been growing over the past year.

Guyana is no China. APNU+ AFC should explain its growth projections or it should simply wait and see if it will win the elections and then make a realistic assessment of Guyana’s economy and its prospects.