The
Kenrick Hunte Column
guyanacaribbeanpolitics.com
Funding for Critchlow Labor College
Posted March 4th. 2008
Governments in modern societies pride themselves in their ability to make available to their citizens educational opportunities for building a labor force and a citizenry that are capable of living in a contemporary world. In particular, Governments know that social cohesion and progress cannot be attained and sustained, if this basic right is denied. Yet we find today that the Government of Guyana has gone off the deep end by denying young people a chance at accessing education. In this regard, I refer to the decision of the Guyana Government to deny funding to Critchlow Labor College.
The impression one gets from reading the newspapers is that the Government has some disagreement with the political structure and governing body of the College and not necessarily with the students who attend the College. If this is an accurate assessment of the circumstances at the College, then the Government is wrong, for students are being penalized for misunderstandings that are beyond their grasp and above their political control. How could this be? Are we no longer a serious people?
The work of Critchlow Labor College is not only important from the perspective of empowering workers, but it is also important for sustaining the vision and legacy of Hubert Nathaniel Critchlow, a national hero, whose work predates that of Presidents Burnham and Jagan. We show our respect for Critchlow's legacy by allowing workers a second chance at accessing the benefits of education, knowing that their first attempt at an earlier age may have been sidetracked by family misfortune. The Minister of Agriculture who it is alleged attended Critchlow Labor College should be the first to disassociate himself from this perfidy of denying young people a chance at being educated. These young people, in a land where crime and unemployment abounds, have taken the high ground. They have embraced education, as a means of self-improvement and as a process of upgrading their skills for the ever-changing demands of the global labor market. The Government of Guyana cannot and must not turn their eyes against these young people.
Recent examination results from the College appear to indicate that student performances were reasonable and the Faculty and Staff have been delivering on their mandate. I therefore implore the Government not to deny the educational opportunities now available, as the alternatives for young people in Guyana are slim and none, with the economy ending in joblessness and jobless growth. I urge the Government to rise above this triviality and find another way to resolve the political issues at the Critchlow Labor College.
Berbicians: Why are they so sick?
Posted January 23rd. 2008
Congratulations are in order for the health care services provided by The Berbice Regional Health Authority (BRHA) to 308,209 persons at the New Amsterdam, Port Mourant, Skeldon and Mibicuri hospitals (SN 1-21-2008). Yet this is a troubling situation, for on average, this represents over 844 persons each day who are seen by doctors and nurses at these health care facilities. This is incredible and it raises some interesting questions, among which are the following:
Why are Berbicians so sick? What are the illnesses reported at these facilities? Is there an epidemic of some sort? Are there sufficient medicines for these people? What are the high and low months for visits to these health-care givers? What percentage of the population is sick in Berbice and who are these unfortunate residents (gender/age groups)? How do these statistics compare with the statistics at the Public Hospital Georgetown and elsewhere in the country? Moreover, if there are no repeat visits in these numbers of 308,209 persons, then Guyana, given a population of only 750,000, could be heading for a health care crisis. I would want to suspect that doctors, nurses and other health care workers must be overworked and gross domestic product in Berbice must be declining.
I would urge the press and the authorities to take a closer look at these health care statistics as these data, like some of the rainfall information, may be overstated and need further explanations.
Cooperating
for Development:
Building our Caribbean-ness in the 21st. Century
Posted October 14th. 2007
As the Caribbean moves forward in the twenty-first century, there are many pressing concerns that the people of the Caribbean must contemplate, if they are to maintain and remain true to their Caribbean-ness. For example, there is the loss of special trade concessions and price subsidies, as markets are liberalized without due considerations for fairness and equity. Our efforts so far on this issue, though commendable, have not been robust enough, leading in one instance to less than favorable trade terms in the new Economic Partnership Agreement with Europe. Negotiations are still ongoing, but the options available are limited and the path to mutual agreement is highly uncertain.
Another example from international trade is with the increasing price for basic staples, such as wheat, soybeans and other grains, due to supply shocks and changing world demand and consumption patterns. How has the Caribbean agriculture sector responded to these changes, given that the Caribbean is already a net importer of food and agricultural products? What has been the Caribbean response to offset the impact of the growing demand for energy worldwide, with its concomitant rise in prices and its impact on families in the Caribbean? While it would appear that some work at the policy level has commenced, not much follow-through at the research, extension and production levels have been attained, due in part to the lack of funds, the shortage of skills and the absence of a forward looking work-program. A cursory review of what has been achieved would indicate that research and extension programs have been under-funded for many years. Identifying programs in these areas, together with the requisite strategies and financing, would be a useful first step aimed at relaxing these important constraints that hinder Caribbean development and our progress out of poverty.
On the subject of climate change, there is the view that climate change is affecting the intensity, the duration and the impact hurricanes and flooding are having on the infrastructure and other assets in the region. These events are destroying in their aftermath the livelihood of many in the Caribbean. Additionally, there is the increasing concern about terrorism and its apparent unfortunate trade-off with employment opportunities in the tourist industry, resulting from tourist travel restrictions. Add to this, the growing list of deportees, together with drug related and criminal activities. The climbing migration rates of skilled workers; the expansion of trans-border diseases; our inability to efficiently manage our fragile ecosystems both on land and sea; and the lightening speed with which new and traditional financial systems can transmit financial resources and trade financial assets without sufficient oversight. These concerns are real and they have engaged the attention of policy makers; but it is clear that such work should be complemented with the contributions from our Caribbean Diaspora who may have expertise and contacts in places where resources and experience can be drawn upon.
Many in the Diaspora are willing to contribute; and a workable mechanism must be found to move from promise and potential to implementation, success and ex-post evaluation. Our eagerness to learn and access technology for the Caribbean must be a priority, for the Caribbean deserves no less at this time. Above all, finding a unique space in which we can embrace the opportunities that our diversity brings and thereby eschew the well-known pitfalls that have kept us from achieving the successes we dream of should become the platform on which we build for the future.
Finally, building our Caribbean-ness in the 21st century cannot be achieved by reactive consequences; it cannot be achieved by passively signing-on to memoranda of change that we were not engaged in designing or fashioning. Instead, building our Caribbean-ness can only emerge from our defining a platform of Caribbean self-interest that is inclusive of all in the region and in the Caribbean Diaspora, and it must optimally use the entire human and other resources available to it. To do less would not facilitate Caribbean Development, but it would only retard meaningful progress. Therefore, Cooperating for Development must be the only imperative as we move forward in the 21st
United Sates-Caribbean Relations: Should it be Restructured?
Posted June 28th. 2006
Introduction
How should US-Caribbean relations be re-structured over the next decade? Is there a need to do things differently? Does the rule which states that, “if it isn’t broken, don’t fix it”, apply to US-Caribbean relations? Answers to these questions may not present a single and consistent response, for US-Caribbean relations are spawned in a complex mix of issues that cut across several sectors. For example, there are several US Programs aimed at addressing concerns in trade, health, democracy, national security, disaster preparedness and human trafficking, among other issues. In addition, there is the Third Border Initiative and the HIV/AIDS prevention program. The loss of agriculture preferences and passport restrictions on the tourism industry, along with deportees are some of the other concerns that must be examined, as we contemplate US-Caribbean relations in the 21st century.
Requirements
While it could be said that the US has a well organized program from the US perspective (Sullivan 2006), I would posit that the leadership in the Caribbean have not done a good job of building a comprehensive agenda and putting together a mechanism that could address these new concerns in the next decade. The current approach seems to be based on working only in the traditional way of diplomatic cooperation between the US and Caribbean governments, with informal and passive connections with the Diaspora. This approach was perhaps useful in the past, but it is insufficient in the current environment, where several combined options should be simultaneously organized and executed. For example, a cursory review of how non-Caribbean immigrants operate would show that diplomatic relations are buttressed by strong and vibrant community-based groups, think-tanks and other organizations in the Diaspora. These groups interact with US policy makers and present information and analyses of issues affecting their communities here in the US or in their country of origin. This approach is one area where US-Caribbean relations can be improved, allowing a new synergy to develop that is flexible and expansive in its outreach; and this approach should be given serious consideration by policy makers.
A second concern seems to be that we in the Diaspora do not have a clearly defined agenda and objectives that are endorsed by Caribbean Governments. Meanwhile, the Diaspora independently work through many informal or semi-formal Caribbean groups such as alumni associations, village-parish groups, nurses and teachers associations providing some of their time, talent and financial resources to many projects in the Caribbean. Scholarships and medicines are not uncommon goods and services that are arranged. In other cases, these groups target the most-needy by working through local grass-root or non-governmental institutions, delivering their goods and services to those who require assistance. Without taking over these voluntary groups, I would argue that the performance of these groups can be improved, especially in their administrative operations and capacity building to double output and outreach. US-Caribbean relations can benefit, if these groups are assisted with finding and deploying resources that can complement what has been formally organized between the US and Caribbean Governments. Moreover, clarity on the priorities and where we should position ourselves to build a more organized partnership is critical, complementing the work done under the United States Peace Corp, even as US funding for the Caribbean declines and emphasis shifts to other competing US priorities.
Over the years, the Caribbean has produced a well trained and educated population that has excelled in many different fields of study and work situations, especially in the USA. Typically, these Caribbean migrants are everywhere, with some being attached to and working for some of the most exclusive, merit based, frontier research, academic, scientific, finance and business institutions. Applying their strong work ethic and self-sacrifice, they persevere and succeed, climbing whatever obstacles and ladders that are placed before them. Most of these workers left home largely because of push and pull factors that have aversely affected Caribbean labor markets. This experience is likely to accelerate, given the loss of traditional export markets and the lack of substantial investment, except in the energy sector, mainly in Trinidad and Tobago. Among the push factors are limited job opportunities, low wage rates relative to what workers can earn elsewhere, political uncertainties, no social safety-net that addresses the concerns of the less fortunate among us, inadequate health care, and the belief that their offspring would not be well prepared to survive and prosper, without their sacrifice and migratory behavior. Pull factors are related to new immigration laws in developed countries that specifically target in developing countries the trained and educated workers, especially teachers, nurses, doctors, among other workers. A recent study confirmed that the Caribbean had a severe brain-drain, with a significant percentage of these migrants to the United States being trained at the tertiary or University levels (Carrington and Detragiache, 1998).
Fixing the loss of skills that result from migration would require US-Caribbean Governments and businesses to develop programs that encourage the migrated skilled workers to make professional contributions to the Caribbean, for many in the Diaspora have the skills and expertise needed for catching up and staying abreast with a changing world. I would therefore argue that US-Caribbean relations can be enhanced if a joint Diaspora program could be organized.
Conclusion
US-Caribbean relations is at a cross road, given the changing opportunities in global markets, the free movement of skilled workers, the loss of tradition subsidies, the rise of the importance of remittances, the deep concerns for terrorism, the transshipment of cocaine from South America, money laundering and illegal migration. US-Caribbean relations cannot remain in its current mode of operations, if these concerns are to be addressed. Instead, we need a new paradigm that spells out an inclusive approach, incorporating US-Caribbean-Diaspora Relations in a compact and focused agenda for the next decade.
Bourda Market and the Le Repentir
Posted March 24th. 2006
On a short visit home, a few days ago, I had cause to go to Bourda Market and to the Le Repentir Cemetery, where I observed that both places were poorly maintained. However, after reading your article (SN 3-22-06) captioned, "Municipal markets closed for Cleaning", I felt less troubled, knowing that the Mayor and City Council will be busy getting the market cleaned. While this is certainly one of their critical responsibilities, my comment on this cleaning exercise is that this must not be a 'one-time' event, but at least a weekly activity. In the past, I recall seeing the floor in the fish and meat sections of the market being washed daily, using the water from the fire hydrants. I hope some reporter will check on this so that we can have an update on the progress there, for it is dangerous to have food stored and displayed in such surroundings.
On the matter of the Le Repentir Cemetery, I am concerned since the Cemetery is a big mess and the Mayor and City Council might not be up on this project. How could we inter our loved ones in a poorly maintained place and feel good about ourselves? My recent visit there revealed that the roads are impassable. The canals which form the northern and southern boundaries and the inter-locking side trenches are clogged with grass and all sorts of debris and unwanted material, including plastic containers. Bush is everywhere and poorly maintained grass path-ways are abundant.
Speaking with some of the workers, they claim that it is much worse when it rains, lamenting further that they are short staffed, overworked and underpaid; they have no protective gear and do not have the tools to do the job. What is also troubling is the location of the garbage dump in the eastern part of the cemetery. Placing that garbage dump there was a big mistake, since it reduced the size of the cemetery and these lands cannot now be used for burial for several hundred years. This dump should be closed immediately, leaving the Le Repentir for its original purpose, unless we now view the two activities, the burial of garbage and our deceased, as being one and the same thing.
Equally troubling also is the record keeping. The system is based on manually maintained hand-written records in exercise books. A good shower of rain on the dilapidated office building where the burial records are maintained; and the loss of a few senior staff will result in a serious problem of not being able to find where family members, relatives and friends are interred. This is a looming crisis that must be avoided.
I strongly recommend that we allocate some of the lotto money to fix the Le Repentir. Funds should be allocated to clean the drains and canals and their connection to the kokers on the Demerara River. Funds should be allocated to purchase tools (flat files, cutlasses and equipment) and protective clothing for the workers. Funds should be allocated to hire workers to complete the cleaning and weeding on a scheduled basis, several times a year. Funds should be allocated to fix the building where the sextant is housed, along with his staff; and the records of the cemetery must be computerized and integrated with the layout of the cemetery. This is a non-political issue that requires urgent and collective action. So Mr. Mayor, City Councilors and Mr. President, fix the Le Repentir now!
The mantra of macroeconomic stability is meaningless in the presence of corruption
Posted March 6th. 2006
I wish to commend The European Commission (EC) for their action taken to terminate its relationship with GuyFlag (SN 2-25-06), an agent of the Government of Guyana, whom it would appear did not apply the appropriate level of due diligence that such contracting requires. Coming at a time when legal action, aimed at curbing corrupt practices involving state assets and revenue are not enforced, it is clear that the EU has taken a positive stand for the Guyanese people.
In a recent article captioned, ‘Wolfowitz's Corruption Agenda’ written by Mallaby of the Washington Post (mallabys@washpost.com), it was noted that the World Bank stopped disbursements on an $800 million loan to an Indian health project, following allegations against some Indian politicians. It froze lending to Chad; it canceled 14 road contracts in Bangladesh because of corrupt bidding; it blocked five loans to Kenya because of corruption; and it postponed debt relief for Congo after the International Monetary Fund (IMF) had certified that the country deserved relief. The IMF may not have considered the reduction of corruption as a good governance indicator; hence, the action by the Bank may have been prompted by this oversight by the IMF. Consequently, the mantra of macroeconomic stability so often spoken of by the IMF is meaningless in the presence of corruption, since development cannot be sustained when the public purse and public trust are breached.
Our recent history shows that Guyana had similar concerns of corruption, but no legal action or donor conditionalities to correct the breach in public trust was taken. In fact, the IMF and bilateral donors blessed Guyana with additional debt relief, but there was no call to end corruption. With Dr. Luncheon’s announcement on GuyFlag, I hope this is his first signal among many that the government will correct its poor governance performance in the interest of the Guyanese people. The EU has set the pace; and given that our local institutions have failed to take action to end corruption, the question is: Which other donor or multilateral financial institutions will join the EU to save Guyana? The deficit on this year’s budget, which is expected to be financed by donors, is a good place to start.
Guysuco is cash-strapped and its Financial Viability is Questionable
Posted January 21st. 2006
Recently, I read in Stabroek News that President Jagdeo instructed the Guysuco management to make incentive payments to sugar-workers at a time when the management stated that they had cash flow problems in what must now be a loss making enterprise.
Going beyond prudent financial management practices and their own realistic financial analysis of the company, it would appear that the Guysuco Management concurred with the President's request, paying workers with financial resources the company did not have. Stabroek News also reported that this payment was financed using a bank loan at interest rates that were higher than usual. The public should be informed of the loan amount, credit and repayment terms and loan guarantees in this agreement, for tax payers will have to pay this bill, given a 36 percent cut in sugar prices.
My first question is: Where is the input of the Board of Directors at Guysuco and why is President Jagdeo directly involved in the financial decision-making of Guysuco? Is there a law which says this is acceptable? Furthermore, should the Board not be supportive of a management team that is left hanging in the breeze? Since it would appear that the Board is asleep, they should all resign to save themselves further embarrassment, for this is indeed a novel idea to borrow money to pay worker-incentives in a company that is facing severe financial viability concerns. This must be one for the Guinness Book of records.
I also read of the potential investment of US$600.0million to be invested in Guysuco based on an action plan 'formulated by a special task force set up by Cabinet...' (SN 1-12-2006). My second question is this: where is the feasibility study for the US$600.0 million, the largest investment ever in the history of Guyana? To learn that a task force prepared an “action plan” and not a “feasibility study” and that a consultant will spend ten days working on this massive undertaking bringing all the components together in a viable project must be a big joke for Guyanese. Without a feasibility study, this should not be taken as a serious proposal by anyone, for this is not how investment projects are developed, especially for an export driven activity in sugar with dwindling markets.
Furthermore, since Guysuco is cash-strapped and its financial viability is questionable, my next question is: Who will finance this undertaking? What are the terms and conditions, interest rates, repayment agreements, rate of return, marketing and sale agreements and guarantees for this project? Where are the audited reports of Guysuco for the last 5 years? Some responsible person must report to the Guyanese people before this “plan” is moved to the ‘next stage of concern’.
In a previous editorial on sugar captioned “Trade Unions and Politics, SN 2/4/99”, the idea that management is often ‘outplayed’ by sugar unions is the norm in Guyana, given the different objectives of management, government and the unions. In that editorial, it was reported that if the union’s objective is to maximize the employment of labor, as well as maximize labor income and workers’ benefits, and the management’s objective is minimizing cost, improving efficiency and profitability, and ensuring that their management contract is renewed, then management will lose and the union will win in every case. This is more so in an election year, as is year 2006. This is because “GAWU can exert enough pressure on government to secure wage increases even when revenues and output are falling ….” (SN 2/4/99). In the current case, workers were already on strike for their incentive payments and President Jagdeo enforced the workers’ demands by jumping over the Board and forcing management to behave contrary to their financial objectives.
Fenty's contribution on Critchlow
Posted January 8th. 2006
Social and political change is a dynamic process with many twists, turns and unexpected events. It is never a smooth, linear movement along some unchanging path with full predictability. In fact, these unexpected changes sometimes may not bring results consistent with what we expect; or sometimes it may bring what we expect only in incremental ways, never before envisaged.
I make these observations in relation to the angle taken by Mr. Fenty in which he attempted to besmirch one aspect of the seminal work done by Critchlow in regard to adult suffrage in Guyana. So when Critchlow said, "I still feel that we should get the suffrage, but if we cannot get it now, we must take what we can get.' this is not a retreat or an 'about-face'. Instead, this is part of the dynamic process where incremental steps are being made on changing the oppressive centuries-old social and political order. This is fundamental and catalytic in nature as it involves redistributing the power from the planters to the ordinary man, who had no say or control on how his life was organized for more than a few hundred years. In short, this is real change and if incrementally is how it is started, so be it.
Take another example where Critchlow fought for higher wages, but at times he had to agree to wage cuts to stop retrenchment (Woolford, "The Origins of the Labor Movement Pg 285, in "Themes in African Guyanese History" by Mc Gowan, Rose, and Granger, 1998). So is he a sell out? Context and the political environment must be taken into account Mr. Fenty, and you did not do so in your 'Frankly Speaking on Critchlow'.
Finally, the imputed assertion that Critchlow was against dispossessed ignorant East Indians 'in Mr. Fenty's piece, "And his Africanist instincts seemed to influence his actions too" is inflammatory and should be supported with direct quotes from Critchlow himself; otherwise, this is just crass innuendo. Critchlow's union is recognized as championing the cause of East Indians sugar estate workers, especially on the East Coast and East Bank Demerara as early as 1924 (Woolford pg 293). Come on Mr. Fenty, Mr. Critchlow does not deserve the black-eye you wish to give him, for Critchlow work professes a different reality.
Sugar without Subsidies
Posted December 22nd. 2005
Now that a significant proportion of the EU subsidized sugar price would no longer be paid to Guysuco, I think it would be appropriate for several writers to apologize to the Guyanese people for providing false hope and delaying the inevitable. Professionalism demands no less of them, as they were arguing for several years that there will be no price cuts. Likewise, the visits by EU members to Guyana and the picketing exercise by management and the union in Georgetown were also ineffective, signaling that the exercise was only a waste of scarce resource, since the EU did not change its position.
Our political clout and claim to special and differential treatment died when an expanded EU became operable at the political and economic levels; and when American owned banana firms in Central America, with clout in Washington, entered the market. We never addressed the US problem and we relied only on the State Department and forgot the Diaspora who had the potential for building some leverage elsewhere. Our best counter-attack to the gathering storm was with the assistance of the United Kingdom and a few other countries; but they could no longer shield us under special preferences, for the game was beyond their grasp and we never understood and still do not understand this new political environment.
So we lost bananas and in came the regional negotiating machinery (RNM). Could anyone say what the RNM did to stop the gathering storm? Are there any deliverables we can claim as the contribution of the RNM, given the financing they received? Brazil, Australia and others appealed to the WTO and won the economic arguments on competitiveness and fairness. We never had a chance in the arena of competitiveness as our cost of production is much higher than many other trading countries. In contrast, our case for special and differential treatment is a political/diplomatic argument that is outside of the scope of a WTO, but we did not do our homework, despite claims to the contrary. The outcome of the WTO ruling is that the ACP is crippled as the EU has taken a position to protect its wider trading interest, offering the ACP grants and development aid that are less than the lost sugar subsidies. An effective political and diplomatic strategy may have made the difference, if we were better organized over the last five years.
Today, a few Caribbean countries no longer produce sugar; they are out of the business, doing other things and hoping to buy sugar from the cheapest source possible in competitive markets. Who could blame them if they are trying to be frugal? Meanwhile, our current reality requires that the Management and Board of Guysuco make available to the public the audited reports of the company for the last four years and fully disclose the Berbice Investment document so that a better understanding of this incremental US100 million project could be examined. I would want to suspect that the financial and economic viability of this project is in jeopardy and the evidence should no longer be a government secret.
The accountability must start now, for a loss of 36 percent of the price will negatively affect the financial and economic viability of the business, which was already a loss making enterprise even with the EU subsidy and government tax holidays. It would be important too for the Union to tell the workers in the Demerara Region when they will no longer be involved in sugar-cane cultivation and sugar processing. We need to get everyone on the same page, if we are to move forward. Cutting cost below six cents (US) for a pound of sugar is not a competitive price Guysuco can attain, using the labor-intensive and low-productivity technology in force, even in Berbice.
Some thing to vote for: The Constitution, the Umpire
Posted October 6th. 2005
The SN (10-2-05) editorial on "Principle" provided useful coverage to the idea of building institutions for rescuing Guyana from the abyss. Well functioning public institutions are far better than depending on the orders of an all powerful President. No one person should have such power and this is the Guyanese chasm that has to be closed. Where I differ from the editorial is on the question of returning the system to one whereby the President would become more of a figurehead. This will not work. What we need is an Ultimate Umpire and a redistribution of power in Parliament to make it responsive to the needs of the Guyanese population.
Quoting from a previous letter March 2004 it was pointed out that '. the 1980 Constitution merged the functions of the Head of State with that of Head of Government into the Office of the President. Since voters select ethnically challenged leaders, where the position of Head of State is not really contested, a critical change to the Constitution is suggested to deal with this problem. The Head of State should be answerable only to the Constitution (non-political), and the job of the Head of Government, the Prime Minister, who is political, must work as one of the Captains in Parliament, the other being the Captain of the Opposition.
Excluding the Judiciary, the key focus of the President is to be in charge of the constitutional institutions, including the Audi Department, Public, Police and Teachers Service Commissions, Bank of Guyana, the Ombudsman, GECOM, and GDF. The President's will be responsible for safeguarding the independence of these institutions, ensuring their professionalism and preserving their accountability to the nation. Anything short of this in the functioning of the Presidency is a waste of time. We have seem the failure of the current system (scams, crime and corruption), where criminal behavior at all levels is pervasive with no serious corrective measures or punishment in place. The Public Accounts Committee is lame and toothless. So too is the Ethnic Relations Commission.
Who should be the President? Because of our ethnic politics in which we know in advance how 90 to 95 percent of the voters will cast their votes for the PPC and PNCR, then the small parties together who receive the remaining 5 to 10 percent of the vote, should occupy the post of the Presidency, until such time that a single party receives at the poll 66 percent of the total vote which I hope is not ethnic based, but issue driven --a sure sign of democratic maturity.
In electing the Primer Minister, this person should come from the party with the largest number of votes, with the condition that some bills (budget, foreign affairs, and statutory offices, among others) in Parliament will require a 66 percent majority for it to become law. This redistribution of power will change the incentives against having all the power in one party; it will be inclusive of the small parties in the distribution of power; and the system will work for the benefit of all Guyanese. There will be no losers in this process as is the case in a simple majority (51-55 percent), since those Guyanese who do not prefer either the PNCR or PPP/C would have something to vote for: the constitution/Umpire. Currently, most Guyanese vote their fears, mistrust and disgust; others vote with their feet. Voting for the Umpire/Constitution would give a pure alternative, yielding a choice that is above partisan politics, but in the firm grip of hope and opportunity for a fair, just and inclusive society. We must include this option in the 2006 elections, if we wish everyone to win.
My last comment on your article is reserved for your comments on the late Dr. Richmond. Not only was he interested in well functioning institutions, but he was also good at providing public service. In this regard, I last saw him at the Dharm Shala during the 2003 Christmas Party for the poor, the hungry, and the forgotten. I suppose, he did not have to be present, but he was there doing what is required for occupying his space on planet earth.
May he Rest in Peace.
GDP and Its Limitations
Posted September 7th. 2005
Dr. Ian McDonald has written that Gross Domestic Product (GDP) is not an accurate measure of well-being, arguing that “…it makes no distinction between the desirable and undesirable (activities)…. He further states that” … it is time to stop fooling people by clinging to this indicator…” (Mc Donald 9-4-2005).
While Dr. McDonald is correct on this issue it is useful to point out that economists have long acknowledged this shortcoming of using GDP and in most undergraduate economic textbooks, this limitation is explained. One such book published in 2005 (sixteenth edition) and entitled, ”Economics” by McConnell and Brue documents on pages 125-126 the exclusion of non-market activities, leisure, improved product quality, the underground economy (a large part of Guyana’s economy), the environment, crime, violence, drugs, alcohol, smoking, among other issues.
Identifying and measuring accurately the costs and utility/ disutility of these items, however, is difficult due to a number of factors. For example, people who understate their income or engage in “cash-only” activities are excluded from the GDP measure; so too would be many self employed workers who could avoid paying taxes on their transactions. Certainly, refinements are needed and this work must be strengthened with research and modification upon new evidence; but to discard GDP as an aggregate measure without an alternative measure would be problematic. If it is not too much trouble perhaps Dr. McDonald could make a suggestion on a replacement measure for GDP; this would indeed be a useful addition to the macroeconomics literature. At the same time, Dr. McDonald may wish to exclude from our GDP the European sugar and rice subsidies, for they overstate our GDP; they provide the wrong signals to policymakers; and they hinder serious development when not used to advance new knowledge or alleviate poverty across the board and not necessarily in the sugar sector.
Reply to Ms. Marlyn Hinds on the Economy
Posted July 15th. 2005
Ms. Marlyn Hinds wrote a letter (SN 7-11-2005) captioned, ?The PPP has reduced debt and unemployment? in which she made some unsubstantiated claims about my analysis of the Guyanese economy 1992-2004, adding the usual personal and degrading attacks in the customary style of attempting to ?kill the messenger and bypass the message?. What seemed to have irritated Marlyn beyond measure was my response to a letter written by Mr. Jason Hinds (SN 7-6-2005, captioned, "Government worked hard to reduce inherited debt burden". Judging from her letter it is reasonable to conclude that Marlyn has several levels of difficulty with the inferences I drew from the data I used and I will illustrate why her suppositions were unfounded.
So where did I get my data? I used the published statistics and reports of the Bank of Guyana and reported accurately the data I saw there, noting that the foreign portion of the national debt in 1992 owed to Multilateral Institutions was US$863.4 million out of a total debt of US$2.1 billion. I also recorded that by September 2004, the Bank of Guyana reported that the debt owed to Multilateral Institutions was US$936.8 million, signaling by any objective measure applied to these data that the multilateral debt increased, even though the overall national debt decreased to US$1.3 billion. This is a reasonable inference one can draw from the data, but Ms. Hinds challenged this simple high school analysis, leaving me to contemplate that she maybe an embarrassment to her high school teacher. Furthermore, if Marlyn has better statistics she should present them to the public and show why her inferences are stronger than mine.
Ms. Hinds laments that, ?I (Marlyn) am totally disappointed at the anecdotal economic analysis Dr. Kenrick Hunte has presented?? and indicated that she had ??to start questioning Mr. Hunte?s scholarship?. On the subject of the anecdotal economic analysis, this is clear proof that Marlyn does not know of what she writes, for economists may conduct an economic analysis using anecdotal evidence to build an argument, but economists do not engage in anecdotal economic analysis. Marlyn should clarify what she means by this statement.
On the subject of scholarship, Marlyn has made several rookie mistakes by using current instead of constant prices to examine economic growth, and compounds her problem by mixing growth accounting, with an analysis of economic growth overtime. What is more unfortunate is that she further claims that ??the economic base has increased tremendously?.
Marlyn should identify the new economic activities. Specifically, she should identify the new industries and their location, the employment and exports levels, and new capital that have contributed to this increase in the economic base. This type of data will certainly support her argument of an expanded economic base and refute the known finding that the economy is floundering and private investment is almost nil (see recent US report on investment). Otherwise, Marlyn?s statement would not only lack scholarship, but it would be frivolous.
There are, of course, other unsubstantiated claims made by Marlyn, but I will leave these for another time and recommend to Marlyn to work harder at separating fact from fiction.
Economic Performance and Debt Burden 1992-2005: PPP/C Legacy
Posted July 9th. 2005
Mr. Jason Hinds wrote an important letter (SN 7-6-2005) on how well the PPP/C government has performed in reducing the debt burden and suggesting that the PPP/C government should be 'commended for the diligent work being carried out to improve Guyana's economic status.' However, before congratulations are showered on the PPP/C government, it is useful to examine the record created under their stewardship.
On the subject of the debt burden, I present the following data obtained from the Bank of Guyana website and Annual Reports. In 1992, the national debt was US$2.1 billion, consisting of domestic debt of US$150.2 million, bilateral debt of US$943.2 million, multilateral debt of US$863.4 million and other international debt of US$160.6 million (Table 1).
By the end of September 2004, the total debt declined to US$1.3 billion, with some important debt distribution changes. Specifically, while the bilateral and other international debts have declined, the multilateral and domestic debts have increased. The bilateral debt declined by over US$850.0 million due mainly to debt writes-offs related to the generosity of friendly governments, especially Trinidad and Tobago (US$530.0 million), the United Kingdom, and the United States, among other countries. At the same time, the domestic and multilateral debt (mainly IDB and IMF) increased by over US$200.0 million, reflecting the propensity of the multilateral agencies, namely the IDB and the IMF, to provide grants to a floundering economy with expansionary domestic government borrowing, a depreciating exchange rate of over 60 percent between 1992 and 2004 (in 1992 the exchange rate was 125 to 1, today it is 200 to 1 for the US dollar), and low and negative economic growth.
The economic growth rate, which was in excess of 5 percent per year between 1991 and 1997, declined into negative territory by the late 1990s and it has not recovered, heading to a negative of 2.6 percent in 2005 (Figure1). Incidentally, one of the objectives of the IMF and World Bank Debt Relief Program was to free up resources that could in turn be used for stimulating economic growth. In this regard, the IMF and World Bank, and Trinidad and Tobago did their part, while the PPP/C government failed, given the growth disaster in Figure 1.
Consequently, applauding the PPP/C government for increasing our foreign and domestic debt, for increasing the unemployment rate and for generating negative economic growth must be contrary to the Hinds' unsupported observations and only akin to playing the fiddle while Rome burns.
Enmore and Ruimveldt Martyrs
Posted June 2nd. 2005
Guyanese will pay tribute to five workers who were killed (Kissoon, Pooran, Rambarran, Dookhie and Harry) and fourteen others who were injured when the police opened fire at the Enmore Estate on June 16, 1948. According to Dr. Odeen Ishmael, the workers were agitating for higher wages, improved living conditions, and demanding recognition for the GIWU as the bargaining union, instead of the recognized union, the MPCA.
While we continue to recognize the sacrifice of these workers in seeking justice and a fair day's pay, it is equally true that similar sacrifices that resulted in death and injury were made by other workers in circumstances no less different. One such event occurred on March 31, 1924, at Ruimveldt where the massacre was twice as tragic and no less painful. According to Woolford (1998, page 277, "Themes in African Guyanese History")" … dock workers in Georgetown … went on strike to force their employers to meet their demand for higher wages. … On April 3, a large group of workers from sugar plantations on the East Bank of Demerara, whose cause was also supported by the Union (BGLU), set out on a march to the city… The Police and Militia fired upon the crowd, killing 13 and wounding 24." A key lesson learnt from the 1924 tragedy was the willingness of dock and sugar-cane workers to work together, stamping out injustice, even if it meant the loss of limb and life. Solidarity and common cause could not have been better served, for the 24 years between these events represent not the lack of will, but one of hard struggle aimed at the social, economic and political transformation in Guyana.
I therefore call upon the sponsors of the Enmore Martyrs to include in their programme a tribute to the Ruimveldt Martyrs, for they were part of a group of martyrs who paid the ultimate price. I also call upon the historians in Guyana to thoroughly research and publish the record of struggle of all those workers at Ruimveldt and elsewhere, for they, among others, may well have been the catalyst for starting the push for workers rights and universal adult suffrage. They must never be forgotten!
President Jagdeo Decries GAIBANK
Posted May 23rd. 2005
President Jagdeo has made a series of inaccurate statements concerning the operational procedures and financial viability of GAIBANK. This is not the first time that inaccuracies of this type have been made and I wish to respond to these false allegations.
According to the SN report of 5-15-2005 captioned, "Development Finance facility opens", it is reported that President Jagdeo said, '…that Guyana once had its own development bank in GAIBANK, but that the bad management of loans had caused it to collapse. He lamented the practices of the government of the day whose ministers signed recommendation letters for persons to access loans, adding that many of those loans defaulted. He also stated that the government had restructured many institutions without cost to the treasury'.
With respect to the recommendation letters allegedly sent by PNC Ministers, I would respectfully ask the President to produce the signed letters used to access loans at GAIBANK, thereby establishing the veracity of his claim. This type of attack on GAIBANK has its genesis in early 1993, when it was claimed in the Mirror newspaper that loans were made to PNC bigwigs, which denied loans to small entrepreneurs. In my reply as General Manager GAIBANK, I refuted those claims and outlined the procedure and criteria used to approve and reject loans. In a subsequent letter from the Editor of the Mirror newspaper, I was informed that my reply would not be printed, while Stabroek News provided me the courtesy of publishing on 6-8-1993 a summarized version of my reply, alongside the spurious claims published in the Mirror newspaper.
On the subject of what caused GAIBANK to collapse, the President is again being misled. For the record, let me restate that the ill-advised closure of GAIBANK was the sole responsibility of the PPP/C Government which failed to implement the recommendations of Mr. S. A. Goolsarran, Auditor General of Guyana, in relation to foreign exchange losses that were Government liabilities and not GAIBANK liabilities. The Auditor General in his letters of 31-12-93 and 9-16-1994 supported his recommendations of dealing with the foreign exchange losses by invoking the Laws of Guyana, Section 50(2) of the Co-operative Financial Institutions Act, Chapter 75:01. Regrettably, the PPP/C Government ignored the professional advice of the Auditor General, which would have accurately reflected the profitability levels of GAIBANK that were in the hundred of millions of dollars, after all other operating expenses were charged to the appropriate accounts.
What was more troubling, however, was the fact that the PPP/C Government also imprudently followed the nutty advice of two foreign consultants who did not even understand the mismatching problem commercial banks would experience when using short term deposits to finance long-term investments. These consultants, without irrefutable evidence of a negative nature on the quality of the GAIBANK loan portfolio, sold the PPP/C Government in 1993 the zany idea that the commercial banks in Guyana would provide long term credit to the various sectors in a much better way than GAIBANK. Why the PPP/C Government followed such poor advice, without even a Parliamentary Debate, is beyond words.
The President's comment that government had restructured many institutions without cost to the treasury is also misleading and for this case, I provide the following evidence. In an SN article 3-25-1996, captioned "Jagdeo signs US$38M IDB financial sector pact" it is stated that the President, who at that time was the Senior Minister of Finance, signed a US$38.0 million loan on behalf of the Government to among other things finance the merger of two government banks- the Guyana National Cooperative Bank and the Guyana Cooperative Agricultural and Industrial Development Bank and to strengthen the resulting institution. Evidence shows that the PPP/C Government subsequently closed the merged institution a few years after it was established; and, unfortunately, the audited accounts of the merged entity were never examined by the Auditor General nor presented in Parliament (note: all GAIBANK annual accounts were audited and presented in Parliament during the PNC Government). Meanwhile, since the IDB loan for merging the banks was disbursed, the claim by the President of no cost the treasury must be inaccurate.
So what do we have twelve years after the PPP/C decisions on the financial sector? Hardly any new investment as noted in a USSD report (SN 5-6-2005); and no significant long-term lending in the productive sectors, although commercial banks are flush with cash now mainly disbursed to procure government treasury bills, resulting from a large fiscal deficit, which the President acknowledges. Mr. President, the key question is: would you concede that the policies and programs in the financial sector have failed? And would you agree, Mr. President that pulling the plug on short-, medium-, and long-term lending provided by GAIBANK has severely handicapped the productive sectors, especially agriculture and manufacturing? If you disagree, I respectfully ask that you provide any evidence to the contrary.
Finally, it should be emphasized that whenever the President of any country speaks, s/he must not only be above the fray (SN Editorial 5-15-2005), but must always provide credible and irrefutable evidence on national issues that cannot be challenged on factual grounds, for s/he speaks not as a politician, nor Head of Government, but as Head of State. Consequently, her/his pronouncements must reflect the dignity of the office which s/he holds; otherwise, frequent inaccuracies would only set the stage for the mad-walk to a societal meltdown.
Defending the Indefensible
Posted May 7th. 2005
In SN article (5-3-2005), "WTO ruling on sugar bad news for Guyana-GAWU", several interesting statements were made by GAWU President, Mr. Komal Chand. First, speaking about the National Budget, Mr. Chand expressed his dismay that "...another budget had begun with no increase in the tax threshold..." As a PPP Member of Parliament, Mr. Chand should have voiced this concern during the Budget debate in Parliament, which is the appropriate forum for such a serious issue. But to raise it at the Sunday May Day rally at the NIS Sports Ground instead of Parliament is only a good crowd-teaser by an astute politician. But as the old people say, "monkey does know wah limb fuh klimb pun".
Second, touching on the recent floods which reduced sugar cane production, Mr. Chand stated that, "All parties must be reasonable during this period of reconstruction. GAWU therefore stands ready to sit with the employer and to devise or advise on ways in which workers may still receive their just incentives".
Given that sugar production has decreased and sugar prices are in free fall, it must be preposterous to speak about 'ways in which workers may still receive their just incentives'. Yet anything is possible in Guyana, for since Mr. Chand is a member of the PPP Central Executive, a PPP Member of Parliament and the President of GAWU that negotiates with Guysuco/PPP Government on behalf of his union members, this is indeed a special conflict of interest case, where sugar workers could receive incentive payments for no incremental production.
The results of previous negotiations between the union and management have shown that wage increases have been higher than the productivity gains, contributing to the unprofitable status of Guysuco. Consequently, for Mr. Chand to be dismayed about the tax threshold is a small matter, when compared with the Guysuco dilemma that focuses on short-term political gains, instead of the long-term sustainability considerations, especially in the Demerara Estates. It would have been most appropriate to present workers with some detailed information on the future plans for the Demerara Estates and whether their employment prospects are favorable. Now, this would be worth listening to on May Day, for a tax threshold without jobs is pointless.
On the matter of the ruling by the WTO on sugar, Mr. Chand said that 'the ruling of the World Trade Organization (WTO) appellate body against EU sugar subsidies was bad news for Guyana'. This is indeed a very late realization for Mr. Chand, for this outcome was on the table for a long time. In fact, in an SN letter dated 2-12-2000 captioned, "The sugar industry has to be competitive within eight years" it was argued that the subsidies would be terminated; only Mr. Chand and a few others believed otherwise. The record would show that the important question was not if the subsides would be terminated, but when they would be terminated. Now that the 'if' is behind us and only 'when' is outstanding, the WTO ruling could now shorten the time to EU compliance, which could be weeks and not months away. Many years have been wasted defending the indefensible; but as the old people say, "moon a run, 'till day ketch am".
Budget 2005: A comment
Posted April 8th. 2005
In perusing the 2005 Budget Estimates, I noticed in Table 3 (Budget Estimates, Volume 1, page 3) that the Central Government Summary of Revenue and Expenditure was organized to show significant increases in the collection of government revenue and significant increases in capital expenditure. Table A below contains a condensed version of Table 3 from the estimates. It shows the three year period 2003-2005. For the 2005 budget, revenue is shown as $80.5 billion; and expenditure is estimated at $86.4 billion, of which capital expenditure is projected at $31.7 billion, resulting in a deficit of $5.9 billion in 2005.
What is misleading about this presentation is that it overstates total revenue, it hides the increasing fiscal deficit, and it de-emphasizes the relative importance of donor funds and HIPC Relief, which together prop-up government spending, year after year.
In fact, what government calls total revenue of $80.5 billion is the total inflow of resources of which $51.8 billion is really current revenue, with the remainder of $34.7 billion consisting of grants ($6.1 billion), loans ($20.0 billion) and debt relief ($2.6 billion). By including international and domestic loans as sources of revenue, this approach is an 'accounting gimmick' that generates false accounting balances that are not worthy of a country's national accounts.
Since the accounting formulation in Table A is incorrect, I have reformulated the budget using an acceptable accounting classification that shows current receipts as a separate entry from the financing required to cover the deficit spending (Table B).
The first point to recognize in Table B is that government revenue is only $51.8 billion and not $80.5 billion in 2005 (Table A). An increase in government revenue of more than 50 percent in one year ($28.7 billion more in 2005, compared with 2004), is not plausible, when the government itself has signaled that economic growth is projected to be close to zero in a floundering economy with insignificant private investment. There can be no justification for such a high revenue number and the Minster of Finance should be asked to explain.
The second point is that the true deficit is not $5.9 billion, but a whopping $34.7 billion! This results from large capital expenditures and insufficient capital revenues that have been decreasing during the last three years, moving downwards from $2.0 billion in 2003 to zero in 2005. In order to cover the deficit of $34.7 billion, the government is expecting grants and loans from foreign sources, as well as loans from the domestic financial system and funds from the auction of treasury bills or bonds to domestic commercial banks, insurance companies and private savers. It is also apposite to note that the deficit in 2005 is larger than the deficits in 2004 and 2003, where it is acknowledged that an increasing deficit overtime indicates poor fiscal management, an event that some Directors of the IMF emphasized in a recent Guyana Report, 3-11-2005, which can be accessed at (http://www.imf.org/external/np/sec/pn/2005/pn0532.htm). Deficits of the magnitude shown here relative to the size of the GDP cannot be sustained, unless deep donor pockets of the IDB, CDB, and EU are continuously tapped. In this regard, these donors have been overly generous over the years, not withstanding the frequent calls of corruption and the plethora of scams while using project funds.
Thirdly, the main grant sources (Table C) are the European Union ($3.3 billion) and USAID ($1.0 billion), while the main sources for loans are the IDB ($9.3 billion), the CDB ($5.5 billion), the European Union ($3.3 billion), the World Bank (2.8 billion), HIPC write-off (2.6 billion), China ($1.8 billion) and India ($1.1 billion). Grants and Loans amount to $28.7 billion which are not trivial sums.
In a cursory review of the uses of capital flows, several issues should be highlighted. There are no capital expenditures identified for the Office of the Prime Minister, which has responsibility for energy and natural resource development. This ought to be the sector in the economy on which Guyana has to depend for its growth and development. Electricity costs of U.S 22 cents per kilowatt hour in Guyana as compared with U.S.6 cents in Trinidad indicates in part why some segments of the export sector is dying or is dead and why the cost of living is increasing. The increasing cost of oil imports would not make things easier. Yet the total absence of capital expenditure in natural resources compared with the $7.7 billion that Guysuco is expected to receive from the total of $31.7 billion is a clear signal of the political priorities, with no recourse for diversification-all your eggs in one basket. This, of course, is happening at a time when the profitability in the sugar industry is questionable, sugar markets are uncertain, sugar productivity is low and the cost per pound of sugar is almost three times the price in the open market. I think we are told Skeldon holds the 'magic crystals' and not necessarily 'Estate Demerara', which could go the way of the Caribbean producers who have taken a different path out of sugar. Only recently, St. Kitts after 300 years said they are moving on, noting that this was their last year in sugar. Do they know something that we do not, I wonder? Meanwhile, I am certain the Prime Minister knows the importance of mining, the only sector that has attracted some small investors, not because of government policies but because of the increasing world prices for gold and diamonds and the laxity in enforcement of our mining laws and poor management.
In the budget, the largest region, Region 4, a region with the most human capital and infrastructure, and with the greatest need, resulting from the catastrophic floods (1996-2005) that destroyed the assets and production base of many families, was allocated $92.5 million for capital works in 2005, in contrast to smaller regions, such as Region 6 with $197.9 million, Region 2 with $188.0 million and Region 3 with $147.8 million. Additionally, when I examine the total annual subvention of $16 million to all the Local Authorities in the 10 Regions (account code 6312, page 21) and note that the Ministry of Finance controls the vote of $336.4 million) for the payment of rates and taxes (account code 6311, page 21), this is a clear signal why our regional system is not working, as the central government has the final say in allocating these funds. This may be a good election strategy for the government, but it is bad fiscal and infrastructure management, aided by what appears to be willing donors that have failed to enforce their own policies of good governance, project efficiency and high quality performance.
Floods:If we are caught napping again
Posted January 29th. 2005
While there is no doubt that the impact of the above average rainfall in January 2005 and the subsequent coastal flooding of homes could have been worse, it is clear that the existing system used for the storage and drainage of water is below the safety requirements for the coastal lands adjacent to the Atlantic.
Letters in the press, especially those from engineers, have identified most of what has gone wrong at the technical, operational, maintenance and managerial levels. Action must be taken now to fix these problems before the next major test of the storage and drainage system occurs during the May-June rains, the time of the heaviest rainfall in Guyana. If we are caught napping again, the coast will be transformed into a community not preferred by many.
The laws concerning reserve lands must be enforced in a timely manner. No excuses must be accepted, as the public good for safety and survival must supercede private self interests. Persons living or business firms operating on those reserves or farm lands that impede the flow of water from canals or kokers must be removed immediately. Start the cleaning and dredging of all the canals from the forty-feet canal, which is now a shallow plate, to the last canal on the east and west bank roads. A priority list should be made to have the most critical canals maintained first, with a maintenance schedule set to have these canals cleaned and dredged at least once a year.
Kokers must be manned 24-7-365, and opened and closed at the appropriate times so as to facilitate efficient drainage and storage. The silt lodged in the outfalls from the kokers to the river and the silt lodged in the river channel to the Atlantic must be removed. Dredging of the river should also be undertaken based on an impact assessment. Incentives should be provided for the establishment of private maintenance workshops for water pumps used in the drainage and irrigation systems. Government should not attempt to provide this service as there are other services only they can provide, such as an upgraded meteorological office that will be responsible for providing timely information (an early warning system) to the public.
The political boundaries that separate the city of Georgetown from the east coast are only useful for political organization and direct representation. Using such a system for water control, however, would result in poor management and a highly disjointed system. What is suggested here is that the Georgetown City drainage and storage system, along with the adjacent storage and drainage systems on the east coast, should be managed as an integrated system.
Last year in a January 2004 letter, I wrote that ‘…Georgetown is in a mighty mess! Blocked drains and kokers; alligators in gutters, snakes in yards; mosquitoes galore; the putrid smell of rotting biomass; the bush-overgrown burial ground, a poor resting place for loved-ones; roads that are no longer passable, either on foot or by four wheeled vehicles.’ This outcome could very well be the experience for many over the next few weeks, if we continue to fail to understand the fragile nature of the environment in which we live.
In another section of the January 2004 letter, I noted that ‘…the government must provide the necessary incentives to make the recycling plant for plastics active. Now is the time to put in a container-return system or use a refundable fee method ($25-$50 per container); this should go a long way to changing the propensity of consumers to litter. This system already works for water bottle caps, water bottles and cooking gas containers; it should work for other containers as well. Furthermore, penalties for littering the city should be imposed, especially upon businesses that throw their garbage, including empty containers and spoiled goods, in alleyways.’
Only one project from this list has been undertaken and I applaud the city council for implementing the fines for littering, but the wider problems were not addressed. More disappointing has been the disappearance of the recycling project from the public debate. Meanwhile, it should be noted that chipped plastic has been used as an ingredient along side asphalt in road building materials and this should be examined in Guyana.
Finally, here is an untested idea from a non-engineer that may have some merit for further investigation by the many knowledgeable engineers in Guyana. Given that the population in Demerara has already encroached on areas that were once wet land used for the defensive storage of rain water, using the many dams and conservancies, I propose that a study to ascertain and determine whether or not man-made lakes, two on the backlands on the east coast and one on the back lands on the west coast, could provide an aggressive, long-term solution to our flooding problem on the coast. If such a project is technically feasible and economically viable, it will enhance the storage capacity for fresh water and provide better water control, as the natural lakes in the Essequibo do at the current time. The water authority (GWI) and farmers will have access to a ready supply of water and there could be opportunities for fish farming and boating, among other economic ventures. Excess water can be pumped out when not needed into the many rivers in Regions 3 and 4. This kind of project has been completed elsewhere and it is time we make the water in this country work for us, instead of against us.
RICE MILLERS’ LARGESSE
Posted January 10th. 2005
Rice millers who do not have sufficient working capital to pay paddy farmers must know that their paddy and rice inventories are being financed by small paddy farmers who may have to wait several months before they are paid in full. Most paddy farmers only collect part payment at delivery, along with post dated checks that are sometimes rejected by bank tellers, due to insufficient funds in millers’ accounts. In other cases, small paddy farmers may accumulate interest on their loans during the waiting period and millers do not have to be held accountable for such additional costs. This is a serious burden that small paddy farmers carry in Guyana and this approach to financing must be changed, as it is patently unfair.
I raise these issues based on a comment made by Mr. Beni Sankar in your SN article 12-24-2004, in which he states, ‘The only thing that is halting us now, is the working capital since the price of rice is not looking too bad’. Given that the bank gave a generous “largesse” to Mr. Sankar, I hope the bank will ensure that small paddy farmers are not squeezed again as the bank can stop this unfortunate situation, using a different financing arrangement. Equally also, I hope that the other large rice millers/exporters, who are in the same boat as Mr. Sankar and attracted a discussion by Mr. Alan Fenty in one of his ‘Frankly Speaking’ columns, have been given the same wealth transfer as Mr. Sankar. Finally, I hope the confidentiality argument is not used by the bank to cover down this important issue of receivership, loan restructuring, equity and fairness. The Rice Producers Association should be taking a more aggressive approach to this problem.
Is the C-tax increase part of the strategy to satisfy the IMF?
Posted December 15th. 2004
Coming at a time when the economy is being hammered by stagflation, which is rising prices and falling output, it is hard to believe that higher consumption taxes are expected to be imposed again from January 1, 2005 (SN article, “C-Tax to rise on alcoholic beverages” dated 12-13-2004). This is not a good way for any weak economy to start the New Year. Yet one should suspect that higher taxes had to come from somewhere, if the promises made to the IMF are to be satisfied about maintaining sustainable debt levels in the wake of increased government spending on questionable projects. Only recently, Minister Kowlessar warned us that, "Whatever it takes we will do it; we will try our best to keep within sustainable limits" (Article in SN, 11-17 -04, “Govt working towards meeting IMF debt conditionalities –Kowlessar”. Is this tax increase part of the fiscal strategy to satisfy the IMF?
It should be obvious that higher beverage taxes will encourage smuggling along the coast and border towns as well as encourage non-taxable, “back-dam production”. This tax hike is not a solution to the growing fiscal deficit in the country; rather, this tax increase will enhance the smuggling of beer, rum and other beverages from border countries. Smuggled fuel and alcohol, like smuggled wheaten flour in the 1980s, will further distort the incentives and the willingness of investors to work in the beverage manufacturing sector.
Tax revenues collected from companies such as BDIH and DDL will fall, as the demand for alcoholic beverages from these firms decline when these taxes are ultimately passed to consumers. Profits and profit taxes for these firms will fall as well. In the meantime, the incentive to smuggle will be given a boost, adding to the headaches of all those government agencies involved in protection our borders and collecting government revenue on imported goods. And by the way, is this another chance for the already underpaid government workers to become corrupted by accepting under-the-table, non-taxable allowances? Smugglers will try their very best to get the advantages the authorities have provided them in this round of tax increases, for smuggled alcohol is no different than smuggled fuel, or even smuggled wheaten flour.
Under the new tax regime, BDIH might not be as profitable an undertaking that is ripe for foreign intervention as currently speculated, for patriotism of a negative kind may do the job to keep BDIH a local entity, given the expected tax hike. Unless of course, special incentives are provided and the supply of energy which is a high cost input in Guyanese manufacturing is processed as an inter-company transfer at Trinidad and Tobago base prices.
In the meantime, stock up you drinkers; you have two weeks before the tax hammer falls. So “fire-one” in memory of low alcohol prices this Christmas-- it may very well be your last! Next, take one for the road? Nah! Drink coconut water instead, for it is tax free and you cannot be charged for drunk-driving. Finally, raise a toast to the hope that Government will look at this tax increase again. Merry XMass!
For Guyana's sake, I hope the donors are not distracted
Posted November 22nd. 2004
I read the responses the Minister of Finance gave in relation to satisfying IMF conditionalities (SN 11-17-04). From it, I learned that the feasibility study for the Berbice Bridge is completed and that the project is feasible. Yet one gets the impression that the IMF and many decision makers in Guyana have not seen the feasibility report. If the feasibility report is available it should be made public, for this report cannot be a secret document. Tax payer money is involved and the Guyanese people need to know how their money is being spent.
Meanwhile, it should be pointed out that a project can be technically feasible and at the same time not be viable from a financial or economic standpoint, given a set of cost constraints and the lack of an effective demand for the product or service to be provided. In other words, technical feasibility is a necessary condition for partial success, but it is not a sufficient condition for investment decision-making, if all the other considerations are not included, such as the debt service payments and the willingness and ability of consumers to pay for the good or service. The published study should include such an analysis, if another 'white-elephant' (SN letter, 10-4-2000, 'Will Berbice River Bridge be another rushed project') is to be avoided.
On the subject of the feasibility study for the cricket stadium, the same rule applies as in the case of the bridge, but the concern one should have is related to the comment made by Mr. Kowlessar, Minister of Finance. He said, 'We are aware that there is need to do a feasibility study, as the IMF has required, and we are proceeding with that and as soon as the results are available, we will submit the report to the relevant authorities'. He also added, 'that the project was very important to Guyana and will definitely proceed. "Whatever it takes we will do it.'
My understanding of investment projects is that feasibility studies and financial and economic analyses are first completed before one begins construction. This is certainly not the case as work at the site for the stadium has already commenced even without knowing the findings of the study. If the IMF is worried about Guyana's debt levels (SN 11-14-2004), it seems they have to add another US25 million to the national debt and stop worrying, for as the Minister says, this is a done deal. We will see if the IMF is blowing hot air, or if it has remedies that include enforcement.
Finally, we all know that the donor community, which applies less strict lending and grant criteria than the multilateral financial institutions, have been more than generous to Guyana, writing off a large part of Guyana's foreign debt under the HIPC programs administered by the IMF and World Bank. Only recently, the EEC approved grant money for housing, which should be a more transparent arrangement than providing hidden sugar subsidies for Guysuco. All these events happened even when Guyana did not show signs of a robust economy over the last few years. In fact, negative economic growth and non-competitive export industries that survive on dwindling subsidies are not symbols of economic dynamism. Rather, they are symbols of lost opportunities, inflexibility and an inherent dependency syndrome that must be broken for progress. For Guyana's sake, I hope the donors in the short-run are not distracted, diverting their scarce resources to the many other less fortunate and less endowed LDCs than we are in Guyana.
Wag the Dog
Posted November 10th. 2004
Sometime in high school, one of my teachers taught me the concept of “ the tail wagging the dog”. Stabroek news article captioned, ‘Albion sugar workers return, SN 11-4-2004’ had me reflecting on this idea.
The SN report stated that after cane harvesters walked off the job and were expected to return to work following an agreement reached last Thursday between GAWU and Guysuco, the workers refused to return to work until Monday. In fact, the SN article stated that on Monday, only 50 percent of the cane harvesters turned up for work. Central workshop workers and factory workers also were off the job, too.
Are there any corrective measures? Who should be held accountable for such action? Are there any penalties? Is this holiday with pay? What is the role of the Chief Labor Officer who chaired the meeting and had oversight for the agreement?
The other sections of the SN report were also revealing on the question of productivity decreases instead of increases; the payment of one day’s pay for achieving weekly targets that have no bearing on cost control and sustainability of the industry. Is this the industry that the government wants to invest US$100 million? Do you hear laughter? Keep wagging-the-dog, cane-harvesters, for you are more than right.
The Media and Guysuco
Posted October 28th. 2004
In the midst of pleading with the European Union to think again about cutting the subsidy paid to sugar producers, it is laughable to see the Unions and Guysuco agreeing to pay “incentives” to sugar workers, when the cost of sugar production in Guyana is higher than the current and expected price for sugar. Such a decision will result in losses and the owners, the people of Guyana, are being taken for a costly ride.
Most surprising is to read that President Chand commends the press (SN 10-26-04) for their support, when the press has not done its job of reporting on the industry losses and the unbalanced influence the union has over the company. I ask the Public Accounts Committee of Parliament to make available to the press the annual reports of Guysuco from 2000 to 2003 so that the public can be informed of the state and performance of this industry. I ask the media to take their job seriously and I look forward to being enlightened.
Constitutional Change in Guyana
Posted September 8th. 2004
Stabroek news editorial (8-31-2004), "We did not need a Presidency” and the reply by Mr. Haslyn Parris and Rupert Roopnaraine (SN 9-3-04), goes to one of the core Constitutional weaknesses in Guyana. Guyana will go nowhere if this constitutional problem is not solved, for it causes the numbing of the national consciousness, choking the few remaining strands of life in a land that is being poisoned by its own folly. "
The 1980 Constitution centralized most of the power in the Office of the President, rendering the opposition in Parliament irrelevant to the democracy. An Executive President who is both Head of State and Head of Government, and (s)elected through ethnic voting patterns is one recipe for a failed state. In this kind of political jungle, the perception that the government uses the instruments, institutions, and resources of the nation to benefit its supporters would raise questions of accountability and good governance. Unfortunately, under current constitutional arrangements, there is no separation of powers, there is no “ultimate umpire” and there is no place for quiet reflection. Political rivalry trumps everything and nothing is conducted in the name of the national interest, a function exclusively reserved for the Head of State. By merging the job of Head of State and Head of Government, as in the 1980 Constitution, we have inadvertently institutionalized conditions conducive for a conflict of interest to the detriment of the national interest and the public good. In short, we are forever locked in election mode 24-7-365, with no possibility of extricating ourselves from the harsh political rhetoric that paralyzes the nation.
Not surprisingly, therefore, the last twenty-five years, 12 under the PNC and 13 under the PPP, have seem us, a fragmented nation, sipping our own home-brewed ‘political-hemlock’ from the same calabash. We do not need an Executive or a Ceremonial President. Instead, we need a President whose job is to ensure the national interest is served at all times, and that public institutions, such as the Judiciary, Bank of Guyana, Police, Public Service and Utilities Commission, UG, Audit, Tender Board, Procurement and Land Committees among others, function professionally and remain independent of the political dog-fight.
As I suggested in a previous SN letter, “…the job of Head of State (a non-political post)… must be separated from the job of the Head of Government, the Prime Minister, who is political, but works as one of the Captains. Otherwise, the ultimate umpire will play as the 13th player on the winning team and political stability and the building a more vibrant democracy will forever be delayed...”
Most Guyanese, I believe, agree with the idea that the imposition of an executive presidency in the 1980 constitution was, is and will in the future be wrong for Guyana. However, talking about this problem and taking no action to correct it, some twenty-five years after its imposition, suggests that we as a people inhabit a mentality that enjoys displaying our underachievement, as we bemoan our lack of progress. The 1980 Constitution has in part stymied the building of a cohesive national system that embraces and celebrates our cultural, religious and ethnic diversity, as it indirectly forces citizens to migrate to places where their civil rights, justice, fairness and opportunities for personal progress are guaranteed, and where their offspring can achieve and flourish. I plead with Guyanese to make the first move: change the brew in the calabash!
A reply to Prime Minister, Mr.Samuel A.Hinds
Posted June 12th. 2004
I refer to the letter written by the Honorable Prime Minister, Mr.Samuel A.Hinds, of June 6, captioned “No government ‘virtually destroyed ‘the bauxite industry” and would like to make a few observations.
Firstly, Prime Minister Hinds has agreed with the main points of my letter in regard to the state of play in the bauxite industry and Linden. For example, I wrote in my letter of June 2, 2004, that “The total export value of bauxite in 1992 was US$97.1 million, accounting for 27 per cent of total exports. By the end of 2002, the total value of bauxite exports fell to US$35.3 (million), a loss of US$61.8 million in export sales, as compared with what was earned in 1992.” In his reply, Mr. Hinds writes, ‘Yes, the value of bauxite products continued to decline from 1992 to 2002…”. This statement by the Prime Mister supports my position.
On the subject of the alumina plant in Guyana, I wrote that “the Government of Guyana should find the time and resources to explore this opportunity with the PNM Government and the company Alcoa,…”. In his response, Mr. Hinds endorses this view by pointing out that President Jagdeo will “hold bilateral talks with Prime Minister Manning and among other things explore further a path towards an alumina plant in Guyana”.
I also wrote that “Hundreds have lost their jobs, and many are on the bread line.” In response, Mr. Hinds confirms my position when he writes, “Yes, the reduction in numbers employed has continued ever since the first big retrenchment in 1983,…”.
Given these statements, it is clear that the Prime Minister, whom I know to be a decent and honorable man, may wish to clarify his position that I alone am culpable of a “jaundice view” of government’s programs.
In the second part of his letter, the Prime Minister raised a number of interesting issues that I did not cover in my letter, but because of their relevance to the subject, I wish to make a few comments. In this regard, the Prime Minister wrote of a number of research, feasibility studies and possible contracts in bauxite. I was surprised by these statements, because of the comments raised by Mr. Sylvester Carmichael, who is equally qualified as the Prime Minister on matters of bauxite in Guyana. In an SN article of May 30, 2004, Mr. Carmichael said, “he was bowled over by the recent budget speech that referred to a company expressing interest in 35% extractable bauxite deposits from the Pakaraimas. He thinks the probability of anyone developing these deposits in the current state of the world bauxite resources and planned developments in the industry, is close to zero.” Shouldn’t this be clarified?
On the subject of losses in bauxite, the Prime Minister noted that, “From the mid-1970s to now, despite the hard work and sacrifice of many (including yours truly), the sad fact is that bauxite lost money, lots of money, some years even being a net loser of foreign exchange. You may speak with officers of the Bank of Guyana during the 1978 to 1992 period.” There are several issues here. First, I do recall reading a letter in SN from Mr. Carmichael in which financial statements were discussed; but when one speaks of financial viability in bauxite one has to exclude a number of social costs that were inadvertently imposed, expenses a foreign private company will not carry, unless its profitability is large enough to bear that cost. Nevertheless, the social costs of Linden were passed into Guymine books and were constrained to a narrow financial construct. Second, one must complete an economic analysis that places the entire operation in its proper context. This is something that must be completed so that comparisons are on the same basis; otherwise, the distortions will give an inaccurate and unfortunate picture. By the way, on the matter of excluding unnecessary social costs from their operations, I in the past admired the political sagacity of Guysuco’s management in which they kept most of the social costs out, until recently when union domination prevailed. We all know the consequences, even without including the marketing problems and the expected loss of European Subsidies. The question is: in what ways are Guysuco similar to and different from Guymine? This is worthy of a Guyana prize.
But a more fundamental point has to be made, noting that Prime Minister Hinds identified the mid 1970s as the turning point for bauxite. On this matter, he is right, for around that time the cost of fuel had a significant negative impact on bauxite production, which is an enormous user of energy. At US$2.00 per barrel prior to the first oil crisis in the 1970s and with bauxite ore that was near the surface and relatively close to the plant, energy cost was not a significant share of the total cost of bauxite production. There were twenty-fours of electricity in most buildings and even exporting some electricity to Georgetown can be remembered. Today, with oil at $40.00 per barrel, the same old technology in use, thicker overburden, longer distances to the mines, among other concerns, we know that the business has to be reconfigured. And for this to be achieved it must start at a policy level.
It is therefore within this context that I strongly believe that the energy and natural resource sector in Guyana requires a full time Minister. I wrote on this matter before; and to have this portfolio without a Minister, while many other sectors with less impact on exports and employment have in some cases more than one Minister, this is certainly reflective of flawed governance and national neglect.
The economic growth rate Guyana desires and the poverty reduction we need cannot be attained solely from the agriculture sector, for it requires a different mix in which mining and energy must have a larger space, with a better vision and a strategic plan. A Minister for Tourism, for example, without a Minster of Energy and Natural Resource cannot be a serious posture when energy and natural resources account for more than 40 percent of GDP and tourism less than 2 percent. Where is the balance? Where is the strategy? As Guyanese vote with their feet, our neighbors find employment in our mining sector, even as our own citizens engage in illicit activities in many border towns and villages.
Mr. Hinds, you have my sympathy, for I believe you are overburdened, working as Prime Minster, with oversight functions for Energy and Natural Resources, among other responsibilities, including your frequent acting appointments as President 3 or 4 times per year. No other Minister has such a portfolio or scope of work. So Mr. Prime Minister my question to you is this: shouldn’t the Government do better?
Thank you Prime Minister Manning
Posted May 29th. 2004
Coming at a time when the Government of Guyana has virtually destroyed the bauxite industry in Guyana it is heartening to note the special concern of the Government of Trinidad and Tobago batting again for us by sticking its neck out in asking for the construction for an alumina plant for Guyana (SN May 28, 2004). Thank you Prime Minister Manning for lighting a candle in the darkness!
The bauxite industry has certainly not been a priority for the Government, for its importance in the economy has been allowed to deteriorate at an alarming rate. The total export value of bauxite in 1992 was US$97.1 million, accounting for 27 percent of total exports. By the end of 2002, the total value of bauxite exports fell to US$35.3, a loss of US$61.8 million in export sales, as compared with what was earned in 1992. Hundreds have lost their jobs, and many are on the bread line. More troubling is the fact that the program, “LEAP”, the hope for Linden, has no legs and it is more than likely mirroring the President's Youth Choice Initiative for ineffectiveness. The European Union which funded this project must do an evaluation and correct this problem, even if the government is not so inclined.
Meanwhile, the Government of Guyana should find the time and resources to explore this opportunity with the PNM Government and the company Alcoa, for this is the closest we have come to establishing a fully integrated CARICOM industry since the 1970s.
The Governance Game in Guyana
Posted March 24th. 2004
Reading the newspaper on current Guyanese Governance concerns, I see a parallel to the game of cricket, which I hope the Editor will allow me to share with the many SN readers.
In a serious cricket game, the appeal, “How is that, Umpire?” is a hopeful plea of expectation against the best or worst batsman in the world. The aim of the appeal by the opposing side is to present an opportunity for the rules of the game to be applied, without fear or favor, by the only independent authority in the game, the umpire. Certainly, if the umpire is biased and is playing as the 13th member of either team, the game is over before it begins. Meanwhile, the teams should only win or secure a draw by using a set of fair and efficient strategies that fall within the rules of the game. The purpose of the umpire’s action, therefore, is to preserve fairness and render final judgment, ensuring at all times that the single winner is the rules of the game and nothing else.
Unfortunately, the rules of the Governance Game in Guyana are not properly designed and the designated umpires do not have an independent existence, because of inherent institutional weaknesses, the lack of human and capital resources and insufficient intellectual curiosity by those in charge. For example, the 1980 Constitution, which was ridiculed prior to 1992 as being poor and needed to be changed, has now been endorsed, cuddled and defended as good. The Office of the Ombudsman, an important umpire in our system of Government has not worked and has been nailed shut for a long time. Many of the troubling concerns of public trust, safety, confidentiality, transparency, accountability and the integrity of public officials that are now crippling the state could be resolved after passage through that office, if it is properly financed and given the freedom and mandate to do its work.
We change the umpire for every ethnic selection (Election Chairman), but that public officer remains just as ineffective as the last Chairman because the rules of the game are unchanged and we do not learn from our mistakes. Other umpires that are in poor shape are the Judiciary, the Bank of Guyana, the Auditor General, the Police, the Public Utility Commission, the Tender and Procurement Board, the Teacher and Public Service Commissions. Besides, an appeal by the public to any one of these institutions for redress, “how is that, Umpire?” would in most cases result in long delays that could take years of pain and unnecessary stress. Recent reports prepared by several foreign agencies identified a litany of woes that should be troubling to any serious government. In particular, reported cases in the press of drug busts in the UK, the USA (Baltimore and New York) and in Africa of illegal substances shipped from Guyana, or allegations of ‘death squads’, the import scam, gold smuggling of some USD$10.0 million with no one charged in Guyana, are symptomatic of a wider concern of the inability of the local authorities to follow through on these criminal matters.
Sadly, the job of the ultimate umpire in our system of government is vacant. This is because the 1980 Constitution merged the functions of the Head of State with that of Head of Government into the Office of the President. Since voters select ethnically challenged leaders, where the position of Head of State is not really contested, a critical change to the Constitution is suggested to deal with this problem: the job of Head of State, who should be answerable only to the Constitution (non-political), must be separated from the job of the Head of Government, the Prime Minister, who is political, but works as one of the Captains. Otherwise, the ultimate umpire will play as the 13th player on the winning team and political stability and the building a more vibrant democracy will forever be delayed, as a criminal state emerges and honest, hard working people vote with their feet. The ultimate umpire should be able to examine with the assistance of Ombudsman and other relevant expertise, the matters concerning the Minister of Home Affairs and the Secretary to the Treasury, among others cases of public trust, corruption and confidence.
On the subject of the rules of the game, we all know that the one day game has a different set of rules as compared with the rules of the test match. The change in the rules results in a different set of game strategies and team selection objectives. For instance, the one day game only yields one outcome (win/lose), while the test match has two, (win/lose, or draw).
In Guyana politics we delude ourselves into believing that we play a democracy game, but we know this is never the case, for we understand that our games are about ethnic selections. They are never about moving the country forward and expanding opportunities for every citizen. Instead, in the heat of the (s)election campaign, the focus is gradually changed to ethnic questions, forcing most citizens into a defensive mode by (s)election day. Cooperation disappears across ethnic lines, with the (s)election results, known before hand, mirroring the population ethnic distribution. Coalition and consensus government across ethnic lines is therefore a lost cause, only to be considered in times of crisis, as is the situation with our border problems, or at times when other quick fixes are needed, such as the social partner experiment, the three-wise-men, the Carter Center, the Commonwealth teams. All these are put together in haste for the wrong reason, and not unexpectedly they generate only a time-out/ water-break and no permanent solution. The alternative to this weak governance structure is to build strong national institutions that are independent, accountable, professional, inclusive, and merit driven. This must be given top priority, in order to change the non-responsive environment of the failed state.
Light meters, instant play-back and the third umpire are all some of the positive changes made to assist the umpire in getting the correct decision. In the case of Guyana, getting the correct decision that takes into account our diversity, but honors our common interests, will only materialize when we separate the role of the Head of State (the President) and the role and functions of the umpires from the role of the Head of Government, the Prime Minster and the Cabinet. This is one of the first steps out of the deep hole we have collectively dug for ourselves.
Concerns in a Troubled Land
Posted January 21st. 2004
On a recent visit home, I witnessed many concerns in a troubled land. First, even though the garbage trucks seem to be doing some work around some parts of the city, Georgetown is in a mighty mess! Blocked drains and kokers; alligators in gutters, snakes in yards; mosquitoes galore; the putrid smell of rotting biomass; the bush-overgrown burial ground, a poor resting place for loved-ones; roads that are no longer passable, either on foot or by four wheeled vehicles. Is this the garden city? Find another name, and do so fast!
Yet, one good spark of hope is the recycling plant for plastic, aluminum and other containers. The government must provide the necessary incentives to make this project active. Now is also the time to put in a container-return system or use a refundable fee method ($25-$50 per container); this should go a long way to changing the propensity of consumers to litter. This system works for water bottle caps, water bottles and cooking gas containers; it should work for other containers as well. Furthermore, penalties for littering the city should be imposed, especially upon businesses that throw their garbage, including empty containers and spoiled goods, in alleyways. Meanwhile, could someone say what share of the city budget is allocated for cleaning the city, paying salaries and meeting other costs? Is it true that in the past, the Mayor’s job did not attract a salary? All these costs should be known by citizens, for they pay the taxes and they must know how these taxes are spent-- transparency and accountability.
Second, congratulations to the organizers who made it possible for the contestants of the recent Ms. Guyana/Universe to serve the poor at the Dharm Shala Christmas party. The beauty in serving the poor is the best crown a Ms. Guyana can win and wear, for each contestant can claim an unchallenged first prize. This kind of event should be made a permanent segment of the Ms. Guyana show and also be part of Sharma TV program when he is making his regular distributions to the many poor and punishing people in Guyana today.
Third, is it true that both GPL and G.T&T are planting poles side by side or on opposite sides of the same street? Is there no formal agreement between these two monopolies for them to cooperate in the best interest of the public? Durban Street seems to be one place where this madness is taking place. This problem is a job for the Public Utilities Commission, but they may be ‘out to lunch’, since G.T&T and GPL are, respectively, partially and fully owned by the same owner, the government. I wonder where Guyana Water Incorporated, another government owned business, will plant their poles for supplying electricity to their substations for water distribution and sewage disposal? Public utilities cooperate and do not compete with each other, as this is cheaper for all, including consumers, but only in Guyana can we experience such an eye sore and high cost chaos.
Fourth, much of our history is being consumed by fires in Guyana and the losses are unacceptably high. A walk down Water Street from New Market Street to burnt-out Auto Supplies is a good reminder of what has been lost over the years and how long replacements take. What we need is to professionally investigate a rational, risk assessment approach and finance a program aimed at reducing the probability of preventable fires. Sadly, the ‘blame-game’ and ‘last-lick’ is in play, trapping us in our own self-made prisons. We need to break new ground.
Finally, how do you cope, when public institutions do not work? Dreams and hope for a future move off in different directions. Crime has a best friend in no punishment. Too many road deaths, homicides and suicides-- conflict resolution? Nah, final solution, for life must be very cheap in a land where it is always someone else’s fault, be they dead or alive, in charge or not. So in silence, many contemplate flight, nurses and teachers, the young and old, they leave with much untold, for the promise of home is now the promise of a distant land.
With every thing on the rise (bills for electricity, water, rent and food), except good paying jobs, where could you turn as a silent sufferer? Politicians, Priests, Pandits and Professors, all who should have the tools to point the people in a positive direction are perplexed. Is this the land of potential and endless possibilities? If the answer is yes, then end the pain and suffering, declare a draw now, and start over, Guyana!
GUYSUCO:
Who is in charge?
Posted September 14th. 2003
Establishing who is in charge of the sugar industry in Guyana is never in doubt, for one only has to read the many statements made by the President of the Guyana Agricultural and General Workers Union [GAWU], Mr. Komal Chand, a PPP/C Member of Parliament. Coming at a time when factories, are closing in Cuba, Barbados, Trinidad and Tobago, because of their inability to be competitive, Mr. Chand instructs all that his union will oppose the closure of any Demerara sugar estate and will be at the forefront of resistance against privatization. The evidence of GAWU power is shown below in Table 1, where wages costs have increased by over 163 percent between 1992 and 2001, while sugar production only increased 15 percent, the price per ton of sugar declined by 21 percent, and profits moved from G$394 million in 1992 to losses of G$1, 235 million in 2001.
Given that declining sugar prices are expected for the medium to long term, and the case by Brazil, Australia and Thailand to end EC welfare payments and terminate special marketing arrangements will cause a further decline in Guyana sugar prices, the power of GAWU may have already pushed GUYSUCO over the falls. In 1992, labor costs accounted 39 percent of revenues and by 2001 labor costs amounted to 67 percent of revenues, with GUYSUCO paying no taxes, dividends and or export levies to the treasury at a time when the national deficit is increasing. With 22,000 workers on the books in 2001, the average monthly pay is $48,564.00, an amount many qualified workers in Guyana would be happy to receive.
Meanwhile, the statement by the Chairman of GUYSUCO, Mr. Vicram Oditt provided some insight into the thinking in the industry. His explanation for the losses in 2001 is attributed to exchange rate movements, an event over which GUYSUCO has no control and can do nothing to change now or in the future. His reference to the Skelton project of US$110.0 million indicates that 50 percent of the funding will come from the Multilateral Financial Institutions, perhaps the World Bank and IDB, and 50 percent from land sales and self generated funds. While one could perhaps be concerned about multilateral funding, one must be skeptical about raising US$50 million locally from GUYSUCO land and residential property sales in housing and land markets that have seen values plummet and mortgage companies worried about their investment portfolios. Besides, the view that GUYSUCO can generate funds internally is also overly optimistic, especially in the presence of an insatiable union that is out of control. The lament by Mr. Oditt of the lost of 21 managers in 2001 is a headache faced by all employers in Guyana, but coming at a time when significant investments are being considered, this outcome should be of grave concern to investors. Indirectly, the Chairman has signaled that mechanized husbandry is the way around high-cost labor, especially in the Demerara Estates. This approach may have some merit, for cutting labor-cost is part of the solution, but GAWU will undoubtedly show who is in charge in an industry where profits and paying taxes are no longer signals of success.
The
sugar-coated playing fields of Guysuco
Posted July 11th. 2003
Considering that the sugar industry is a loss making enterprise, unable to breakeven, even with local and foreign subsidies that are shortly to disappear, I was not astonished to read of the massive welfare transfers to sugar workers, in an arrangement with an aggressive union and government. When taken together, these combinations of agents and principals have ensured a noncompetitive sugar industry, one that consumes a far greater share of its output in the form of worker-benefits at the expense of its long run viability. No private company could behave this way and survive, but such is the outcome in a non-accountable economic system in which politics trumps everything else and there is no one, not even the government, with a concern for the national interest. P> In a letter captioned, “Dev is trying in vain to smear Dr. Jagan” written by Mr. Robert Persaud, Information Liaison to the President, he gleefully told Mr. Ravi Dev, Leader of ROAR, that the PPP/C government was responsible for ensuring the rapid advancement of sugar workers’ benefits and working conditions. Among the benefits he listed are the following: At the commencement of 1992, employment costs were $2.7 billion, now they are over $10 billion. This is a 270 percent increase in wage cost over the 1992 figure, confirming that the government was more than generous to sugar workers than at any others time when the capital base of the company was questionable, markets were dwindling and prices were falling. Such is the power of the union over a paralyzed government and a management team that has no wallop, due to contractual commitments and continuity concerns that are beyond their control.
In a land where the government runs massive deficits, Mr. Persaud informs us that Guysuco no longer paid the sugar levy and presumably paid no import duties, profit or consumption taxes. Yet anyone in Guyana can argue convincingly that Guysuco collects subsidies from a private company (see Houston Sugar Estate at the crossroads after 100 years, SN 7-8-2003), the treasury and Europe, a transfer that no other business in Guyana receives. Maybe all private sector companies should get on this lush playing field and our problems of attracting private investment will disappear. Mr. Persaud also noted that wage increases have been higher than the rate of inflation, while annual and worker production incentives are tax-free. Additionally, sugar workers received an average of 40 days tax-free pay per year, with 28% of their earnings being tax-free. Add to this the benefit of free transportation to and from work, free cutlasses, files, forks and footwear. Four days guaranteed days out-of-crop work, leave allowance of one’s month pay, full payment for workers attending Trade Uni