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Sluggish economy did not start five months ago – President Granger
– warns of long haul on recovery route
By Leonard Gildarie
The new coalition Government is fast approaching six months in office and it has not all been honeymoon.
The economy is continuing its struggles from a string of poor performances at the sugar estates (with a hint of fortunes reversing), falling gold prices and a rice market that is causing rice farmers major headache.
On the Point: President David Granger rapping with senior reporters, Leonard Gildarie (KNews); Paul Moore from NCN and Press Officer from the Ministry of the Presidency, Mark Archer.
The People’s Progressive Party (PPP), in opposition for the first time in over two decades, has been more than reluctant to allow the coalition time to settle.
With the Venezuela border controversy taking centre stage, there has been growing complaints about the slowdown in the economy.
On Friday, during a recorded interview with media workers, President David Granger was grilled about the perception that the economy is on a downturn.
He agrees that the manufacturing sector is sluggish but insisted that the economy could not have slowed down in the last five months. Rather the decline started way before that.
“We need to look at the structure of the economy and as I often said, we depended on the six sisters for the last 100 years.”
The Head of State would of course be referring the main foreign earners – sugar, rice, gold bauxite, diamond and timber.
“And we have had some structural problems, as long as we have to continue to depend on those six sisters, we are going to be susceptible…going to be vulnerable…and we are going to suffer from the fluctuations that will always affect commodity prices.”
According to Granger, it is a fact that gold prices have come down considerably after a four-year record run.
The new administration, after a number of appeals by miners, had agreed to drop the fuel tax and has granted waivers on a number of spares and supplies for the sector but it may not be enough as prices remain low and costs high.
“….And there is nothing that the Guyana Government can do to maintain gold prices. The answer will have to be to restructure the economy in the middle and long term to shift the focus away from the six sisters.”
Granger explained that this shift in economy, more than ever now, will have to demand more downstream or value-added activities with a significant emphasis to be placed on agro-processing.
Instead of boatloads of cassava and plaintain being taken out, Guyana can seriously start thinking about introducing packaged chips using even breadfruit. The fruit juice market would also be an area policy makers would want to take advantage of.
The President expressed unhappiness about the volumes of lumber leaving the country instead of the more downstream processing like veneer, flooring, doors and windows being produced.
Guyana has the potential to also develop its jewelry industry, some of the finest in the world, instead of just exporting or smuggling it.
“We need to have an economy guided by entrepreneurs and not just traders. People who will invest in downsteam and manufacturing.”
The President admitted that it is a fact that the manufacturing sector has remained sluggish. He warned that citizens should not expect a sudden shift of fortunes in the near future.
The structural issues will have to be addressed.
“This is going to affect us for a long time; until we get off of the six sisters. The fact is that the commodities are now facing low prices on the world market.”
With Parliament prorogued late last year and national elections called in January, state contracts had slowed amidst the campaign activities.
The underground economy, which had played a crucial role in propping the buying power, had been taken a beating with authorities making several high profile arrests in the drug trafficking arena and even in gold smuggling.
Indeed from consecutive budget reports starting back in 2013, the economy had shown signs of a slowdown, recording 5.2 percent that year and dropping to 3.8 percent in 2014.
This year, growth is not likely to surpass 3.4 percent, a cautious government has warned in its mid-year report. (Leonard Gildarie)
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