A spanking new ivory-coloured Premio was ahead of me in the line for petrol at the filling station. The purchase was quick; in less than one minute he was gone.
It was my turn. I look at the meter and noticed that the purchase before me was a mere $1000, just more than four litres of petrol. A person driving a $3M vehicle was only buying $1000 in gasoline.
The pump attendant noticed my interest. He said, “Dem man can hardly afford to put gas in their tanks. Every month, they have to pay the car dealer. Things tight!”
Not only are things’ tight’ in the economy, but members of the public are overextending. People are borrowing heavily to finance consumables and durables. The banks are now on a lending spree. They are lending for school supplies, they are lending for people to celebrate Mashramani; they are lending for people to enjoy themselves during the Independence Carnival; they are lending for Christmas purchases; they are lending to buy vehicles; they are lending to buy houses, they are lending to furnish the house; they are lending to paint the house, they are lending for UG fees; they are even lending for vacations.
Doctors, nurses, teachers, police, soldiers, labourers are borrowing. Young, middle-aged and old are borrowing. Organic growth is slow in the economy and therefore the banks have created new packages for borrowing. Every month the bank installments have to be paid.
Persons not only have to pay the banks, they are also indebted to the hire-purchase companies. They call promptly each month when the installments are late. Some of these hire-purchase companies have also become loan agencies, lending money to their clients, with interest. Some car dealers have joined the bandwagon. They are offering hire-purchase also. They give you the car and you pay them each month.
Guyanese people are borrowing left, right and centre. And regardless of what happens in the economy, many of them will find out sooner or later that they are overextending themselves in debt. The next thing that is going to happen is that someone is going to drive up to a petrol station in a SUV and ask for $500 in petrol, because that is all he or she can afford to put in the tank.
The public has to be wary when the government speaks about private sector credit. The growth in private sector credit includes all these various financial packages. Private sector credit is also being driven by property speculation. You just have to read the classified advertisements or try buying a property and you will realise that property and land prices have skyrocketed. Foreigners are buying up real estate and this has caused an escalation of property prices.
There is a mad rush for investments in the oil and gas sector. But this sector has limited potential for local content growth. Most of the major contracts for the supply of capital equipment and operational supplies have already been awarded. Yet, more and more people are building facilities under the presumption that local content will expand.
The monies from oil and gas investments are not going to filter down. Many of these firms are going to go bust; many of those being trained will find jobs hard to come by. All of these people who are overextending in their borrowing will find themselves in deep problems. A financial crunch is in the making.
The half-yearly report paints a different picture of a rosy and growing private sector. When the bills begin to roll in and the anticipated local content does not materialise, that picture will change, and change dramatically.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper)
Sep 21, 2019The inaugural Archery Guyana’s Seven Seas Indoor Championships 2019 was held on Sunday September 15that the National Gymnasium. Sponsored by Seven Seas, the competition shot off at approximately...
Editor’s Note, If your sent letter was not published and you felt its contents were valid and devoid of libel or personal attacks, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]