Oil revenues will not save this country. A sound economic model will. Unless the problems in the economy are fixed, no amount of oil revenue is going to make things easier for the small man.
One of the disappointing aspects of the ruling APNU+AFC campaign, thus far, has been the scant attention which is being paid to the economy. And one has to ask why there is such Spartan discussion of the economic model and economic plan which is going to be used to spend oil revenues.
The economic model pursued by the APNU+AFC is no different from that which was pursued by the PPPC. It is about taxing, borrowing and spending. The economy is said to have grown by 4.7% in 2019 but that growth was due mainly to the performance of rice, the Cuban arrivals and construction, the latter related to oil-related investments.
In the meantime, concerns are being expressed about expenditure management. One letter writer pointed out that the government is spending $800M more on hosting national events. This could have built 200 houses for poor persons.
The letter pointed out that $2.2B more is being spent on meals. This could have built another 550 houses for the poor. The government is supposed to be going “green”, yet $1.3B is being spent on travel and transportation. This could have built an additional 300 low income homes for the poor.
In fact, the letter writer pointed to an increase in spending of $92.6B. No one has disputed these numbers.
Through judicious pruning in some areas of public expenditure, more than 2,000 houses could have been built each year for the poor. That would have been 10,000 in five years.
Government spending is sapping public expenditure, resulting in a higher burden of taxes. The bureaucracy is expanding while the productive public sector is shrinking, as is evident in the large reduction in jobs in non-central government employment.
For all its efforts, the government has only managed to create about 6,000 jobs in the public sector. That will not dent the unemployment problem.
At the same time, the government has collected $27.8B more in taxes. The government surely cannot be expecting the public to believe that the bulk of this collection has been due to more efficient tax collection.
If there is more efficient tax collection, then a strong case can be made about for more than a 2% decline in VAT after the elections. The public will hardly be dissuaded from holding the view that much of these increases in taxes for 2019 had to do with the burden of increased taxation.
Things are not as rosy as the government would have us believe. The small man is hurting and the election campaign should have involved less sermonising and listening to the people.
The poor man is facing severe hardships. Prices in the markets are increasing. Housing rentals are now prohibitive and this is hurting your employees. The things that some female workers are earning just enough to pay their rents would surprise you; many cannot even afford one meal per day until the next pay day.
It is true that salaries have increased and have been increasing each year but that has been the norm for years now. The APNU+AFC has been proud to boast that the public service minimum wages have increased from $34,000 to $70,000 from 2015 to 2019.
However, they are yet to point out just how many, of the more than 30,000 public sector workers in 2014 of the more than 13,000 public servants, were receiving this $34,000 in 2014. This would allow for a better assessment of how much real incomes have increased for the public servants on the lower wage bands.
The bulk of employment in the country is in the private sector. And some private sector workers are receiving dreadfully low wages. Yet, the government says that it does not have the authority to increase the minimum wages of these workers. It does. The government can set a national minimum wage.
Increasing the national minimum wage to $70,000 will bring great relief to the thousands of poor security guards and domestics in this country, many of whom struggle to survive on their monthly incomes and are in fact forced to work overtime just to make ends meet.
Oil is not going to solve these problems. More money will be chasing fewer goods and services. The basic law of demand and supply suggests that this will result in higher prices. Things will get worse for the small man because rentals and the cost of living will increase further.
The poor man will not be able to survive in an oil economy under the present economic model. It is time for a rethink of the economic model, which both the PPPC and the APNU+AFC cannot seem to ditch.
Apr 06, 2020By Zaheer Mohamed Port Kaituma Football Foundation (PKFF) is one of the leading sports organisations in Region One. The body was formed in 2009 with the aim of developing sports in the area. Its...
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