Business and Economic Commentary by Christopher Ram
Introduction
This is the second and concluding part of a two-part commentary on the underground economy. Part I, published on August 18, 2025, was prompted by the revelations of Azeem ‘Junior’ Baksh in an interview with online reporter Travis Chase – although Baksh has since distanced himself from some of the statements made. The continuation was delayed by intervening elections and a shift in national attention.
Part I explored the origins of Guyana’s underground economy – born of shortages and import substitution – but did not address the criminal economy, which operates alongside, and increasingly, within it. That sphere includes narcotrafficking, illegal mining, smuggling, and other activities that are not merely informal, but outright illegal. Unlike the earlier underground economy, driven by necessity, today’s criminal enterprises rely on laundering, political cover, and networks of protection, often intersecting with official complicity.
Overlap
Before proceeding, it is useful to distinguish the three overlapping spheres. The underground economy lies outside the tax and regulatory net – informal, unrecorded, or under-declared. The criminal economy includes activities that are illegal by definition. The corrupt economy operates within legal structures but subverts them – through bribery, procurement fraud, kickbacks, and abuse of state power for private gain. When they co-exist as they now do, they are more dangerous and detrimental.
The contrast with “underground economy one” is stark. Then, Guyana was one of the poorest countries in the hemisphere, behind only Haiti. It was a pariah state, burdened by unsustainable debt, currency shortages, crumbling infrastructure, and mass emigration. Today, the country boasts of the world’s fastest-growing economy and a per capita GDP that rivals developed countries – a transformation estimated at over a 100-fold increase.
As oil catapulted the formal economy past the trillion-dollar mark, the underground was overtaken by a corrupt economy thriving within formal systems but beyond accountability. That wealth thus obtained is now flaunted openly, its source unchallenged. Enforcement agencies – politicised at the top and underpaid below – either look the other way or target only the powerless. In this environment, connections and privilege, not legality, decide who are held to account.
The consequence is that the lines between the underground, the criminal and the corrupt have blurred into convergence. What follows are key segments of the economy where shadow activity now thrives in plain sight.
Gold: More than worth its weight
Gold remains the underground economy’s preferred medium of exchange. With its high value-to-weight ratio, liquidity, and resistance to tracing, it is ideal for discreet transactions. But the issue goes deeper. Guyana is widely believed to serve as a laundering route for gold smuggled from blacklisted jurisdictions like Venezuela and parts of Africa. This gold is exported under Guyana’s name, cloaking it in legitimacy while draining the country of credibility – and revenue.
Narcotics: A Persistent Foundation
The drug kingpins are no longer as conspicuous, but the narcotics trade has not disappeared. Ongoing busts, unexplained wealth, and suspicious transactions point to its continued presence. Guyana’s location keeps it central to transshipment routes between South American producers and North American and European markets. Proceeds still seep into the economy – undeclared, untraceable, and dangerous.
Procurement: The Golden Goose of Corruption
With massive increase in public spending, generous budgeting and poor audit and oversight, public procurement is now a rich source of high-level corruption. The model is familiar: inflated contracts, padded pricing, and poorly supervised improperly executed work with rewards through third parties. Kickbacks appear in various forms, including political payments serving the dual purpose of a reward, and deposits on future state contracts.
Gambling
Gambling, once a vice, is now development policy. A “lucky” night at the slots can explain sudden wealth – real or invented. Online betting in various forms, is almost untraceable. Horseracing, casinos, and digital platforms now serve as ideal channels for laundering illicit income under the guise of entertainment.
Retail and VAT Evasion
The old contraband model – suitcase traders and street forex – has been eclipsed by more complex systems. Large importers, often doubling as wholesalers and retailers, under-invoice imports, move currency off-market, and under-declare VAT. With undocumented foreign workers in retail, security, and construction, evasion extends beyond goods to wages, payroll taxes and social security deducted but not paid over.
Real Estate: The Underground’s Vault
Real estate is another favoured avenue of undisclosed value. Properties are acquired via proxies, relatives, or shell companies, with transactions under-declared or settled in cash. High-end developments often shadow public infrastructure budgets. The cycle is clear: illicit funds from procurement are laundered and locked into real assets – invisible to tax authorities, insulated from scrutiny.
Political Protection and Contributions
Corruption at this level thrives not just on evasion, but on immunity. Politically exposed persons (PEPs) offer cover, and political contributions often act as prepayment for regulatory leniency or future contracts. In return, appointees shield benefactors and frustrate enforcement. The line between campaign finance and criminal facilitation grows ever thinner.
Institutional Paralysis and Political Protection
The overlap among the segments means that there is an erosion of institutional will. Agencies meant to monitor, regulate, and prosecute financial crime are themselves weakened – by political interference and under-resourced. Unless the Police, SOCU, the Procurement Commission, the Integrity Commission and the Commission of Information, are insulated from political control and granted stronger investigative and prosecutorial authority, they will continue being more symbolic than substance.
Conclusion:
Though remnants of the original underground economy remain and should not be dismissed, they have been largely overtaken by a more insidious, corrupt economy – one cloaked in legality, yet beyond the line of legitimacy and legality. Its replacement shifts the tax burden to the honest, distorts markets in favour of the well-connected, and shuts out even the law-abiding. Together, they turn enforcement into a tool of the powerful, while corroding public trust in justice, fairness and the rule of law.
Oil money does not solve these problems. In fact, it exacerbates them. Another of the challenges that will define President Ali’s second term.