A nonsensical analysis

The Guyana Chronicle on Tuesday, September 27, 2011, under a caption ‘Lies Exposed’ carries a statement in full by PPP Executive Committee member Mr Robert Persaud, “debunk[ing] recent statements issued by PNC’s APNU, et al on Guyana’s development.” Taking aim at former Finance Minister Mr Carl Greenidge, Mr Persaud said that Mr Greenidge “ignores the fact that in 2010, the Guyanese economy (at current prices) was more than fifteen times the size it was in 1991 when he was at the helm.”

Mr Persaud might very well be accused of engaging in some lies of his own. I assume he knows that there are two measures of the size of an economy – Gross Domestic Product and Purchas-ing Power Parity. Size ‘at current prices’ is not a meaningful concept, and GDP at current prices is not used by economists for making the type of long-term comparisons Mr Persaud undertakes. Real GDP would have been more appropriate, because it makes allowance for inflation which accounts for the bulk of the higher values we see. It seems that Mr Persaud engaged in some simplistic exercise creating a table comparing 1991 GDP with that of 2010 at current prices. In grade-three style, he then divided one into the other to arrive at the figure of 15! Surely there must be someone who could and should have told Mr Persaud that he was holding himself up to amusement since this is not even apples and oranges, but more like apples and chalk.

The politician in Mr Persaud probably wanted to suggest that the economy grew 15 fold (1500 per cent!) since the PPP/C came to power. That is absolutely and obviously nonsense, requiring an annual growth rate of 15.3%. In fact the average annual growth rate as reported by successive Ministers of Finance for the past eighteen years and disputed by other observers was 3.26%. Cumulatively then, in real terms the economy has grown by only 78.11% at best since 1992, hardly the kind of growth one expects from a resource-rich economy coming from a horribly low base (ie, it has not even doubled in close to 20 years).

The other point worth noting is the arbitrary date that Mr Persaud has chosen – 1991 – when we all know that Mr Greenidge was Finance Minister for a full three quarters in 1992. I suspect the reason for the choice of the year 1991 rather than 1992 is that it suits Mr Persaud’s purpose to project the PNC and Mr Greenidge in the worst possible light and thus show the PPP in the best possible circumstances, albeit false and contrived.

What Mr Persaud wanted to hide was the fact that in 1991 the economy grew – using the non-bogus yardstick real GDP – by 6.1% and in 1992 it was 7.7%, levels not achieved since Mr Bharrat Jagdeo became Finance Minister in 1995.

But Mr Persaud’s distortion goes to inflation as well. Mr Persaud refers to the inflation rate of 70% in 1991 without acknowledging that this was due almost entirely to a devaluation of the Guyana Dollar relative to the United States Dollar from G$45 to $101.75, more than 125%. The rate continued to decline in 1992 reaching G$125 to the US Dollar by October 1992 when Dr Jagan pledged to reduce it. It is now $204 to the US Dollar.

Mr Persaud also selectively relies on an IMF quote in 1988 – before the introduction of the Economic Recovery Programme (ERP). Is he not aware that on April 28, 1992 Mr Lewis Preston, the President of the World Bank, wrote the IDA Board of Directors in the following terms concerning Guyana: “Few countries have moved as far as Guyana in terms of implementing a comprehensive adjustment programme… and eliminated its arrears to international financial institutions.”

It is a sad testimony of the PPP and Mr Persaud that he would seek to ridicule Mr Greenidge for facing up to the truth about the state of the pre-ERP economy while he (Mr Persaud) can indulge in cheap distortions.

May I add that Mr Persaud might not know or wish to admit that before his administration signed on to the ERP, then President Hoyte invited Dr Cheddi Jagan as leader of the Opposition to attend a Cabinet meeting at which Dr Jagan grilled Mr Greenidge about the ERP.

Many Guyanese, including me, did not support the ERP either on ideological grounds, or because they did not think the ERP would succeed, or because of the programme’s immediate harsh social impact while its compensating ameliorative measures were slow in coming. But at least we have to credit the PNC and its finance team led by Mr Greenidge with courage, honesty and integrity, concepts that are largely alien in this era.

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