ChrisRam.net

The Guyana economy has performed reasonably well during the first half of the year according to Dr. Ashni Singh, Minister of Finance, and there is cautious optimism about the domestic economy for the rest of the year. This is according to the mid-year report presented to the National Assembly by the Minister on October 27, 2008. However, anyone with a serious interest in the economy and concerned about the several important omissions contained in the mid-year report should read the report in conjunction with the half-year report done by the Bank of Guyana and published on the bank’s website.

Driven by improved performances in agriculture, mining, engineering and construction, and services, the economy recorded a 3.8 per cent GDP growth during the first half of 2008, but still a sharp decline from the 5.8 per cent growth in the corresponding period of 2007. The Bank of Guyana – using that well-known oxymoron – reports that the manufacturing sector recorded negative growth, due partly to the high cost of inputs − fuel and imported raw materials, challenges to which the sector is no stranger.

Source: Bank of Guyana Half-year report 2008

Revenue and expenditure
On central government revenue and expenditure, the mid-year report presents some interesting information. Value-added and excise taxes were budgeted to increase by 12.8% from the $36.7 billion collected in 2007 to $41.4 billion in 2008. For the half-year actual collections amounted to $17.8 billion (43% of full year) compared with the $17.1 billion collected last year. On a period by period comparison these collections represented a marginal increase in value-added tax to $11 billion from $10.2 billion, although excise tax collections declined to $6.7 billion from $7 billion.
Internal revenue collections amounted to $19 billion in the first half of 2008 compared with $17.4 billion collected last year. The bulk of such revenue comes from a handful of companies, including the commercial banks, telecommunications companies and Banks DIH, DDL and DEMTOCO. Despite the many unincorporated businesses, the self-employed category pays less than one billion dollars in taxes, or just about 15% of the taxes paid by the employed persons.

While both reports indicate significant growth in key sectors, tax revenues have not risen correspondingly and one is left to wonder whether this is a case of generous tax concessions or continued tax evasion within key sectors.

But it is in relation to expenditure that the picture is particularly interesting. And while the Minister in his report did not discuss the table which contains several errors, it must now be a matter of speculation why only 38% of the full year budget has been expended in what the table itself describes as key sectors. Particular attention is drawn to the Health, Infrastructure and Agriculture sectors where only 41%, 27% and 33% respectively, have been spent in the first half of the year. Are we going to see a mad and irresponsible rush to spend during the second half of the year, simply because the money has been allocated?

Debt
The mid-year report deals very inadequately with external debt and omits completely any information on domestic debt which has been rising alarmingly over the past several years. The Bank of Guyana Report shows the stock of government’s domestic bonded debt increasing by 7.6 per cent, while its external public and publicly guaranteed debt rose by a whopping 16.8 per cent from end-June 2007.

The outstanding stock of government domestic bonded debt, which consisted of treasury bills, debentures, bonds and the CARICOM loan, amounted to G$74,223 million, an increase of 7.6 per cent from end-June 2007 and 7 per cent from end-December 2007 balance. The increase from one year earlier reflected the expansion in the stock of outstanding government treasury bills at end-June 2007.

Over the year July 1 2007 to June 30, 2008, the stock of outstanding public and publicly guaranteed external debt rose by 18.2 per cent to US$774 million. This increase reflected disbursements of US$45 million by the Inter-American Development Bank and the delivery of US$44 million credit by the Venezuela Petrocaribe agreement.

Employment
This very critical economic and social indicator once again fails to attract the attention of the Minister and again recourse has to be had to the Bank of Guyana Report which by its own admission is not based entirely on hard data. One has to wonder why the government continues to refer to labour surveys but yet the Ministry of Finance seems unable or unwilling to deal with the issue. While indicating that preliminary data indicated that public sector employment remained relatively stable, the Bank of Guyana reports some decline due primarily to factors such as resignation and retirement of employees.

The Bank of Guyana reported that while “data on private sector employment are sparse, there are indications that the growth sectors recorded higher levels of employment.” It went on to state that the mining, distribution as well as the engineering and construction sectors seem (emphasis mine) to be associated with increased employment.

It is interesting how the Bank of Guyana and the Ministry of Finance are so sure of the performance of the various sectors of the economy but cannot establish similarly reliable numbers on employment.

Inflation
Inflation has been one of the most disputed and massaged variables in the Guyana economy. Both reports indicate a 5.8% rate of inflation but again the Bank of Guyana is more informative even if no less controversial. The Minister of Finance attributes the increase mainly to food items, identifying cereals and cereal products as the principal contributors which are unlikely to be the main concerns of the average consumer. In fact in a typical food basket done monthly by Ram & McRae, Chartered Accountants, the price increase in food items over the six month period was 10.2%, compared with the Bank of Guyana figure for the food group of approximately 9%.

Conclusion
While the date on the Minister’s report is shown as September 12, in fact it was presented to the National Assembly on October 27, repeating a pattern of wrong dating by this Minister. Despite the additional time he took in presenting his report, the Minister chose not to address the serious global economic issues that surfaced in the third quarter, nor did he treat in any serious way his duty under the law to include in the report a list of major fiscal risks for the remainder of the fiscal year, together with likely policy responses that the government proposes to take to meet the expected circumstances.

David de Caires was very clear on what Business Page was about – the dissemination of financial and economic information and discussion of ideas and issues aimed at enhancing the business culture and environment. He was quick but polite in recognising my sometimes not too subtle attempts to inject extraneous matters into Business Page. His use of the editorial pen was surgical and sharp, always accompanied by the reassurance that if I “put it in a letter” I would have a better chance at publication. On this occasion, as we mark his passing, I take the opportunity to break his rule, hoping that he would understand how extraordinary are the circumstances and implications of his departure.

Even though over approximately twenty-five years or so I had the privilege of knowing him as client, editor-in-chief and friend, my initial impression of him of awe and admiration remained undiminished to the very end. Much has been written and said of David – the enduring nature of his contribution to the country that he loved, including the reconstruction of the Camp Street Avenue as a Y2K project, the rehabilitation of the Theatre Guild, the launch of the Stabroek News in 1986, his contribution to the ideas for an independent Guyana with the publication New World, his success as a solicitor and his role as guide, mentor and friend to so many in the field of journalism.

But there was another side, a personal side, to David that was equally extraordinary. He was human to the bone. My first experience was shortly after I had returned from Grenada with a young family and was told by state officials in a state-dominated economy that as I had worked for the Grenada government, I was blacklisted and could not be employed in any state entity in Guyana. I had met David through his law partner, Miles Fitzpatrick, who had also served the Bishop regime in Grenada. David would certainly never had heard of me, but his words on being told by Mr. Fitzpatrick of my situation were that they would “give me a brace” with an offer to me to provide professional accounting services to their law practice.

It is no disrespect to anyone to state that that was the beginning of one of the most satisfying and stimulating professional relationships Ram & McRae has had with clients throughout its more than two decades of existence.

His incisive questions on audit matters and instant grasp of issues raised by us were a testament to the breadth and depth of his intellect. The relationship was characterised by mutual respect for each other’s profession, during which never was Ram & McRae asked to do anything remotely unlawful or unethical. There was no question in Mr de Caires’s mind that simple decency, patriotism and calls for good government and governance carried with them an obligation to act within all laws, that if you make profits you should pay your taxes, that the flip side of the coin of privilege is responsibility. He felt that accounting and accountability were not a responsibility reserved for companies, but also wherever public funds or interest were involved, including the Camp Street and the Theatre Guild projects which he insisted must be audited.

My partner Robert McRae recalls the occasion when David and he both got stopped by traffic cops. In David’s case, the fitness for his vehicle had expired and while admitting that his driver was careless, David took full responsibility for the lapse and recognised that the police were totally in order. According to McRae, even as they were being held, David saw as a positive that the police were doing their job without caring who he was!

His respect for professionalism, for ethical conduct, for accountability and good governance was no doubt his motivation for the launch of Business Page.

He wanted the page to be an unvarnished record of business and related issues that was informed, fair and balanced. Crusader as he was, the only goal, weapon and vessel was the truth.

His unfortunate but honourable battle with the government over its withdrawal of ads from the Stabroek News has been widely acknowledged, but he was also disappointed at the behaviour of some of the captains of industry and leaders of the private sector who also used ads to express their displeasure over the content of critical news articles and Business Page. He recognized, however, the difference between the strict duty of a government and that of the private sector, and while he would often say that Business Page cost him friends and the newspaper, advertising revenue, he never entertained any thought of discontinuing the page or replacing me as contributor.

We had our own skirmishes over editorial deadlines − which the Sunday Editor would attest that I mostly missed − and the sometimes unnecessarily strong language I used to express myself.

He would constantly remind me that the English language is so wide and flexible that the same idea could be expressed in much more palatable words, and of course be free from libel!
But David was also a friend with whom the closest secret can be shared and advice sought. In that regard there are only two other persons in whom I had such confidence – former President Desmond Hoyte and Elder Eusi Kwayana. David was ever willing to lend that ear, to share an anecdote or to offer advice that was measured, sound and uncannily right. It did not require of him any special effort to demonstrate extraordinary humility and while I have known him on a first-name basis for years, never was I not aware of the uniqueness of the man or has my awe and respect of him been dimmed.

I suppose, however, that even with that close and long association I admired, but never truly appreciated his greatness. If I had to put a label on him it was that he was a capitalist, even if a liberal one. Yet many of his friends were socialists, if not Marxists.

He saw the strong criticisms of businesses in Business Page and the views of market economics as contributing to their refinement and enhancement. He was an intellectual giant, a workaholic with the patience for even the most modest among us.

He was at once a David, the nimble tactician, and a Goliath, a force of power. He came from a privileged class but not only did he not seek to benefit from that class, but actually cultivated relationships outside of it. While others would talk about multiracial values and conduct, David actually lived them and offered us what is, I believe, an outstanding example of those values.

It may be idealistic but certainly not idle to ponder what Guyana would have been if his vision and values had been shared by politicians over the last fifty years or so. To those in his later profession, he has left a legacy of commitment to excellence, quality and values that should be the goal of all journalists. For him the progression from New World to Stabroek News was a mere step, inevitable and logical. For those who now bear the responsibility of carrying on his work, or hoping to walk in his footsteps, that will require giant leaps.

Guyana is a better place for having benefited from his presence, his contribution, his insights and his ideas. All Guyanese at home and abroad are better informed because of the brave new world of Stabroek News. Those who use the Camp Street Avenue are safer and more comfortable for his tireless efforts to rebuild the avenue. The arts community is richer because of his faith that the Theatre Guild could be and was restored.

With the passing of Mr David de Caires, founder and Editor-in-Chief of the Stabroek News, Business Page has lost its creator, guide and friend. David’s commanding personality, considerable intellect, unusual humility and an unshakeable commitment to truth in all its forms, made him a truly remarkable man, a legend in his lifetime and the quintessential gentleman.

To his wife Doreen, children Isabelle and Brendan and their families, Business Page extends its condolences.

Introduction
Today we conclude this three-part article arising out of the publication of the 2008 Corruption Perception Index of Transparency International which ranked Guyana at a lowly 126 out of a total of 180 countries surveyed, with a score of 2.6 out of 10. No one can say whether the ranking is correct in the strict sense. That would require knowledge of the other countries surveyed or assume an unerring degree of consistency in the process across all of them. What we can say, however, is that the methodology and sources meet the reliability and credibility test, and any government serious about the image of the country ought to take the perception very seriously.

No one needs to be convinced that corruption and its sidekick, bad governance, have developed in Guyana into a culture of impunity fuelled by an unacceptable level of public tolerance. Inconsistent with its boasts of achievements in rooting out corruption, the government fiercely resists any demand for public scrutiny and readily attacks anyone who questions its decisions and actions. Corruption finds shelter in opacity and over- centralisation of power, non-transparency in major financial dealings and contracts, absence of accountability, and excessive red tape in government departments − conditions that exist here.

Many-headed hydra
There is no longer any question whether there is corruption, but only the extent and cost. One columnist described the situation as a “kleptocracy,” a term applied to “a government that extends the personal wealth and political power of government officials and the ruling class at the expense of the population.” Corruption takes many forms and the cases are legion. It can be the straight bribing of politicians and officials to the extension of concessions, contracts and benefits to those in power. It can take the form of scholarships and plum jobs for relatives of those in power, advisory positions for party officials and all kinds of personal benefits for the politicians. All of these have a real cost to the economy and explain why despite all the tax write-offs and excessive taxation on the backs of the poor our per capita GDP is a mere US$1,000.

Compare Guyana with the African island of Mauritius, which at its independence in 1968 was more dependent on sugar than Guyana was. Its per capita GDP was a mere US$200 and its future gloomy at best. Forty years later, despite the absence of oil or mineral resources and having to import most of its food and energy, the country has a diversified economy and enjoys a per capita GDP of US$7,000. It was rated at 41 on the TI Index and is considered the top African country in the Doing Business Series of the World Bank.

Cost and cancer-effect
Corruption costs the treasury, but also the ordinary person and as one friend wrote to me in an e-mail, “Corruption is not just a morality abstraction. It can and does indiscriminately hurt persons, groups, organisations, communities and nations in concrete and practical terms. For example, the untutored motorist who has corruptly paid for their driver’s licence ‘under the table’ is really a lethal weapon that may be heading your way. And every time you pay for a public service which is nominally available without cost, you obviously and unnecessarily diminish your disposable income and your child may have to do, at least temporarily, without a school book.”

Parts one and two of this article showed that instead of the government taking action to curb corruption, it has dismantled, emasculated and politicised key institutions with the result that corruption goes undetected and unpunished. The question is why is there an absence of outrage at the failure of the government to deal with corruption, and whether it has now gone out of control?

It may be that we have been so accustomed to corruption that it is now part of one’s existence, part of doing business in Guyana. It is also cancerous as businesses find it necessary to adopt corrupt practices to compete. It may also be that corruption takes so many forms that it may not be immediately seen for what it is. The country failed to see the creation of Pradoville, the Cabinet Outreach to get Amerindian votes for the 2006 elections and the virtual abolition of the Office of the Ombudsman and the Integrity Commission either as themselves corrupt practices or the facilitators of corruption. Not even the emasculation of the Audit Office, the abuse of the Lotto and NICIL funds and the misuse of state funds for personal benefits arouse any attention these days.

Tackling the problem
For there to be any real war on corruption requires political will and personal and institutional commitment, all of which seem in very short supply. Threats by the President to deal with corruption and to bring the perpetrators to justice are almost a monthly joke. The PPP/C came to power with a pledge to deal with corruption and its own manifestos may offer some solutions. Here are some of its pledges:

1.  Its 1997 Manifesto pledged to have a Freedom of Information Bill approved in the 1997 Parliament.

2.  In 2006 it promised, among other things, to:

i)  introduce fiduciary oversight reforms that will give greater oversight responsibilities to parliament to monitor executive programmes;

ii)  to reform and strengthen the Integrity Commission to carry out its functions of holding public officers to account;

iii)   strengthen the Audit Office; and

iv)  work with Parliament to establish the Procurement Commission.

As Business Page has shown over the past weeks, the government has not only failed to deliver but has gone into reverse, even as its political control has increased.

The parliamentary opposition chairs the Public Accounts Committee but the PNCR which holds the chairmanship seems to have run out of ideas, energy and capacity to make a real impact. The AFC failed to win government support for a Freedom of Information Bill in Parliament and it and the PNCR have not been effective enough in asking searching questions in the National Assembly that would help to expose and reduce the level of corruption.

That leaves us with ‘civil society,’ which however defined, has shown little or no interest in stemming corruption. For all its feigned complaints about corruption, the private sector is willing to ask for and accept concessions which it knows smack of corruption and which compromise their independence. Beneficiaries themselves of goodies from the government, they are recycled into various forms and on successive days they are members of this or that commission or body, then the next they are in religion and the next, part of the EPA coalition. As a result civil society is so weak that even when it extracts a commitment from the government as in the aftermath of the Lusignan Massacre, it could and did nothing when the President broke his promise to have the outstanding constitutional commissions set up by May, 2008.

In the course of this article I have called on key members of civil society to play their part in cleaning up corruption in their own areas. Significantly this included the Integrity Commission that has been disgraced as much by the politicians as by the Commissioners. A similar call was made to the Gecom commissioners but that too has been ignored. Hopes then are receding and the fear is that things will get even worse.

Conclusion
This may be a last chance for the so-called ‘silent majority’ to find its voice and get involved in the fight against this cancer. Entering the public debate, pushing for resuscitation of the powers of the Office of the Ombudsman, mobilising public support against corruption, demanding accountability for public funds and lodging complaints when approached for bribes are all actions that the lowliest among us can take, so the excuses that we cannot change the situation are just that: a copout. Advocacy in the form of sustained pressure from civic groups and private sector organisations for fundamental reform of how government runs its business can be effective and save the country billions. For starters I would support the recommendation of the friend from whose e-mail I quoted above that we have a country chapter of Transparency International appropriately structured and populated. Any interest anyone?