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The constitution continues to be flouted in respect of the presidential assent

In a recent interview on Plain Talk, I asked the Prime Minister in his capacity as Leader of the National Assembly whether he was concerned about bills being passed by the National Assembly and not being assented to within the period (twenty-one days) required by the constitution. This problem first surfaced in a big way in 2006. The Prime Minister estimated these to be “about six.”

I knew that was not correct and visited the Parliament Office on Tuesday January 12, requesting an update on 2009 bills not assented to. I was asked to come back later in the day. After making several attempts to contact the person her supervisor told me that the information could not be made available to me.

In any case it was public knowledge that for 2006 ten bills lapsed because of presidential inaction and from records we maintain at Ram & McRae, I was aware that for 2009 only, twenty-six of forty bills had been published in the Official Gazette. What surprised me not a little is that after my enquiries there appeared a flurry of activities involving “the printers” and I wondered whether there was any mischief afoot, even though the Gazette in which the legislation is published had already had moved on to 2010.

It was a shock, but not a surprise, therefore, to receive this past Wednesday several Extraordinary Gazettes containing legislation that dates back, in some cases, several months.

This information provides clear evidence that the constitution continues to be flouted by the President with the tacit or expressed agreement, or neglect of the National Assembly. And even if we assume that the backdated publication is constitutional and legitimate, that leaves eight bills passed in 2009 by the National Assembly which the President has not dealt with in compliance with the constitution.

The implications are more than academic. To force public servants either directly or indirectly to engage in backdating any documents, let alone the Official Gazette, is to make corruption part of their work. Second, it is dangerous for the President to break the very constitution which he took an oath to uphold. Finally, an Act comes into operation on the date of publication. Those Acts published in predated Gazettes are therefore considered to be of retroactive effect, an equally dangerous issue.

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Supplementary or contingency: Same abuse

Introduction
So often we hear time-worn sayings like ‘Chickens coming home to roost,’ ‘History repeating itself’ and ‘Forgetting the lessons of history,’ and we think they are just platitudes of no consequence. Yet the brouhaha in the National Assembly last Monday showed how some such things are not only more than idle talk, but rather powerful enough to have an after life.

The occasion for the war of words in the National Assembly was consideration of Supplementary Appropriation (No.3 of 2009) Bill 2010, for $8,245,758,278 as further and additional funding for various purposes, some of which had already been spent (Contingencies) and to be spent (Supplementary Appropriations).

On one side there were Prime Minister Sam Hinds, Housing Minister Irfan Ali and Health Minister Dr Leslie Ramsammy, three persons whose ministerial portfolios were significant would-be beneficiaries of the bulk of the supplementary funds. Over the other side were two attorneys-at-law, Opposition Members of Parliament Winston Murray (PNCR) and Khemraj Ramjattan (AFC), both of whom eventually left the arena in anger and frustration, threatening to take the fight elsewhere.

Déjà vu
To understand the exchanges one needs to delve a little bit into history, going back to the National Development Strategy which was adopted by the National Assembly a couple of years ago. Chapter 13 of that strategy dealing with Fiscal Policy and The Public Sector had this to say about the Contingency Fund which is so often confused – either by design or otherwise – with Supplementary Appropriations.

“Deficiencies in the Budget Process: Largely due to deficiencies in the budgetary process, the Contingencies Fund has been used to meet all kinds of expenditures, such as shortfalls in ministries’ provisions arising from basic miscalculations in estimates and unrealistic budget assumptions about exchange rate changes, inflation and spending patterns, and the introduction during the course of the year of new projects or programmes deemed ‘necessary’ or ‘relevant’ by a political or high-ranking technical functionary. Instead of being used for emergencies, such as a major breach in the sea defence system – the use intended by the National Assembly – the Contingency Fund now serves as a source of financing for unauthorised (by Parliament) and additional expenditures.”

More and more we have to admire, and owe a debt of gratitude to, the scores of persons who contributed to that document. Had we taken the NDS seriously we would long have been on an environmentally-conscious development trajectory rather than travelling to dictatorships like Iran to beg for money to sustain our economy.

The first walkout
The French have a wonderful way of expressing the English equivalent of “the more things change the more they remain the same.” And that introduces the second bit of history, this time in December 2003 when the Fiscal Management and Accountability Act 2003 came up for consideration in the National Assembly. The Stabroek News of December 16 of that year reported the PPP/C refusing a request from the Opposition PNCR to send the 87-clause bill to a select committee for detailed consideration. The Minister of Finance then was Mr Saisnarine Kowlessar and the reason he advanced for the government’s refusal of the request was that urgent passage was necessary to pave the way for debt relief of US$30 million from the World Bank and the IMF for the next twenty years. That explanation appears as strange as the request was sensible but then the National Assembly has never been the forum for the most sensible decisions or debate in Guyana.

Given no more than forty-eight hours to study and debate the bill, Mr Winston Murray, the PNC Shadow Finance Minister walked out in protest, allowing the overwhelming passage of the bill that may soon be at the centre of a legal action by the Alliance For Change. Ironically, the PPP/C may itself be a loser for not having read and understood what is clearly a complex and possibly badly worded piece of legislation. Indeed a statement given by Mr Robert Corbin, the PNCR leader on the recent exchange suggests that, at the very least, the act lends itself to continued misunderstanding in how billions of taxpayers’ funds are spent and accounted for. Over the next couple of weeks Business Page will examine some of the main provisions of the act, the principal objective of which is better transparency and accountability for the receipts and payments of the state in the Consolidated Fund which has as a sub-fund a Contingency Fund.

The Supplementary Appropriation
Section 24 of the FMAA requires that the variation of an appropriation other than reallocation of approved appropriations must be authorised by a supplementary appropriation act prior to the incurring of any expenditure. And that is where the experienced Prime Minister, the adventurous Health Minister and the green Housing Minister appear to have run into problems, confusing the supplementary funding with the kind of expenditure for which the Contingency Fund was specifically set up.

It seems too that the Finance Minister Dr Ashni Singh is also not sufficiently familiar with the act’s provisions on supplementary appropriations since he consistently fails to comply with the requirement that on the introduction of a supplementary appropriation bill, he is required to present to the National Assembly the reasons for the proposed variations and “a supplementary document describing the impact that the variations, if approved, will have on the financial plan outlined in the national budget.”

And before we go on perhaps it would be useful to note that Ram & McRae in Budget Focus 2008 had identified the absence of meaningful debate and real accounting for such additional funds.

Did it not strike our parliamentarians as odd that they should pass legislation that requires a request for $100 million in the budget to be subject to extensive scrutiny and debate but for an $8 billion supplementary request to be supported by only very limited information and subject only to questions and not a debate?

Cocking a snook at Parliament
Because of the supremacy of the constitution which empowers and regulates the raising of revenues and the incurring of expenditure by the government, we will also be looking at how the FMAA gives effect to and is circumscribed by the constitution. In researching for this column I found an interesting article by Indian Professor P.K. Tripathi and titled Lawless withdrawals from public funds: Cocking a snook at Parliament. It is apparent from that article that the application of responsible public accounting begins with the appreciation of a fundamental point about democracy and the rule of law.

As Tripathi points out, in a democracy the government must function both in respect of determination of its policies and the administration of those policies strictly under the control of the representatives of the people. The democratic process requires that no public monies can be spent without a grant made by the Parliament following a request by the government in the form of an Appropriation Bill or a Supplementary Appropriation Bill presented to the National Assembly specifying the purposes for which it plans to spend and the amounts of money it plans to spend on each of those purposes.

One exception for the prior approval of the National Assembly is in respect of monies out of the Contingencies Fund. I will look at the governing constitutional and statutory procedures next week, but for now it is not at all clear that those on the government side of the House, including the Prime Minister and Leader of the House Samuel Hinds and the Finance Minister Dr Ashni Singh, Dr Leslie Ramsammy and Mr Irfan Ali are familiar with those provisions. The two financial papers which were embodied in Supplementary Appropriation Bill #3 were in respect of both advances from the Contingency Fund and Supplementary Provisions for the year 2009. If we accept the position in the law that supplementary provision must be approved prior to expenditure it would seem beyond logic that one can be asking for supplementary provision for 2009 in 2010!

The New GPC again
Included in Financial Paper No. 5/2009 for $1.449 billion were amounts totalling $473 million for purchases of drugs mainly from the New Guyana Pharmaceutical Corporation towards which this government had earlier found itself acting illegally. Is history now repeating itself with breaches of the Contingency Fund being involved in payments made to the company between December 28 and 31 to procure drugs to last up to April 2010? What neither Dr Ramsammy nor Dr Ashni Singh told the National Assembly is when the drawing rights for these were requested, and issued in accordance with section 41 of the FMAA.

It may well turn out to be entirely ironic that one of the few amendments proposed by Mr Winston Murray and accepted by the government when the FMAA Bill was debated in 2003 may come back to haunt the government. And that is in relation to penalties for breaches.

The act makes it an indictable offence punishable on conviction to a fine of two million dollars and to imprisonment for three years for any official to knowingly permit any other person to contravene any provision of the act.

Maybe the Prime Minister sensed the rising temperature and not so implicit threats during the exchange in the National Assembly, taking refuge in the need to consult legally.

Those who have honed their political skills and owe their allegiance to the architects of the more permissive recent financial arrangements do not appear so compelled.

To be continued

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On the line – The Banks Group

Comment

Ram & McRae has identified and announced as one of the activities and initiatives for its 25th anniversary being observed this year, an award for the best Annual Report by any Guyanese company. The selection will be made by a panel of independent professionals from the business community, academia, the Guyana Bar Association, consumer representatives and the media.

In deference to the firm and in order to avoid any appearance of, or in any other way influencing that panel, Business Page and this feature will restrict its analysis of the annual financial statements and reports of public companies in Guyana to matters contained and disclosed in those reports and accounts. It will avoid identifying, as far as is consistent with a proper analysis of those reports, any defects or deficiencies, and will be less judgmental in its evaluation and interpretation of those documents. A consequence of this approach will be that the column will not be offering any public recommendations for addressing any perceived or actual deficiencies.

I hope that this does not detract from the interest which readers have shown in this feature over the years, which has on many occasions caused the column to be at odds with some of the companies.

Introduction
Today’s Business Page looks at the financial statements of the two operating companies of the Banks DIH group. The group comprises Banks DIH Limited (‘Banks’), the food and beverage giant, Citizens Bank Limited, a 51% owned retail bank and Caribanks Shipping Company Ltd, a dormant company. The financial statements of the group also include as an associate company B&B Farms Inc, a Guyana private company and BCL (Barbados) Limited in which Banks holds a 25% interest. The financial statements of the group do not treat as an associate Banks Holdings Limited, a company in which it owns 8.6% of its issued capital, has a director on its board and with which it had transactions valued at $150 million during 2009. On the other hand, Banks Holdings which owns 20% of Banks and which has two directors on the board of the Guyana company, treats Banks Guyana as an associate in its books.

Both the public companies in the group have as their accounting year-ends September 30 and will be holding their annual general meetings later this month – Citizens on January 19 and Banks four days later. The shareholdings in the two companies reflect an interesting contrast with Banks spreading 60% of its shareholdings among a vast network of private individuals, while in the case of Citizens, four shareholders own 82% of the shares with the remainder spread among about sixty smaller shareholders.

Banks will be presenting a regionally designed and produced high-quality, glossy report in which the Chairman and CEO waxes lyrical about the iconic role of the company in the landscape of Guyana. The report of the bank in contrast, is done with the standard cover in which only the year is different. One other issue of difference is the structure and contents of the reports of the two companies which have different governance structures, with Banks having an Executive Chairman, the American model, while Citizens has split the roles of Chairman and Chief Executive Officer, the European model.

Banks has eleven directors, five of whom overlap with the nine in Citizens. In both cases, all are male, even as this week’s Economist shows on its cover a blue-collar woman flexing her muscles and boasting “We did it!”


Source: Annual Report 2009

As the Chairman pointed out in his report, the net profit of the company passed the significant one billion dollar milestone for the first time in its history, with a 32% increase over 2008. Those profits were earned on increased turnover of 5% which would be slightly ahead of the official inflation rate for the country. Net operating costs rose by a smaller 2.1% compared with an increase of 4.9% in 2008 over 2007, but with staff costs increasing by just under 10%, about double the rate of inflation. Costs for key management increased by 13.07% while for other staff the increases averaged 10.69%.

A significant contributor to the better performance reported in this year, however, is a write-back of $474 million arising from a favourable settlement of an excise tax issue between the company and the Guyana Revenue Authority. In 2007 and 2008, the company made provisions of $183M and $291M for potential excise taxes and the published half-year report at March 31, 2009 showed a cumulative provision of $617M.

Reflective of that agreement, the Profit and Loss Account for the year shows a reduction in excise tax of $268 million over 2008 or an effective rate of 11.7% of sales compared with 15%. If the write-back, which is a non-recurring benefit, is excluded from the current year’s profit the net after-tax profit for the year would have been $813M. When compared to a profit for 2008 of $1,039M (adjusted for the excise tax provision made in that year), the company would have reflected a fall in profitability of 21.72%, despite the increase in sales.

Partly due to the write-back, all the profitability ratios show increases over the preceding year, but so too do the other ratios which are less, or not directly affected by the write-back, such as activity, liquidity and solvency ratios. Both current as well as long-term liabilities have declined while current assets have increased as have cash resources which increased by $481 million or 37% over 2008.

The average rate of tax charged in the accounts for the current year is 39%, a marginal decline over the previous year. Current year taxation has jumped from 34% in 2008 to 43% in 2009, with property, withholding and capital gains tax accounting for a smaller percentage this year (11%) than in 2008 (16%). High rates of taxes and the non-deductibility of Property Tax have been a major concern of this group and the manufacturing sector for decades, but such concerns have largely been ignored by the government and such groups as the National Competitiveness Strategy Council, in which the private sector has significant representation without any apparent comparable influence.

As a result of the attempt by a regional group to wrest control of the company and the company’s defence strategy, the company’s share price based on transactions reported by the Guyana Stock Exchange, has shown a high degree of volatility. During the year, the company’s share price fell from $10 to $9.50, or by 5%, and is now at its lowest point since September 2008.

Share price

Source: Guyana Stock Exchange

Citizens Bank Limited
It has not been a good year for the banking arm of the group. While Republic Bank and Demerara Bank with similar year-ends have been reporting record profits, and with the Guyana Bank for Trade and Industry likely to follow suit, Citizens has seen its profit decline during the year from $438 million to $391 million, or by 11%. Contributing to this decline is an impairment provision of $170 million for investments in Stanford International Bank and Clico Trinidad Limited, the region’s two financial catastrophes for 2009.

Because of the difference in the governance arrangements referred to above, Citizens presents both a Chairman’s and a CEO’s report, the latter offering details and insights on some operational issues of relevance not only to members, but to depositors and the wider public who see strength in a financial institution being reflected in numbers and profitability.

Interest income increased by 5% and other income by 31% while operating expenses increased by 11%. Net customers’ deposits had a small decrease during the year with increases in savings deposits of 24% and demand deposits of 11% while the usually high-value term deposits declined sharply by 32%.


Source: Annual Report 2009

Share price
In 337 sessions since the Guyana Stock Exchange began trading in 2003, shares in Citizens have only traded on 9 occasions, 4 of which were in the last year. Given so few trades the price at which shares would change hands in usually limited volumes is not an indicator of what other transactions may fetch. The records of the Stock Exchange show a trade in the shares in Citizens in December 2009 at a price of $45 up from $18 in June 2009.

Next week we will look at the increasing abuse of the Contingency Fund as part of the deteriorating financial management of the public purse.

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Predictions 2010

Introduction
Accustomed only to the arcane drudgery of a calculator and a columnar pad, I turned to the Angel Gabriel and the Deity Ganesh for divine guidance in looking at the world in 2010. They point to a different world in 2010 from the one predicted by the Economist’s publication of that name. But then what can one expect from someone who thinks that Guyana is on the African coast? Inspired by such dual divinity I see for Guyana the best of times and the worst of times, spectacular winners and catastrophic losers, drug pushers and soup drinkers, strike-breaking employers and spineless unionists, ambitious turks and aging politicians, their sell-by dates long past. With predictions, the probability of success is 50/50 – either right or wrong. Accordingly, mine come with the usual exclusionary clauses about non-responsibility – the type clients receive from their accountants and policy-holders from insurance companies. With this in mind, let us look into Guyana 2010 in which there will be several developments in politics, the economy and the government and private sector to comfort Guyanese bracing for tough times ahead.

The economy
Fed up with the bureaucracy and transparency of Norway and the EU, the government will advance and rename the Low-Carbon Development Strategy to the Loving Chinese Democratic Systems. Same LCD S… Chinese logging companies will replace Barama as the bête noir of the forestry sector. The Indians will give a further loan to the country to help maintain the traffic lights and to promote culture. Venezuela will provide PetroCaribe funds to help us police our ‘shared’ territory. The boys from Brazil will help finance the Road to make it easier for their illegal exploitation of our forests and gold-mining activities, while their female siblings will take over our social scene, creating more unemployment for our ladies.

To align its logo with practice, the PPP will trade its emblem, the cup, for a set of environmentally-friendly, bio-degradable plastic bowls – the large one for begging and several smaller ones for soup drinking. China will provide the bowls under a Grant Aid Agreement with the Ministry of Finance under which the Chinese will be permitted to compete locally with our merchants of ‘pirated everything,’ and will be exonerated from any liability for the mess-up with the Skeldon Factory. Their consultants will help us with our electricity – funded of course by the Chinese currency. The Grant Aid Agreement will be submitted to the United Nations as the model for non-transparency and non-accountability for resource-rich, low-income countries willing to submit to new age exploitation by the new rich and powerful.

The Minister of Finance will publish his biggest ever Budget within the three month deadline. He will make the decline of the first half year of 2009 into a full year growth – all due to the export of “non-traditionables.” The Minister of Finance will assist the Bureau of Statistics in compiling the GDP and the inflation rates – they will both be favourable, the numbers I mean. Clive Thomas will see red. There will be no available statistics on unemployment and no disclosure statistics on VAT. Inquiries on the absence of related numbers in the areas will be attributed to the high probability of bias in observers.

Dr Ashni Singh will, for the first time, read the Bank of Guyana half-year report before tabling it in the National Assembly. His own mid-year report will be several months late but stamped several months earlier. No change. The Auditor General’s Report for 2008 will be released one year late. Again no change. The Public Accounts Committee will again not notice.

The GRA will announce a tax amnesty, to be followed by a partial one for illegally imported vehicles; automatic and full amnesty will be granted for vehicles found housed in politically connected residential compounds. Not to be outdone, the Ministry of Home Affairs will broadcast its own amnesty for illegal firearms. It will pay $10,000 for every handgun surrendered, and $50,000 for each Kalashnikov-type weapon. Funds will come from the police budget, which will be replenished by the secret results of a resumption of talks with the Brits. If the British talks collapse, patriotic business elements will fund the programme from VAT and/or Customs duties and/or NIS not paid to the government.

The amnesty will be accompanied by the removal out of existence of all records related to taxes; the opposition will be supportive since there will be a removal of its own 100 million dollar debt from all associated files and papers.

To ensure consistency, in 2010 the government will award the same single digit raises (3% for sugar workers, 6% for public servants, and so on) that it offered in 2009 to workers in various sectors. To ensure the same consistency, it will vote and award to itself the same near 100% increase package that it did in 2006. The opposition will, once again, be on the receiving end, which will reiterate the new spirit of inclusion and sharing.

Politics
Despite an easily explained haemorrhaging at the Local Government Elections, the PNCR’s life will be prolonged due to intensive financial care by Dr Jagdeo.

Ravi Dev, pushed by Freddie and helped by Donald Ramotar, will take off his toupee and his mask and join the PPP. GAP-ROAR will read of this slow-breaking news in the press. Carvil Duncan of the GLU will move formally into the Office of the President while Komal Chand of GAWU will be described as a “private trade unionist” responsible, along with the weather, for the continued decline in sugar.

Jagdeo will not get a Nobel mention and blackouts will continue. Several areas of the country will experience unusual weather patterns leading to flooding. There will be no Freedom of Information Act but the President’s friend will be granted a radio licence to help anonymously and financially with the Third Term. He will fail. Ramotar will be named the PPP/C presidential candidate with the slogan ‘More of the Same.’ Robb Street will replace Vlissengen Road as the Centre of Power.

The Minister of Destruction will demolish the Cenotaph for impeding the flow of traffic. He will also facilitate the removal and retirement of long-suffering politician-turned-mayor-turned-letter-writing evangelist Hamilton Green who will take up residence in one of the many vacant rooms at Sophia.

Business initiatives
Guyoil will become a subsidiary of GWI. This will ensure a guaranteed supply of high quality, designer water additives for its fuel pumps. Guyanese consumers are free to demonstrate their now legendary adaptability by utilizing this enhanced fuel for potable purposes, as circumstances warrant.

The Lotto Company under direction from the government will have a new management team drawn from PNC ranks. It will be seen as another example of ongoing government outreach to the main opposition and, given the latter’s history of rigging and fooling everyone for decades, of aligning the right people with the right job. This Lotto shakeup is a contingent arrangement. If the PNC is successful in this assignment, it will be awarded by CGX a management consulting contract to provide it with proven expertise on its oil rigging setup.

One man’s pudding is another’s poison will find very visible proof in 2010. On the one hand, the suitcase businesses will reap a bonanza on sales of customized cell phones, radar detectors and telecommunications scrambling devices, as citizens seek to neutralize the government’s advantage relative to speeding and eavesdropping. On the other, the Bureau of Standards will be overwhelmed by nervous owners trying to obtain official confirmation of sellers’ adherence to truth-in-marketing standards on equipment purchased. The bureau will not concern itself with frivolities surrounding legality and appearances. It will simply limit itself to the sellers’ statements and assurances of performance and physical condition.

A long overdue development will be the partial re-engineering of the GGMC. The units responsible for oversight of miners and producers will become part of a revitalized CLICO offshoot. Experts will reason that this makes perfect sense given CLICO’s now well known proprietary early warning system. Miners will be alerted when to play by the rules and not tamper with troy declarations; political powers will be guided by protective leaks to withdraw from costly surprises produced by whistleblowers, the media, or dogged auditors; and in-house parties will retreat into bureaucratic shelters of ignorance and amnesia. As such, the CLICO system will relay timely information to major stakeholders searching for any edge or advantage.

Several monuments to money laundering will rise to the sky and the trade in non-prescription drugs will gain recognition in the national accounts “in appreciation of its contribution over two decades to the national economy, parties’ coffers and the stability of the Guyana Dollar.”

In other developments, insurance companies will decline coverage to any party that identifies GPL as an official energy source. The same insurance companies will go on record to stress that they have no concerns with illegal connections to the same disputed energy source. Super salaries remitted will be justified as a response to local cost of living realities. There might also be a blurb about the cost of attracting and retaining qualified help along the lines of the once highly publicized Bernard Kerik recruitment foray.

Governance
The President will prove to be very prescient, that stresses in advanced economies will have consequences in Guyana. It does not matter that his prescience is three years late, for the delayed effects will be felt in major areas of commercial activity. There will be consequences, and sacrifices must be made all around. Customs bodies will experience a decline in charitable contributions, and law enforcement ranks will feel the pinch through a decline in involuntary tipping traditions. Tender board people will share the pain.

In an attempt to assuage the critics, there will be presidential releases about a push towards more transparency in government accounting. Contracts will be executed with unemployed accounting alumni from Arthur Anderson, Enron, Madoff and Stanford to avoid any allegations of domestic taint. People from NBS, Republic, and CLICO will be quietly persuaded not to apply. The government will express confidence that all Guyana will be reassured.

The GRA will declare the President non-resident for tax purposes under section 2 paragraph … of the Income Tax Act Cap. 81:01 which requires minimum residence of 183 days in the tax year. This will have no effect on taxes the President traditionally does not pay, since he will claim exemption under section 6, arguing that he exercises his employment abroad and that the thousands of US dollars per trip he receives for staying at friends and relatives, arises outside of Guyana and is therefore exempt.

The head of state will alone burn more dollars in aviation fuel in 2010 than the rest of the nation will expend on gasoline.

Sports
Two top Guyanese spinners – Prem and Randy – will be included in the West Indies team for the World 20/20 championship.

They will perform well on home turf prepared by their side-kick at NCN, but fail outside – taking the team’s chances of success with them. Considered a high risk for this gentleman’s game, another top spinner from the same local club will have to stay at the Office to man the telephone. Brazil will not win the World Cup. Woods will return with a new logo – a hungry looking cheetah – with a warring bevy of waitresses awaiting him at the 19th hole.

Conclusion
Finally, as an indication of its vaunted strategic planning capabilities, the government has already identified several factors that will be rolled out for anticipated business distresses in 2010.

They include: El Nino (La Nina is on standby); foreign terrorist masterminds (wherever located); unattractive US dollar (ugly Americans); lowered overseas demand for local products (except pharmaceuticals); decreased remittances from overseas-based Guyanese (cheap and unreliable); and rising oil prices (whichever year they occur).

In other words, the government is not responsible and has an exit strategy that lays the blame elsewhere. Anywhere else, but not with the government. It seems that 2010 promises to be the best of times and the worse of times.

Next week, it’s back to reality.

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Two per cent growth in the economy is wishful thinking

In looking to 2010, Business Page predicted that the 2010 Budget speech would make the economy’s decline of the first half year of 2009 into a full year growth. No sooner had I submitted that column than no less a person than the President himself, in his New Year’s message, reported “preliminary indications that the economy registered a positive growth rate of about 2% in 2009.” He was careful not to provide any support for such assessment, restricting his only specific comment to the sugar and bauxite sectors whose performance he described simply as “below expectations.”

But that limited comment is enough to caution even the most casual observer not to take the President’s assessment seriously. In November 2009, reporting a 1.4% decline in the economy for the first half of the year, the Minister of Finance reported a 19.3% half-year decline in sugar, a 6.7% decline in rice and flat performance in mining and quarrying. For the remainder of the year, the Minister expected the performance of rice to deteriorate and for mining and quarrying to do substantially worse than they did in the first half. We know too that bitter industrial relations since June 2009 ensured that sugar’s woes continued and, quite possibly, deteriorated in the second half of the year.

Even GuySuCo’s CEO, in his New Year message seemed keen to forget 2009 even as he expressed some optimism for 2010. If a miracle had in fact taken place and Guysuco had transformed a 19.3% decline in the first half of 2009 to a full year 10% growth, the corporation and the President would surely have noticed it.

The revised outlook for a 2.5% growth in real GDP, including all economic sectors, predicted in November by the Minister of Finance, was premised on the full-year growth (of 10%) in sugar – equivalent to a turnaround of 36% for sugar in the second half of the year! That simply did not take place and no other sector of significance could have made up for the loss. To put the numbers another way, non-sugar growth was expected to come in at 1.5%, so that the economy did substantially better than the Minister of Finance expected less than eight weeks ago.

The President’s assessment of an overall 2% growth seems more a mixture of wishful thinking, political rhetoric and self-vindication for his firewall assurance, than a serious, informed or honest assessment by someone trained in economics. Having done his political work, he has now placed the Minister of Finance, the Bank of Guyana and the Bureau of Statistics under immense pressure to produce numbers to vindicate yet another of his assessments.

They may oblige. It is hard to be confident about the integrity of the statistics coming out of a Stats Bureau that would not publish the monthly Georgetown price data it collects, usually doing so only after the Minister has announced suitably relevant numbers in his half-year report or his Budget speech. And the fiasco of conflicting rates of 2009 first half (un)real GDP growth, reported in the Business Page series (November/December), but which neither the Minister nor the Bank considered worthy of a public explanation, has similarly affected the credibility of both the Bank of Guyana and the Minister of Finance.

It seems to me that in relation to statistics on the economy and financial information coming out of the government, 2010 will be no different from 2009 and before.