Georgetown: Government’s financial expert and Minster of Finance Winston Jordan believes that the economic slowdown which the country started to experience in 2014 will soon be over and “things will pick up by December.” The Minister is of the view that there are several contributing factors to this alleged slowdown both locally and internationally.
“Things appear to be picking up based on some amount of statistical evidence and some of anecdotal evidence. Anecdotal in the sense that in speaking to the average man in the street, the taxi driver and so on, they have been telling me that things are picking up, they are not saying business is good but, they are saying things better than a month or two before,” Minister Jordan said in a recent interview with the Government Information Agency (GINA).
The Minister remains optimistic that economic activities will commence at a faster rate soon as the elections are now over and there is a level of political stability in Guyana. “I think, all and all we can expect things to be more and more on track as we had envisaged in the budget and we hope that talk of slowdown not necessarily disappears but, could be at the bottom of our lexicon by the time the next budget comes out.”
According to Jordan, consumers are gaining confidence with the stable political climate and are moving on from the uncertainty of the elections season. "The budget is over, people have been paid their salaries and their back pay and there is more monies that is going to be circulating in the economy between now and December,” the Finance Minister noted.
Explaining the reasons which might have contributed to the slowdown of Guyana’s economy, Minister Jordan pointed to political instability which plagued the country prior to the 2015 General and Regional Elections.
“When you have political instability or a political situation that is not normal people do several things. One they hold back on their investment. You tend to hold on to your money, some capital flight takes place where people try to get out their monies just in case, so unlike a tap that you can turn on and off with ease when people make those decisions it takes a while after political stability returns for those economic decisions now to be reversed,” Minister Jordan explained.
Questioned as to whether the implementation of the recently passed Anti-Money Laundering and Countering the Financing of Terrorism Act (AML-CFT) has had an impact on the economic slowdown, the Minister believes in some regard, it does by crippling the underground economy.
The Minister was quick to point out that in the absence of substantial statistics, no definitive conclusion can be drawn as to whether the AML/CFT law and its implementation is providing a much more difficult time for persons involved in illegal activities to have their proceeds enter the real or formal economy.“If I were to offer an opinion I would say that it could be one of the contributing factors simply because it has always been rumored that our economy really was standing on more or less two legs, the parallel economy – heavily financed by drugs,” Jordan said.
The Finance Minister further stated that since the coalition Government took office there has been increasing evidence of drug busts, which has led to the capturing of one and two high profile traffickers. “So that definitely will have an overall effect on the economy,” he said.
Meanwhile on sustaining the formal economy, the Minister said that for the first time in recent years, a decline in remittances has been recorded. This is not only in the case of Guyana and has attracted international attention.
“I am saying that remittances aren’t at the state it was at a while ago. It could also be due to the general slowdown in the world economy itself, an issue also discussed in Peru. It is perhaps one of the worst in recent times, the slowdown but, luckily by the third quarter they have begun to see signs of the pick up (in the global economy) so they could be a pickup in remittances later on in the year,” Jordan noted.
On the international scene, Minister Jordan advised that Guyana and the Caribbean is currently waging a battle with the withdrawal of corresponding banking in the Caribbean since international banks are closing its operations in Caribbean countries. "They are becoming very risk averse so one and two banks have already pulled out in one and two countries," he said.
Minister Jordan explained that the Governor of the Bank of Guyana, Dr. Gobin Ganga, has been actively involved in staging a rear guard action to stage off this withdrawal since it would have widespread implications for banking and transactions in the Guyana economy.
According to a World Bank overview of Guyana which was last updated on September 08, 2015, real growth of Guyana’s Gross Domestic Product is projected to fluctuate within the range of 3 percent to 5 percent during 2015-2018. Economic activities will be driven by continued investments in primary industries while potential offshore and hydro-energy projects may also attract foreign investment and further boost growth. Inflation is expected to remain relatively subdue.
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