AFC Newswire – 29 Dec 09
It is unfortunate that after the debacle at Copenhagen, President Jagdeo is still bullish that Guyana can obtain a substantial cut of the proposed pitiful US$10 billion funds made available by the powerful nations which run the world. It appears as though the President (with a chosen few) will now personally run off on a new round of global escapades to try to draw down on the pitiful US$10 billion that have to be shared among vulnerable poor countries.
While the AFC is of the view Guyana should not ignore the potential for obtaining small amounts of finance from the pitiful global US$10 billion funds, we believe our energies should be directed elsewhere so as to modernize the production structure, and enhance competitiveness and capabilities of the Guyana economy. The AFC does not believe the LCDS has a realistic model for development financing – essentially the PPP has placed the development financing of the nation at the whims of global deal making and political uncertainties. Thus, the PPP has placed all financing eggs in one basket; furthermore, it is jeopardizing the welfare of the masses of bauxite workers, sugar workers, housewives, farmers, public servants and others.
As the Jagdeo’s government waits for US$580 million each year to be realized to implement LCDS, the PPP has chosen to enter into short-term relationships with bilateral donors to obtain small change to keep the government’s current expenditures going. Therefore, the government’s policy is to maintain its cash flow so as to present a façade of success. However, the short-term aid strategy of cash flow maintenance does not lead to fundamental transformation and independently verifiable job creation (job numbers by Go-Invest are not authoritative as that is not the mandate of the institution Go-Invest).
Given the short-sightedness of the PPP government, the AFC proposes an alternative vision of development financing which simultaneously looks for financing from different sources. All financing eggs must never be placed in one basket. Moreover, development financing must lead to positive structural changes in the economy. Government cash flow or current expenditure financing is just not enough.
Here is the AFC’s vision:
1. Mobilizing domestic savings through financial market development and deepening.
2. The establishment of a state development bank. We see a state development bank as deepening financial markets and complementing (and not competing with) the commercial banks.
3. Foreign direct investments.
4. Mobilization of finance from the Diaspora. The proposed state development bank will play a role in this.
5. Bilateral development financing for fundamental projects and not just cash flow sustenance.
6. Multilateral financing from IDB and other similar agencies.
7. Tax incentives for domestic and Diaspora investors. However, these must be tied to performance measures of businesses.
8. Refocus Guyana’s foreign policy to lead to maximum development financing.
Point of contact: Peter R. Ramsaroop
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