Predictably, the economy contracted for the second consecutive year as a result of bad weather and political instability in the country. The Honorable Minister of Finance in his 2001 Budget presentation directed the house to the Government’s mandate to continue the task of nation building by working with the political opposition and other groups to create a lasting environment of peace, trust and stability – prerequisites, he said, for attracting investment, and bringing about economic progress and social development in the country. The nation can only agree wholeheartedly with the Honorable Minister, as these are the dreams of our people, but it should be told that they are fast becoming ‘pipe dreams’ unless serious attempts are made to establish the economic fundamentals.

This country that once boasted about its ability to be the breadbasket of the CARICOM region, is today being described regionally as a basket case. Rice, sugar and bauxite the old pillars of the economy have been experiencing difficulties for some time now, while the talk about diversification and attracting new investment continue. The Government has become notorious for mouthing the rhetoric about the private sector being the engine of growth, but has failed to walk the talk and has opted instead to rely on its massive $18.7 billion infrastructual Development programme and well provisioned poverty alleviation programmes to keep the economy going. Such an offering could save us only in the short term. Creating a climate of political stability and attracting investment are the essentials the Government has to work to achieve. To his credit, the Minister, in his presentation, informed the house about the kind of climate he hopes to create in order to attract investment for our job starved population – all laudable; but when the veil is removed from the plan offered; we find a lack of investor confidence a cause for serious, concern and opportunities for instability in important areas:

1. The Finance Minister’s consultation with stakeholders prior to the budget preparation is proving to be more a tool for the creation of discontent than the goodwill process it was intended to be.

2. We see greater weight being put on the preparation of the public accounts per se rather than on the corrective action recommended to allow the strengthening of accounting procedures to improve the quality of financial governance.

3. We observe the long delay in relation to the modernization of the Central Tender Board system and the revelations of abuses and substandard public works getting pass the process and raising alarms about the quality of public works executed. Meanwhile, loss of confidence in the process has reached alarming levels.

I draw to the attention of this house a groundbreaking study by Professor Shang-Jin Wei of Harvard University’s School of Government. His study showed that corruption affects the flow of direct foreign investment to developing countries. On a scale of zero to 10, a full one-point increase in corruption levels was associated with a 16% reduction in flows of foreign direct investments. Transparency International and the IADB also have revealed in separate studies, that investments to developing countries increased dramatically when steps were taken to curtail corruption and introduce better systems of accounting and disclosure of information, both at the private and governmental levels. And so, to the extent that Government ignores the scourge of corruption and better standards of accounting in the conduct of its business, foreign and local investments of the magnitude desired will continue to give Guyana a wide girth!

I believe that the way to move ‘Guyana forward and together’ as the Honorable Finance Minister enjoined us to do, must begin with a willingness on the part of the Government to take on board the advice of the people and their representatives. The people, through their stakeholders, have been clamoring for the allowable non-taxable income to be raised and for tax reform to be introduced but the Government opted not to listen, and in so doing lost the opportunity to sow the seeds of goodwill and put into effect a more equitable tax structure so badly needed. Many convincing arguments have been advanced to demonstrate that our tax system unfairly targets salaried persons and organized businesses, categories responsible for most of the tax revenues being collected by the Revenue Authority. At this point the Minister should be reminded that since the removal of the option of either 1/3 or the current yearly allowable income, whichever was higher, some tax payers have had to pay higher taxes.

Reform of the Tax system

We believe that the Government, in refusing to introduce tax reform to take in the recalcitrant taxpayer, has unwittingly exposed sections of the unregulated business community to the scourge of banditry now evident in the society. For it encourages tax evaders to keep large sums of money out of the banking system and hording on their premises. The issue of tax reform is integral to what some call leveling the playing field. It hinges on the creation of an appropriate environment for social and economic justice. The value added tax (VAT) should be examined carefully within these realities rather than be introduced in a copycat manner.

The Guyana police Force

It is imperative that attention be paid to the operation of the Guyana Police Force, as crime is having a deleterious impact on business in general. The societal instability spawned from that institution’s failures to solve criminal and white-collar crimes generally and heinous crimes in particular, engender unhealthy feelings in the country that are bound to affect the fortunes of the formal economy. The people, through their main opposition representatives, have demonstrated time and time again that to ignore their opinion is to increase the growing body of discontent in the society, thereby destabilizing the Government’s own programmes and the Government’s stated intentions ‘to work with the opposition for cooperation, for peace and to build on the foundations that have been laid for our economic take-off.’ It seems to me that Government has a basic obligation, whatever the provocation, to place greater emphasis on embracing its responsibility to introduce confidence building actions and policies to put into effect the economic fundamentals so crucial to laying the foundations for economic growth in the country.

Such fundamentals include:

1. Making the very important paradigm shift to the thinking that Guyana’s most valuable resource resides, not in its vast mineral and forest resources, but in the intellectual abilities of our people.

2. Recognizing that Ministers’ inhospitable utterances and inept actions have the potential to do irreparable damage to the business and investment climate.

3. Broaden the policy currently being placed on education to include the rebuilding of the government’s reward system towards improved standards of scholarship and higher performance criteria.

4. Establish publicly the standards by which public officials will be assessed and do what’s necessary to activate the Integrity Commission.

5. Take the bold steps and introduce higher accountancy standards in Ministries and plug the areas of corruption that have become evident as reported by the Auditor General.

6. Remove the long arm of influence exercised through the appointment of politically malleable Regional Executive Officers who often circumvent the wishes of the people in the regions retarding their legitimate development objectives.

7. Bring the granting of Tax exemptions under a structured system to build confidence.

Government’s Management

It is necessary to state that the public view of the growth in the number of ministries to twenty-two as the Government’s way of, not only providing jobs for the boys, but also presenting partisan interests with opportunities to ‘feather their nests’. Since the increase has not resulted in a better service being offered to the public, it has provided fuel to the public perception that Government could, if it wanted, find funding for the importation of drugs for HIV/AIDS and provisioning for other services and institutions now starved of necessary funding, thus creating the environment for poor governance.

The GDP

The -0.8% decline in the economy raises once again important questions about the data collection policies of the Ministry of Finance. Questions continue to be raised, not only about the need for new surveys to review the weighted values currently in use, but also to provide more relevant and up to date statistics generally to accurately gauge the performance of the economy a necessity in today’s global economy. The Minister should feel obliged to respond to the recurring questions about when the Government envisages the end to the IMF control of the country’s economy? The belief that Guyana is the longest country to be under the dictates of the IMF, raises the specter that Government has failed to satisfy the Fund in its management of the economy.

Political Stability

In closing, the unmistakable economic fundamental for Guyana is of course political stability. Therefore, if the Guyana Government is serious about our country’s development it has no other option but to address this issue. Government has vociferously rejected calls for a national government and calls for power sharing and, in so doing, appears to give the impression that the objective of these proponents is the advancement of ‘power sharing’ per se. Wrong! The objective is to find a solution to the country’s recurring and debilitating political problems. If you reject power sharing you should tell us how and when you intend to bring us peace and stability, and economic development, which has eluded this country for a long time. As the government, the major political party has demanded fair play and that is its right! Fair play should indeed reward those who win, but the rules of fair play also require that those who lose should find the rules acceptable. The central theme here is that not all rules lead to elemental fair play. Some, even commonplace rules work against it. Scholars on the subject say even when rules are perfectly fair in form; they could serve in practice to exclude particular groups from meaningful participation. In a study of the fundamental fairness in a representative democracy, Lani Guinier states that sometimes we construct rules that force us to be divided into winners and losers, when we might have otherwise joined together. I commend to this Assembly Lani Guinier’s book in which she advances brilliant ideas for a positive sum solution to political problems like ours.

The Minister, in closing his budget speech, said ‘let Peace, Progress and Prosperity continue. But, Mr. Speaker, this can only be achieved with Growth And Production With Peoples Assistance, in an atmosphere where there is Peace Not Conflict, to enable us to Rise, Organise And Rebuild as a United Front.

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