I refer to my letter of July 4, 2010 in which I addressed the issues raised by Mr. Rajendra Rampersaud in a letter dated June 28, 2010 on the April 2010 Country Report by the Economist Intelligence Unit (EIU). In my letter I indicated that I would subsequently address the reaction of the Minister of Finance Dr. Ashni Singh to the same EIU Report. I now do so.
Let me first disclose my own long-standing relationship with the Minister who I first came to know shortly after he had completed his outstanding education at Queen’s College. He was too young to be registered as a student with the ACCA and his relatives approached me in my capacity as ACCA International Council Representative to intercede with the ACCA on his behalf for special dispensation. My efforts succeeded. When he qualified he asked me to recommend him for membership, a formality which I readily accepted. Our firm’s boardroom still proudly displays a photograph in which he features with Partner Robert McRae when the firm was awarded a recognition with an international body.
I was the only accountant to publicly acclaim his appointment as a Minister, something not even our national accounting body did. For a long time after that, I had, at his request, shared with him, both orally and in writing, my thoughts on issues of interest to his Ministry and our country. There was one request to which I could not accede and that apparently ended what had developed into what seemed to be a very healthy relationship with Ram & McRae and with me.
But notwithstanding his increasingly personal attacks against me the details of my exchanges with him shall remain private even as he makes the unfounded accusation of me as “a self-confessed partisan politician” (GINA release June 26, 2010), and as part of a “tiny cabal” disparaging every transformative Guyana project (MoF Press statement April 20, 2010).
Now to his attack on the EIU whose recent reports on Guyana Dr. Singh claims “paint a misinformed, distorted, warped, and totally inaccurate picture of economic developments in Guyana”, and was “misled and misinformed by one or two political aspirants and spokespersons who pose as independent correspondents and commentators.”
That aside, let us look at some of the issues the EIU April 2010 report on Guyana raised:
1. That Guyana’s operating environment is “characterised by poor infrastructural facilities, high taxes, rampant crime and corruption.” The evidence on each of these is so obvious and compelling that neither Dr. Singh nor the private sector disputes any of them. Surely they are aware of, if not actually suffer from, the daily blackouts despite the unjustifiably huge sums spent on GPL, the failure to keep the promise of tax reform while imposing VAT at an incorrect, inflated rate on several products and services not previously subject to any consumption tax. Lest they say yes, but what about the items that were subject to consumption tax at higher than 16%, I ask how then did the revenue neutral VAT and Excise Taxes produce excess revenues of 48%, much of it wasted in corruption and nepotism on a scale unprecedented in Guyana? As to the EIU’s statement about “rampant crime and corruption” nothing further needs to be said, as the minister well knows.
2. That “following severe contractions in production in the first three quarters of the year, to attain real GDP growth in 2009 would have required an incredibly strong growth rate in the October-December quarter …… Moreover, with import compression thought to have made a major contribution, the government’s GDP growth estimate for 2009 masks the weakness of the real economy.”
Why the ministerial vitriol and bombast in response to this? In 2008, half year growth was 3.8 per cent while in 2009 there was a decline of 1.4%, a cumulative turnaround of negative 5.2%. Full year growth in 2008 was 3.1%, representing a decline in the second half of the year, in stark contrast with 2009 when a decline over nine months was transformed into a huge positive not in six, but in three months. The Bank of Guyana data show that the poor performance continued into the third quarter, so the challenge to Dr. Singh and his independent but voiceless professionals in the Stats Bureau was for a rational explanation of the dramatic turnaround in the fourth quarter of 2009. That is all.
3. That there was “little evidence of what was driving growth during the second half.” Dr. Singh offers in response growth in rice, sugar and gold but does not tell us how sectors that account in total for 17% of GDP can account for a turnaround of 3.8% in six months over 100% of the economy.
He adds that “the [official] numbers are sourced from the sectors themselves and can be verified directly with those sectors,” and that it “is nothing short of absurd and dishonest to call into question these numbers.” It is Dr. Singh who is being absurd and dishonest by conflating production numbers into GDP figures. GDP is a value not a quantity and a 3% increase in production does not automatically translate into a 3% increase in value. Prices will simply be another variable in the GDP equation.
4. Dr. Singh’s anger becomes uncontrollable when the EIU report quotes from a 2009 Business Outlook Survey by Ram & McRae in which 60% of the respondents reported no confidence in the economy. The survey is described as “politically motivated, highly flawed, and designed to distort the facts and present a negative picture of Guyana under the current administration”, and the principal of the firm, (i.e. me) as “a self-confessed partisan politician”.
Dr. Singh has never, as far as I am aware, sought from any of the partners of the firm the methodology or software it uses in the Survey and did not have a problem with the Surveys in 2006 and 2007 when reported confidence in the economy was high. Those findings were then welcome and widely publicized in the state media. Nor was I “a self-confessed partisan politician” when I was asked by him and the President for assistance on certain matters; when his party asked for tax ideas on their 2006 Manifesto; or when I was visited at home by a high priced Presidential Advisor for consultations on a range of issues.
5. Further, Dr. Singh should be careful in impugning anyone’s integrity, professional or otherwise. His own situation where the wife of the Minister of Finance is the de facto head of the Audit Office is unique, a violation of all the tenets of professional independence, and an embarrassment to this country; he was complicit in the untruth perpetrated in the National Assembly over the $4 billion paid to GUYSUCO in 2009, participating in, and contributing to the devaluation of that august body; and complicit too about the error in the VAT rate that instead of consumers paying $12.1 billion in VAT in 2007, they actually paid $21.3 billion, that is more than 75% more! He was, we recall, also centrally involved in the unlawful concessions given to the Ramroop group. These occurrences and circumstances all speak for themselves, and require no elaboration from me.
But I will show faith in Dr. Singh and look forward to a higher standard of integrity and competence from him in, among other things: ensuring that public moneys are paid into the Consolidated Fund and not the Office of the President or special accounts; ensuring a strong, independent Audit Office; publishing of the mid-year report within the statutory deadline set in the Fiscal Management and Accountability Act; tabling in the National Assembly annual reports of state entities required by the Public Corporations Act; ensuring that NICIL, the Board of which he is Chairman, begins to operate within the law and its own constituent documents, including having its accounts audited and filed as the law requires; granting concessions under the Income Tax (In Aid of Industry) Act on an objective basis rather than on political grounds; and taking a stand on the high level of corruption that has engulfed public finance in the country.
I know he possesses the integrity to rise to the occasion. I am less confident about his courage. But hopefully he will reflect on the oath which he took on being appointed, and will recognise that more than at any time, Guyana needs from its Finance Minister this level of integrity and courage. While he struggles with these challenges, I also suggest the temperance and language befitting his position.