Tag: Jagdeo

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President Jagdeo’s land dealings not above board

President Jagdeo has finally confirmed that he has acquired land in Pradoville 2. He described the price as $5 million per acre without stating how many acres he bought. The word is that it was 2.5 acres of land, which if true is arguably the largest single plot of land by any individual in any residential area in Guyana.

Mr Jagdeo had been among the favoured comrades and strategic individuals to receive an allocation of land in Pradoville 1. He did not build until several years later, rented the house no doubt for a decent rent, and later sold it for a substantial gain. Soon after, in negotiations in which he was influential as both buyer and seller, he acquired land in Pradoville 2 at a concessionary price.

The President enjoys the following exemptions from taxes under the law:

1. on his official emoluments under the Income Tax Act;
2. from all customs duties under the Customs Act;
3. from all obligations under the Property Tax Act;
4. from all obligations under the Capital Gains Tax Act.

Under the Former Presidents (Benefits and other Facilities) Act 2009 in which he was not in an insignificant conflict, Mr Jagdeo will enjoy those exemptions plus a substantial pension and other benefits until death, or until the earlier repeal of the act.

Let us look first at tax issues facing Mr Jagdeo. Since rental is not official emoluments, the net rental income from the Pradoville 1 house is taxable. But Mr Jagdeo’s tax exposure does not end there. He never lived in that house, used it as a commercial venture and then made a substantial profit on its sale. After further consideration and research, I have revised my earlier suggestion (Business Page October 31, 2010) that the gain would be subject to Capital Gains Tax except for the exemption stated at 4 above. It is now my considered view that on a proper interpretation and application of the tax laws, the gain is taxable as income under the Income Tax Act despite the fact that it arose from what would be described as an isolated transaction.

Now to Mr Jagdeo’s land dealings. The standard clauses in transports for the purchase of land in government schemes include:

a) The purchaser must build within twelve months of the passing of transport. Any person failing to do so is bound to re-convey the property to the Central Housing and Planning Authority, subject to be reimbursed with a reasonable sum for any development works undertaken during such period.

b) The purchaser cannot sell, lease, transfer or otherwise dispose of the said property within ten years from the date of transport, without the written consent of the Minister responsible for Housing. If the person wants to do so, the Central Housing and Planning Authority must be given the first option to buy.

c) Anyone who owns real property is not entitled to purchase a lot. If it is found out that the person had owned real property within the past three years he is liable to pay to the Government of Guyana or Central Housing and Planning Authority the current market value of the lot or at its option, the Government of Guyana will be entitled to repossess the said lot upon the repayment of the purchase money less expenses incurred for repossession.

That Mr Jagdeo did not build within twelve months; that he earned rentals; and that he made a gain of approximately $100 million on the sale of the Pradoville property are hardly matters of dispute. He is therefore in breach of the condition under the Pradoville 1 transport and has tax obligations in connection with the property he owned and sold there.

Mr Jagdeo’s attorney may want to make the slick argument that Pradoville 2 is not subject to the rules that apply to government lands. But no one can dispute the arithmetic that 2.5 acres of land in the Eccles housing area (Block A) and comparable land at Diamond would fetch $10 million per acre. It is clear then that $12.5 million for 2.5 acres of ocean front land in the far more exclusive Pradoville 2 cannot be justified and Mr Jagdeo of all people must know this.

When around 1970 then Minister of Works Hydraulics and Supply Hamilton Green acquired government-owned metal sheets to paal off his private property, the PPP, the Catholic Church, the TUC, professionals and all decent-minded Guyanese were outraged. At the instance of Eusi Kwayana, the Ombudsman investigated the matter and exonerated Green. Contrast that with Mr Jagdeo’s shocking and secretive acquisition, contempt for the dignity of the highest office in the land, disdain for the opinion of the people, making a joke of the Norwegians and the United Nations Champion of the Earth award, and the threat and fear of rising sea levels that Jagdeo’s land deals epitomise. It is doubtful that even Burnham knew the possibilities for misuse that his 1980 constitution offered. Hoyte and the two Jagans obviously did not contemplate it. It has taken thirty years and a Bharrat Jagdeo for those possibilities to be exploited to this degree. And we have not seen the end. As a result of his Former Presidents Benefits Act, taxpayers will have to meet for the rest of his life the cost of the maids, gardeners, water, electricity and telephones for a property that under any standards of decency would be considered with more than mere suspicion.

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VAT no burden? What does Jagdeo know

Introduction
In his press briefing on Friday, October 22, 2010, President Jagdeo said that he does not see the Value Added Tax as a burden and therefore there is no need to revise it with a view to lowering the rate. He sought to divert calls for a reduction in the rate of VAT by spinning the consistent increases in the VAT collection as a result of widening the tax net and because of the better performance of the economy over the years. This to me demonstrates how little respect Jagdeo has for the nation and its intelligence.

At one level Jagdeo is right, that he personally does not see VAT as a burden. Indeed he would have been just as right had he said he sees no tax as a burden. And for one very simple reason. He pays no tax in Guyana. Under section 13 of the Income Tax Act, his official emoluments are exempt from income tax. And section 6 of the Property Tax specifically makes that act inapplicable to the President while section 5 of the Capital Gains Tax says that if Property Tax does not apply, then neither does Capital Gains Tax.

Presidential tax planning
Because rental income is not official emoluments it was not tax efficient for President Jagdeo to lease his Pradoville One house, since the net rental would have attracted income tax at the rate of 33⅓%. So what did the President do? Instead, he reportedly sold the property for $120M that no more than two years earlier he had valued in a division of property matter with Ms Varshnie Singh at $10 million. On that transaction alone President Jagdeo saved in Capital Gains Tax approximately $22 million! If the property had been rented over a period of time to earn the same $120 million, then assuming that the maintenance costs were borne by the tenant, he would have had to pay $40 million in taxes.

In other words, the sale by President Jagdeo of his property, the land for which he received at a subsidised value from the state, has cost the tax system between $22 million and $40 million! See why everyone wants to be a president? And on a salary of $1.5 million per month, the state forgoes income tax of close to $10M each year.

In fairness to President Jagdeo, he did not write the tax laws of which he is now the major beneficiary. That was done by Mr Forbes Burnham, whom many describe in unprintable language. Despite their socialist claims, neither of the Jagans thought of repealing this generous piece of legislation. But what Mr Jagdeo has done is made what was a temporary, ex officio benefit into a life-long benefit. Below are the benefits under the former presidents legislation he signed.

Presidential burden
For the rest of his life, President Jagdeo – and all future presidents as well – will enjoy, at the expense of the state, a free and unlimited supply of water, electricity and telephone services to his Guyana home; unspecified numbers of clerical and technical staff, gardener, maid and personal staff; fully paid medical attendance and treatment for himself and family, without limitation; full-time personal security and services of the Presidential Guard Service; unspecified number of vehicles to be provided, all expenses and costs paid by the state; two first-class return airfares provided on the same basis as that granted to serving members of the judiciary.

Most of these benefits would be considered taxable for the rest of the Guyanese. But not for the President. And if you think this is bad, consider that under this act, he will never again have to pay capital gains tax or property tax in Guyana, not ever! The one good thing is that this legislation exists in an act which any later Parliament can amend or repeal. It is worth speculating whether Mr Jagdeo could take the country to court if the Parliament were to repeal this immoral and colossally expensive act. In fact, that is itself a burden.

Clearly then the President does not have to bother personally about the impact of taxes or even VAT. While Mr Jagdeo is a consumer and would therefore suffer VAT on some purchases, unlike other ordinary Guyanese, his take-home pay and his gross pay are about the same. For the average Joe, VAT at 16% would have to be paid out of income already taxed at 33⅓%.

Selling VAT
Not being subject to the country’s wide, deep and draconian menu of taxes, the President may have honestly felt that the VAT is no burden. But let us remember that for practical purposes, he is also the country’s economist-in-chief, is a big spender and knows something about money and the nation’s finances. He played a big role in selling VAT to the nation, the architect-in-chief of a VAT system introduced under his watch four years ago. Yes, we may have adjusted and adapted to VAT and its sister, Excise Tax, but let us not forget that they only came into existence on January 1, 2007.

Having pronounced on the non-burden of VAT, the President then makes what he considers a natural progression in his line of reasoning: there is no need to revise it to lower it. But here he is being disingenuous. He and his Finance Minister have been reminded about his own sweeping, unqualified and oft-repeated commitment to VAT being “revenue-neutral.” So memory lapse is not an excuse. The nation has helped to remind him even as the people plead for relief.

But it did not need an economist to know that VAT was almost instantaneously a burden. Ram & McRae had said in its Budget Focus 2008 that “at some point the law and the tax can become excessively burdensome.” The accounting firm added that “if this point had not been reached, we certainly are very close.”

Remembering GUYEXPO
There was however no need to consider what others said or felt. Just consider what the President and his Finance Minister have said and how they have danced in delicate step on the question of VAT. The President needs no reminder of his speech at the opening of GUYEXPO 2006 during which he repeated his government’s commitment to the revenue-neutrality of VAT when he announced: “We said from the very beginning that VAT should be revenue-neutral, we are not looking to increase the collection of taxes, increase taxes or the revenue base with the introduction of this tax.”

Or that on its introduction, the government was adamant that the rate of 16% was arrived at after careful consideration and that any concession to the pleas of the trade union movement, consumer groups and civil society would undermine the Value Added Tax. Finance Minister Dr Ashni Singh insisted in his mid-year report of 2007 that the tax was revenue neutral. In fact, if we go back some months before the presentation of that report, Dr Singh, rapidly demonstrating all the schemes and skills of a politician, and disparaging the members of the opposition for suggesting that there would be a windfall, made it pellucidly clear how the government had computed “revenue neutrality.”

On page 206 of the Hansard records of the February 15, 2007 sitting of the National Assembly dealing with VAT he said, “If we turn to table VI of the Estimates, we see that the actual collections from the taxes that were abolished with the introduction of VAT, generated a total revenue of $24.3B last year, and so if the actual collections for these taxes were $24.3B for last year, and the projected collection for VAT is $24.8B, I have great difficulty in understanding where, Mde Speaker, is the windfall? These are facts of the matter.”

Well, if revenue neutrality was the goal and commitment, Jagdeo and Singh have gouged the people of this country more than fifty billion dollars.

Dancing with the facts
Dr Singh had to slither a bit when the results for full-year 2007 became public. It showed that VAT and Excise Tax had exceeded budget by $12.6 billion, or 49%. In fact for VAT alone the excess was a staggering 76% but since the two taxes were linked by the government in its revenue neutral commitment, the correct measure was the 49% excess in the combined rate.

By then of course, both the President and the Minister of Finance were aware that the rate of 16% was in fact the result of a mistake which his government had discovered very soon after VAT’s introduction. But instead of correcting the mistake, the government, under pressure to modify the rate, extended a deceptive compromise by agreeing to monitor implementation and make adjustments as necessary to bring relief.

Pity the Poor
For consumers, this was no theoretical matter. VAT is a tax on them. If the tax is not properly formulated, it is a hugely regressive system of taxation because it is imposed on expenditure. The poor do not earn enough to save; they are more affected by VAT than those who earn enough to save. Let us forget for a while that the business class has also exploited the VAT and are the biggest VAT cheats. I have in my possession a single invoice issued earlier this year by a Berbice businessman that was not only in breach of the VAT Act but cheats the revenue of close to $100,000! And that is one invoice for one businessman on one customer.

Sorry about the digression. By the time of VAT’s introduction, the government had removed the lower rate of 20% for the first band of taxable income. The wretched poor and not so poor therefore found themselves in the same tax bracket as the better off folks, paying the same rate of personal tax on income – 33⅓% – and out of the balance were then forced to pay the incorrect, immoral rate of 16% on the VAT-able items of goods and services they consume, including the meal at the corner restaurant.

With all the cheats and cheating, VAT even with poor administration is a huge tax gatherer. And the IMF and the government tried their best and placed considerable resources in ensuring that the poor did not get away. Pity that the same effort was not placed against the VAT cheats that dominate our commercial centres and rural areas. VAT has continued to be a major revenue source and even in 2010 when we expect the economy to grow by less than 3%, VAT takings over the first half of 2009 were 9%. Despite this, the Minister expects the full year increase to be only 5%!

Table: Central Government Abstract Revenue by Head
G$ Millions

Source: National Estimates and Mid-year Report 2010

Conclusion
When the first year results of VAT became known, Ram & McRae confidently and generously said in its Focus on Budget 2008 after the size of the windfall became known that “it would now be immoral for the Government to renege on its commitment to adjust the rate of the tax to make it revenue-neutral.”

Since the year of VAT’s introduction, the economy has grown by 5.4%, 3.1% and 2.3% and for this year it is projected to grow by 2.9%. Compare that with the growth of VAT collection for the same years: 47.82%, 1.06%, 20.4% and close to 6%. But if you take what he said at GUYEXPO 2006, those things had nothing to do with revenue neutrality.

Once again President Jagdeo and Dr Singh have been caught out. I am not sure they care, however, well looked after as they are and with the peoples’ taxes available to silence critics and buy support. My own view is that VAT should be made into an election issue. I am prepared to consider casting my vote for a party that commits itself to correcting the dishonesty that has characterised VAT.

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Who’s left now? – conclusion

The death of socialism
Business Page last week suggested that amidst the cataclysmic dislocation to have rocked the capitalist world first manifested in the housing market in the United States, the response of the governments in the developed market economies is leading to a fundamental rethink of the role of ideology, and in the context of Guyana, raised the question playing on the word ‘left.’ Spreading like wildfire across industries and continents, the dislocation has made it obvious that the crisis goes far beyond the US or its housing market. It has raised troubling questions about the strengths and weaknesses of capitalism and the possibility of the revival of the socialist model of economic development which appeared to have been abandoned after the fall of the Soviet Union in December 1991.

So fundamental and vast is the problem facing the market economies that not even one trillion dollars has been able to calm the waters with the latest potential casualty being the car industry in the US, with the loss of over 2.5 million jobs directly and indirectly if the Big Three – Ford, Chrysler and General Motors – were to collapse. No longer is there any question of whether the state should get directly involved in the economy but only the extent of that involvement. For close to 20 years the world had this illusion that capitalism had solved the cycle of boom and bust, that regulation was the curse and deregulation and the market were a panacea for all the ills facing economies, that wealth in the form of derivatives could be created out of nothing and that socialism was dead.

Ideology
For some, perhaps simplistically, this all boils down to ideology, itself a misunderstood word that means nothing more that a set of doctrines or beliefs that form the basis of a political, economic or other system. Contrary to popular belief the word is not synonymous with socialism but is rather any underlying set of values and ideas and can embrace market capitalism, co-operativism or even religious fundamentalism. In last week’s column I indicated that at one stage the whole of Guyana, barring a small element, had been converted to socialist ideology by Jagan and Burnham and their respective political parties.

To get an understanding of whether those parties still subscribe to that belief I wrote their respective General Secretaries for answers and clarification about their commitment to socialism, and specifically to the PPP, whether the party gives any direction to the government on the kind of political and economic agenda it should pursue. My specific question to the PNC was whether it promotes and supports a socialist agenda. For whatever reason, neither responded to my letter.

It turned out that the PNC had long ago answered that question. In a letter published in the Stabroek News on January 12, 2002, General Secretary Oscar Clarke wrote that he could “think of no political party which can claim to have reversed itself so profoundly as the PNCR. It has changed its ideology and its economics.” That was as clear as one could be on distancing itself from the socialist agenda to which Burnham had committed that party.

Unclear
The situation with the PPP is far less clear. The party’s constitution defines it as Marxist but the party as government was all too willing to pursue the IMF-inspired Economic Recovery Programme inherited from its predecessor. The late President Jagan may have been uncomfortable having to reverse himself as much as he did in embracing the West to the extent he did, but for his supporters to selectively deal with his writings and his actions to show consistency is disingenuous, if not dishonest. I will respond separately to PPP member Rajendra Rampersaud’s letter in Thursday’s Stabroek News but for now he should refer to page 22 of Poverty Cause and Cure in Developing Countries by the late Dr Jagan. Calling for a “new economic planning strategy [which is] based on an anti-imperialist, pro-democratic and pro-socialist programme,” the late President identified the following ‘cures’:

1. nationalisation of the commanding heights of the economy – foreign and comprador capitalist-owned and controlled mines, plantations, factories, banks, insurance and foreign trade;

2. an almost total centralised planning and control;

3. expansion of the public and co-operative sectors;

4. rent, price and foreign-exchange controls.

These were obviously the very antitheses of the ERP which Dr Jagan’s government pursued on taking office in 1992 and no amount of manipulation of the records could explain this as anything but an about-face which has been taken to new lengths by Jagan’s successors. In this regard the PNC is less ambivalent. It would be more sincere if those who now want to protect or embellish Jagan’s reputation would simply explain that confronted with the prevailing international and domestic reality, he and his party had no choice.

Reversal
The completeness of the reversal by the politicians is seen not only in economic polices but in the legislative agenda; the subjugation of the interest of the worker to that of the employer; a tax structure that imposes low or no taxes on passive income while taxing earned income at punitive rates; the shift from direct to indirect taxes; concessions to business at the expense of the worker; and yes, the concentration of wealth to the business and political class.

Billions are spent annually on tax concessions to employers in exchange for their undertaking to provide employment, as though they do so for some philanthropic or altruistic reasons. The number of gas guzzling 4×4’s that are on the road, the majority with concessions, on a per capita basis is one of the highest in the world. But this practice is not only for the businesspersons. It seems that one of the first acts of a parliamentarian after taking the oath of office is to apply for duty-free concessions valued at millions of dollars to purchase a vehicle. At the exclusive community of the political elite in Pradoville the concentration of duty-free vehicles must easily be the highest in the country, with a one-car family being a rarity. These apparently trivial statistics are a measure by which it can be seen how far our society has been transformed. They are never issues that are ventilated.

Intellectual failure
It was suggested to me that one of the failures of socialism was its inability to respond at an intellectual level to the case made by Reagan and Thatcher for the market, and another was the fear of survival of socialist countries following the collapse of the Soviet Union. There is some merit in those suggestions but why have the economists and leaders of political parties not argued for an economic system, without label if necessary, that does not leave the market in charge or one that does not see the role of the government as being a mere facilitator?

Other than Cuba there are only two countries that have embraced state participation in the economy and those are right here in our region – Venezuela and Bolivia. Meanwhile we in Guyana proudly boast of how successful we have been in nationalising state entities which at the end of the day make us as a country poorer. The problem will come when we have exhausted debt write-off, when there is nothing else to privatize and when there is no further windfall revenue from VAT. For all his faults, when Burnham departed the scene, Guyana was owned and controlled by Guyanese. Now we have no control or influence over resources which have passed into foreign hands often with a bunch of goodies to go with them. To reverse that will not be easy, although we saw, as victims, some of that when CDC pulled out of GPL and Reynolds out of bauxite, leaving us to carry the can and the cost. Paradoxically, that is how it is happening in the developed world as well, as more and more businesses take public money in exchange for ceding some control to the government.

Agnosticism
It seems that Guyana’s policy response to the global economic crisis is to wait, see and hope it does not affect us. That is a naïve approach as we already see prices for our main commodities falling and we may soon see a number of Guyanese from the Caribbean returning as the construction job market dries up. In fact this seems an ideal time for a serious re-think of first the kind of society we would like to have, and second the formulation of the economic model that will take us there. That model will inform the investment policy, the regional and proportional development of the economy, the regulatory systems, taxation and the redistribution of wealth, planning and development and the provision of social services. There is no agnosticism in terms of ideology. A political party that seeks the support of the voters and the opportunity to govern has a duty, and ought to have the courage, to tell the public where they stand on fundamental issues.

The shenanigans of Wall Street, fascination with Fortune’s list of the richest this and richest that, greed and power at any cost have corrupted values and ideas. No longer do governments and parties think they need to believe in anything, once they can build a road here and create a few jobs there.

Conclusion
When a more objective judgment is made, the gains from IMF and neo-liberal policies are far from the impressive successes they seem to be. The benefits of free market liberalisation depend on who you are, your party affiliation and how much money or assets you had to begin with. There is no universal solution to begin with so rather than try to answer the question ‘Who is left now?’ I would prefer to see our political and intellectual leaders take the opportunity of the global meltdown to redefine their vision of our country and formulate a plan for taking us there.

Faced with real choices on issues and ideas I believe that our voters would be better disposed to renounce racial cleavages and start concentrating on ideas and policies. At the moment, the choice seems to be between persons of similar ideological persuasion distinguished only by their race.

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Who’s left now?

Introduction
The crisis facing the world economy is leading to a fundamental rethink of the role of ideology and the place of the ‘market’ in economic development. Some twenty years ago there was triumphalism in the West following the fall of the Berlin Wall and the demise of the Soviet Union. With the announcement and celebration of communism’s death mainly by those in the West, the practitioners, politicians and academics who had at one time extolled the virtues of socialism and the egalitarian society and equal opportunities which it would bring to all individuals all went into retreat.

Now it seems that capitalism as practised by those who were the celebrants at the death of communism are experiencing their own travails which offer a rare moment of satisfaction to the tiny minority which is still skeptical of the claims made by capitalism’s chief sponsors. Among this group is Joseph Stiglitz, known for his Nobel Prize in Economics and former Senior Vice President and Chief Economist of the World Bank. In his book Globalization and Its Discontents (2002) in which he not only critiqued globalisation but also argued that developing economies are, in fact, not developing at all, Stiglitz was particularly harsh on the IMF for imposing on those economies and countries, in exchange for loans and other assistance, economic policies “that conform to textbook economics but which do not make sense for those countries.”

In praise of deficits
Suddenly in demand for speaking engagements, Stiglitz, writing in the UK Guardian a few days ago, could barely contain his enthusiasm while speaking for that minority who never ceased having some connection to the Keynesian tradition. Lord Keynes who coincidentally was born the same year that Marx died, was the British economist who published in 1936, during the depths of the Great Depression, the tome The General Theory of Employment, Interest and Money in which his theory was that when the economy is slowing and businesses are reluctant to invest, the government should take up the slack, even if this means higher deficits.

Stiglitz in the Guardian noted that the acceptance of Keynesian theory even by the right in the US offered to those who were not captivated by the power of the market and capitalism, “a moment of triumph, after having been left in the wilderness, almost shunned, for more than three decades.” He posited that what the world was now experiencing was “a triumph of reason and evidence over ideology and interests,” and that some would see this as the end of market fundamentalism, comparable to the fall of the Berlin Wall.

Where have all our socialists gone?
But what happened to our socialists, or rather all of us, when at one time we all seemed to be socialists and the UF of Peter d’Aguiar a mere anomalous nuisance? If we are to take our constitution seriously – and why should we not given that is “the supreme law of Guyana” – Guyana is a state in transition to socialism. The constitution of the ruling Peoples’ Progressive Party, which I could not find on the party’s website, is even more emphatic about the party’s ideology – it is a Marxist party. In his seminal autobiographical work, The West on Trial, the late President and founder of the party, Dr. Cheddi Jagan wore proudly his allegiance to socialism, while blaming the British-US axis of all forms of plots and misdeeds. In fact Dr. Jagan, in the Wynn-Parry Commission into the Black Friday (February 16, 1962) disturbances said he was a communist.

Burnham, who initially came to power on an anti-socialist platform which he shared with D’Aguiar, went on a nationalisation campaign that at one time saw the state controlling some 80% of the economy.

While Burnham surrounded himself with some of the most doctrinaire left-wingers in Guyana including Ranji Chandisingh, Vincent Teekah, Elvin McDavid and Henry Jeffrey, his own commitment and that of his party, the PNC, to the socialist ideology appeared to be based on political control and nothing else. He had hardly been buried when his successor Desmond Hoyte reversed most of the socialist policies and embarked on the wholesale disposal of the country’s assets and resources for which the country received little in return.

The grand retreat
When Jagan returned to power in 1992, entirely out of character he continued those policies lock, stock and barrel, maintaining with the IMF a relationship of obsequiousness while embracing an amorphous and undefined New International Economic Order that had first been raised in 1948 in Cuba. Jagan never explained to his constituents or the country his about-turn on socialism, the IMF and the West, leaving it to others to speculate whether it was due to political expediency or his own conversion.

Whatever it was, his government pursued the same free market economics and model prescribed by the IMF and accepted by Hoyte.

Even before the death of Dr Jagan, economic policy and management of the PPP government was controlled by now President Bharrat Jagdeo who had been a member of the government from its first day in office in 1992. Jagdeo’s policies, on VAT, privatisation, price controls, food production and wages, have been entirely pro-IMF and he never for one moment betrayed his own Russian training. In effect then the policies of successive governments from 1988 to the present have been a renunciation of socialism.

The WPA too had been wedded to the socialist ideal and openly supported the Bishop regime in Grenada and the Cuban revolution. A major influence on the economic philosophy of that party was no doubt its one-time leader, economist Clive Thomas, arguably the best economist this country has ever produced. The TUF remains on paper a capitalist party but its leader sees no contradiction in being often placed in the role of spokesperson for the PPP.

Joining the clubs
For the political parties that were in government, the retreat from their ideological roots was no doubt shaped by developments in a world in which not to have the IMF stamp of approval or to be excluded from the WTO was like being an outcast. Market fundamentals reigned supreme and quietly everyone ceased being a socialist. Indeed, it would be difficult to find any leading member of the PPP – and here I distinguish it from the government – who would publicly describe themselves as a socialist. The PNC under Robert Corbin has lost not only its ideology but direction too, the WPA is peripheral as a force in politics in Guyana while the AFC is, so far as it can be labelled, very pro-market.

Cost and benefits
This column is not setting out as a value judgment on the economic model or policies which we followed at the behest of the IMF.

Nor does it suggest that there were not pluses and benefits from that relationship, however imbalanced. Perhaps both the post-Burnham PNC and the PPP needed an external force to bring investments and financial discipline to the country.

Many of the concessions and debt write-offs the country enjoyed were made possible by our allegiance to the IMF.

If the rules of accounting applied to the government, those write-offs would have been brought into its accounts as revenue, and it is partly those concessions that have made possible the substantial increases in expenditure on social services.

What is often not recognised or admitted, however, is that some of the debt write-off we have received had nothing to do with the IMF or the government, but rather stemmed from the fact that we were among a group of poor countries identified for such concessions.

Those policies have also had their cost. The resources of the country are now under external control and ownership. These foreign companies receive generous tax and other concessions under agreements which in many cases have not been subject to parliamentary approval or made available to the public. And in this regard the Asian wood giant Barama is an instructive example.

That company has reported losses for every one of twenty years while having enjoyed some of the most generous tax and other concessions imaginable. It is not only that those concessions have been costly to the revenue of the country, but they have made our domestic producers uncompetitive. With the various bauxite deals with RUSAL and BOSAI not available to the public, where is the political or public pressure to ensure that the deals are equitable and in the national interest?

One of the criticisms that can be made of the IMF-led policies is that while the national statistics may appear impressive and some Guyanese have seen marked improvements in their standards of living and a few have even reaped immense benefits, a large number of Guyanese still prefer to take their chances elsewhere. The figures show that tens of thousands of Guyanese have chosen to migrate legally or otherwise to seek jobs in just about any country they can enter. In the process, remittances have become one of our largest foreign currency earners and a major factor in any economic analysis. Public sector wages, and indeed wages in segments of the private sector as well, are cruelly low, made worse by a tax system that favours the self-employed and the shareholder over the wage earner.

Time to rethink
The crisis facing the market-oriented economies is causing a major rethink of some of the most sacred tenets of free markets and financial liberalisation. Primed as we are on the daily feed on US television we are aware of the embarrassing manner in which leaders of the US private sector trek to Congress begging for help. Make no mistake, the position in Europe and Asia is no different. When the turmoil is over and the dust has settled, the financial system, the housing and mortgage industry and the auto industry which have been responsible for much of the growth in many of the countries will have ended up in state ownership. While we privatise, they nationalise. That is not only a reversal over what took place for the greater part of the last twenty years, but a total contradiction of the free market. During all of this, the IMF seems to have gone into self-imposed silence.

Even after Guyana ceased being an IMF supervised country some two years ago, the government continued to follow the policies which the IMF imposed on us for so long that we seemed not to know there was an alternative or option. We are fortunate that we are not as vulnerable as some of the other Caricom countries, which because of a higher level of financial integration and tourism in particular, are already feeling the effects of the global storm. But make no mistake – we are not immune. Trinidad and Antigua are cutting back on construction and that will affect us directly. How do we reabsorb those Guyanese workers who may be forced to return home? For us the effects may be less immediate and also less harsh. But affect us it will.

Next week, we will look to see if there is anyone ‘left’ to help shape our response to the new reality brought about by the turbulence.