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Stabroek News

Ruinous economic path
published: Wednesday | January 31, 2007


Delroy Chuck, Contributor

The Minister of Finance, Dr. Omar Davies, is quite upbeat about the economy. But, what's new? Has he not always been positive and optimistic, even when businesses were downsising and capsizing in the nineties? He asserts that the economy is in the best shape it has ever been during his 14 year tenure, which is not surprising, as even a glimmer of hope is better than the economic darkness this country has endured for the better part of his tenure.

Interestingly, even while Dr. Davies preaches economic recovery, the dollar is sliding and heading relentlessly towards 70 to 1 and maybe worse. Surely, our economic policies were dedicated to protect the value of our dollar. Yet, by any objective assessment, the results have been abject failure. The prolonged high interest rate policies destroyed our export sector, closed hundreds of factories, banks and other commercial businesses, and transferred wealth from the poor to the rich. Repeatedly, I argued in these columns that, in spite of the high interest rate policy, the value of the dollar will be determined by the market. Over the past 15 years, the dollar has devalued by more than 500 per cent, from around 12 to 1 to nearly 68 to 1, which clearly reflects the dumb, ruinous and inordinate economic path.

Lowest inflation rate

Perhaps, Dr. Davies is happy with the NIR at a record level of over US$2.3 billion and the lowest inflation rate for decades. But, how can the Minister be happy when everything else around him is falling apart? While the economy, according to Dr. Davies alone, is in its best shape, the police stations, the hospitals, the roads, the schools, the gullies, the small businesses and the poor and vulnerable are in their very worst state for 25 years and more. Is this how we manage an economy? Ask the sick people who visit the clinics and hospitals if proper health care is readily available and the hundreds of thousands of suffering people in our rural and inner-city areas if the economy is on track and the resounding answer would be an outburst of expletives.

When we consider the benefit to the economy of over US$15 billion from remittances over the past decade - suppose this sum was not forthcoming, what would we have done? Amazingly, during that same period of the remittance windfall, Dr. Davies borrowed more money than all previous finance ministers combined. How can our economy be in a healthy state when the national indebtedness is close to or over $1 trillion or about US$15 billion? When this government took power in 1989, the national indebtedness was under US$6 billion, which shows plainly that increasing national indebtedness is one of its main and ruinous economic planks.

Young people giving up

Dr. Davies gloats about the low unemployment rate, which is a stark reflection of the hopelessness of the unemployed. When young people have tried, and tried, to get employment and failed, they subsequently and sensibly give up and are no longer actively searching for jobs. Since the unemployment rate counts only persons actively seeking employment, in a climate of hopelessness the unemployment rate will be low. In fact, when the JLP resumes government later this year, the unemployment figures are likely to triple within a year of taking office, as hope will abound and the hitherto hopelessly unemployed will once again start searching for work.

Over the past decade and more, Dr. Omar Davies' policies have made people so addictive to high interest rates that thousands are now imprudently being attracted to gambling clubs, which offer unsustainable high monthly interest and huge returns. Just like the typical confidence games, you start to win initially to instil confidence but, ultimately, the loss becomes irretrievable and for the retirees and pensioners, these ponzi schemes are disasters. But, is Dr. Davies' ruinous economic path any different from these ponzi schemes?

Delroy Chuck is an attorney-at-law and Member of Parliament. He can be contacted by email at delchuck@hotmail.com.

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