I think it is relevant to respond to an article from January 29 in the Kaieteur News with the headline: “Raising the public debt ceiling poses a danger to future and current generations – the former finance minister” . In the article, former Finance Minister Winston Jordan is quoted as stating that he does not agree with the government’s parliamentary proposal to increase the domestic debt ceiling to facilitate higher borrowing levels. students. The article also mentions that Mr. Jordan’s position is that the government should use money from the Natural Resource Fund (NRF), instead of relying on a borrowing policy.
This latter position runs counter to the NRF’s goal of being available in an emergency, and which should be used with caution and sustainability for the benefit of future generations of Guyanese citizens. In addition, there is no need to touch the funds accumulated in the NRF at this time as these reserves represent significant liquidity available for current and future circumstances related to economic development and growth strategies. Both private sector entities and governments borrow, even when savings are available, as this ensures that current cash flows are preserved while pursuing growth and development initiatives.
Guyana is expected to pursue an unprecedented expansionary economic policy to offset the effects of one of the most extraordinary events in modern world history: the COVID-19 pandemic. The business sector has persistently called for stimulus and other financial support to cushion the deleterious effects of COVID. Likewise, additional aid and support will need to be extended to citizens in the form of direct cash transfers and other means. Many people have already spent the meager $ 25,000 grant, and a second round of support is badly needed, given that the pandemic now lasts for almost a year.
The Guyanese economy is in a very different situation than it was in the past, thanks to the impacts of the oil and gas economy. This development requires an unprecedented upgrade of the country’s infrastructure as well as higher levels of investment in many areas including education, health care, social security, technology upgrades, etc. . Guyanese citizen.
All of this will force the government to spend more and the most appropriate source of revenue would be to seek debt financing rather than implementing policies that tax citizens and businesses who are already strained by COVID- 19.