Minister’s poor understanding of global economics evident in the budget
Feb 06, 2025
Dear Editor,
It was said during the debate that now, while oil prices are high, is the best time for Guyana to take on debt and invest. Unfortunately, the Minister that made this statement made it clear that his understanding of global economics needs to be further developed.
When oil prices are high input costs are also high. Making it expensive to do development projects that are affected by high oil prices. Things such as asphalt and other direct and indirect inputs increase the cost of many of the projects being undertaken by the government at this time. Interest rates are also higher at this time, so as to cool down the global economy and encourage savings, while preventing inflation from rising sharply.
Something which the current administration has not undertaken. As oil prices decline the input costs for many infrastructural projects decrease and, in most cases, interest rates decline so as to encourage investment and foster economic growth. An investment environment that is also favourable to low inflation. Guyana’s current investment strategy is at odds with well understood global economic development strategy. The House of Parliament should consider this very important reality and adjust the nation’s development strategy so as to be in sync with the global economic climate, while enabling the reduction in the exposure to high inflation and high input costs. Such a reduction will also improve national savings due to the availability of high interest rates. The avoidance of loans to fund development projects will also prevent the nation from being exposed to the current high borrowing rates that are indirectly linked to oil prices. We must do better in our management of the nation’s purse. We must do better for the people of Guyana.
Best regards,
Mr. Changlee
(Minister’s poor understanding of global economics evident in the budget)
(Minister’s poor understanding)
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