Monday, May 18, 2009

MAILBOX: Let history be the judge of this Govt.’s record, not some chimera

Prem Misir: Debt relief became necessary by virtue of the state of the economy in 1992. What the PNC bequeathed to the PPP/C in 1992 was horrifying.

The country was bankrupt in 1991; Reporting on the PNC ruling years, the World Bank in its 1994 Report noted: “Economic performance worsened significantly… Demand management policies were expansionary, the real exchange rate appreciated, the country lost competitiveness, the balance of payments came under pressure, and the government relied increasingly on price controls and quantitative restrictions on trade.

This further reduced overall economic activity, while spawning a parallel market for foreign exchange that fed inflation; the country’s infrastructure became dilapidated, real incomes dropped sharply, and the government became increasingly unable to provide basic social services”.

In the context of these PNC’s economic failures, the PPP/C early in its Administration had inherited practically zero funds to service the huge external debt burden of US$2.1B and develop the social services sector; and so debt relief became a desired option. Eventually, HIPC and Enhanced-HIPC superseded the traditional debt relief packages.

There is a view that debt relief constitutes begging, an indictment of Guyana’s poverty, and that debt relief is automatically available; a totally incorrect view.

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