Poverty Reduction: In Search of a New Economic Format

• Author: Prem Misir
• Pages: 353-364

Prem Misir 353353

353353

353

Poverty Reduction:

In Search of a New Economic Format

P R E M M I S I R

University of Guyana

23

Introduction

When the People’s Progressive Party/Civic

formed the government in Guyana, following

its electoral victory in 1992, it inherited a

difficult economic base line situation. Violence

that marked the election became a predictable

feature of subsequent elections, and it has

contributed to poverty. Nonetheless, statistics

show a reduction in poverty, which has been

both dramatic and impressive.

Guyana severed its colonial link with Great

Britain in 1966. For 20 years, two of which

were before 1966 and 26 years thereafter

the People’s National Congress (PNC)

constituted the government. In 1988, the PNC

Administration introduced the Economic

Recovery Programme (ERP), by which time,

as the World Bank concluded, Guyana was

characterized by economic and social decline

largely created through misdirected

government policies and an excessive state

role. Real GDP increased at a mere average

of about 0.4 per cent per year. More

specifically, the report stated:

Economic performance worsened

significantly during the 1980s. 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.1

It was this situation of national degradation,

despite the ERP which was driven by the IMF

and the World Bank and which had radically

reduced the government’s role in the

economy, the PPP/C found as its legacy. The

prevalence of poverty in this economic climate

was a foregone conclusion.

Some aspects of the 1992

legacy

Baseline data providing useful comparisons

with the past strengthens the evaluation of

current programmes and projects. We have

to know from where we started, in order to

know how far we have come and where we

have to go. Knowledge of the past is a

prerequisite for understanding the present and

the future.

The PPP/C Government inherited a

logistical nightmare in 1992. The new

administration in 1992 had to grapple with

numerous constraints. Guyana’s foreign debt

was about US$2.1 billion; debt service