There had been apparent controversy regarding both prices and incomes data generated by official reports purportedly measuring the Guyana Cost of Living, reflected by the Consumer Price Index, CPI and the Nominal Gross Domestic Product, GDP. There is a further complication as the World Bank raised Guyana’s low income status to a high income status using a measure called Gross National Income, GNI. The distinction between GDP and GNI is GDP adds up all the incomes generated by people working in various sectors of the domestic economy plus the dividends, interest, and rental incomes generated locally. The capital assets, machinery, buildings, and rental properties owned abroad by residents of Guyana as their non-resident incomes are added to GDP to give the GNI.
The public is unable to track their GNI economic status as a High Income Country, HIC because of lack of local reports, detailing the ownership of capital and properties earning income abroad by residents. Presumably, the World Bank has the reclassified information that is a secret.
‘Guyana’s GDP per capita was among the lowest in South America, extraordinary economic growth since 2020, averaging 42.3 percent over the last three years, brought GDP per capita to over US$18,199 in 2022 (YS$1,517 per month), from US$6,477 in 2019 (US$540 per month). Real GDP is estimated to have increased by 63.4 percent in 2022, primarily driven by the expansion of oil production but also strong growth in the non-oil economy. The development of the O&G sector has allowed a notable scale-up of investment in infrastructure to support growth in other industries’. (See, https://www.worldbank.org/en/country/guyana/overview ).
Are civil servants and school teachers making even the average GDP, US$18,199, not the added non-resident incomes generated abroad? Is this high income for a certain segment of Guyana’s population the source of overheating concern by the IMF Managing Director?
Guyana’s money valued GDP and its GNI are intractable because of lack of timely publications by the Agency that has a statutory responsibility as a primary source of information, namely the Guyana Statistical Bureau.
The Bank of Guyana as a secondary source user of the data handed to it by the Bureau, reported an inflation rate it projected for 2023, as 3.8 percent. Such a low inflation rate does not signal an ‘overheated’ economy in 2023. The Bureau needs to measure and publish the Country’s Cost of Living Index, the CPI Index independently of any institution, local or foreign for union and management to use in contract negotiations.
The CPI is an important number for contracts involving the use of both labour and capital in Guyana. It is also used as a consistency check in financial markets, such as home mortgage lending. Is Guyana’s measured inflation rate close to the 6.5 percent used to adjust wages? It does not appear so. The number could be much higher as people see much higher price increases than 6 or 7 percent.
If the said 6.5 percent was arbitrarily used to adjust wages, then it is a predetermined number outside the workings of the Guyana economy and could very well mislead policymakers, including Washington bankers.
The Minister of Finance in his Budget 2024 Speech reported a 33% real economic growth for 2024. If prices have increased by 6.5%, this implies that the Nominal GDP for 2024 will increase by just 2.1%. This is misleading labour unions and policymakers as we observe double digit Export Growth in the oil sector, alongside imports of floating ships or lease payments in Guyana’s National Accounts. The data on incomes generated from all of the non-resident assets that residents own to raise Guyana’s GNI is just missing. Similarly, the CPI official data is missing or unreliable.
Sincerely,
Ganga Persad Ramdas, PhD, MA, MS
Article Originally Published At: https://www.stabroeknews.com/2024/02/18/opinion/letters/cost-of-living-index-data-is-missing-or-unreliable/
