Gov’t matching supply, demand effectively to avoid economic overheating

–  Jagdeo

The government has successfully managed the economy to avoid the negative effects of the ‘Dutch disease’ amid the complex global economic landscape, according to the General Secretary of the People’s Progressive Party (PPP), Dr Bharrat Jagdeo.

Speaking with reporters on Thursday, the GS underscored the importance of effectively managing the supply and demand in the economy to prevent it from overheating.

It is crucial, to balance the supply of goods and services with the high double-digit economic expansion to prevent detrimental, short-term consequences.

“This is an economic phenomenon that you cannot get away from. Whether any party is in government…you can’t defy the law of economics; there is upward pressure on price movement, because the demand for goods and services, far outstrips this supply,” he detailed.

For instance, with the construction industry booming in Guyana, there has been a shortage of sand and stone, leading to price hikes.

The government has responded by opening more government-owned sand pits and granting additional licenses to aggregate supply. This proactive approach has led to a significant reduction in stone prices from $15,000 to $10,000.

The GS pointed out, “It’s down back to $10,000 because of the increase in supply because of our government’s action. So, it is navigating a complex period when you have growth.”

Furthermore, despite rapid economic expansion, the nation’s inflation rates are below the regional average, which Jagdeo attributed to the government’s measures.

This unique achievement in maintaining low inflation rates while experiencing substantial growth is a feat unmatched by other countries

“This is no small task or no small achievement of a government to be able to grow at the rates at which we’re growing and the demand for goods and services, the pace at which we are growing and still keep your average inflation rate lower than your counterparts that are not growing at all.”

Furthermore, Dr. Jagdeo underscored the government’s focus on preserving the nation’s competitive exchange rate and enhancing the competitiveness of traditional sectors.

He mentioned the diversification of non-oil sectors using revenue earned from the oil and gas industry to ensure economic stability and sustainability.

The government’s strategic measures include prioritising sectors with long-term benefits, such as healthcare and education expansion, human resource development, and creating an economic structure to attract investments in traditional sectors.

Acknowledging the criticism faced by the government, Dr Jagdeo emphasised the need for sustainable policies that may not always be popular but ensure significant long-term benefits for the people.

“This principle sometimes gets lost when I read editorials and newspaper articles and listen to the opposition. We lose sight of this principle when we hear the pronouncements, they make about how we should spend revenue at this point,” the GS exclaimed.

He stressed the administration’s vision for long-term sustainability, including environmental sustainability, climate resilience, and the resilience of vulnerable sectors.