The Guyana Agricultural and General Workers Union (GAWU) on May 02, 2018 at its Kingston, Georgetown Head Office engaged a team from the International Monetary Fund (IMF). The Fund is currently undertaking its annual Article IV exercise wherein they assess the country’s economic situation and trajectory after hearing from the Government and other stakeholders as well. Our Union was indeed pleased to welcome the team as it has been for many years now.
During our discussions, which lasted for about an hour and a half, the IMF team was keen to hear from the GAWU our views on the developments in the sugar industry which it said made significant economic and social impacts. We did share with them the sad situation that is now playing out in many villages as thousands of workers have been put on the breadline following the closure of four (4) sugar estates during the last two (2) years. Our Union lamented that the decisions to minimize the sugar industry was taken without any study to really assess the ramifications. The GAWU contended that had such an examination been properly, and more so sincerely, pursued it certainly could have very well avoided the harshness of the situation today.
The IMF team wanted to know how the displaced workers were coping at this time. We did advise that many are unable to get steady jobs and even in those instances where they have found jobs, the conditions are, in many instances, far inferior from what they enjoyed as a sugar worker. This, we shared, has had a telling impact on family life with some workers having to contend with the reality of a broken family, noticeable growth of domestic violence, or to discontinue their children’s education, etc. The issue of severance was raised and we shared that the payments the workers received could not sustain them for any considerable period. On this matter, we expressed our deep dismay that despite the law, the Government paid some workers half of their entitlements with a commitment to pay the remainder in the second-half of 2018.
On the approach to sugar, we told the IMF team, that the Government had changed gear somewhat opting now to divest Rose Hall and East Demerara Estates as opposed to out rightly closing them. This intention, the GAWU said, at least offered some dismissed workers a chance to regain employment. We expressed our deep concern with the dramatic fall in sugar production which moved from some 231,000 tonnes in 2015 to just over 137,000 tonnes in 2017. We shared that the usual finger of blame – work stoppages – could not have been used by GuySuCo as an excuse recognizing that official statistics painted a different picture.
We also informed the team about our dismay regarding the conflicting statements of the Minister of Agriculture in relation to his responsibility for the sugar industry. We said this is a matter that required urgent attention and rectification as it does not serve to inspire confidence. The GAWU also welcomed the recent $30B financing for the industry but, at the same time, expressed our deep concern regarding the absence of a clear plan. We did share that in principle we supported the initiatives but could only be convinced after seeing the plan that would be put forward.
The Union also used the opportunity to share its concerns about the economy and pointed to the 2.1 per cent growth recorded in 2017 as against the IMF’s expected growth rate of 3.5 per cent. We said the large disparity was, indeed, worrying and, the team explained that some sectors of the economy fell below expectations and thus the less than anticipated economic expansion.
We also expressed our uneasiness over the decline in our gold and foreign exchange reserves which have been on a downward trend. In terms of gold reserves, the IMF said that the reserves have been converted to investments by the Central Bank, which they felt was prudent move. Regarding the foreign exchange reserves, the IMF team said that shortfall in export earnings together with higher imports accounted for the decline in the foreign exchange reserves. Nevertheless the currently held reserves are sufficient to cover 3.2 months of imports. The team advised that the international benchmark is to have reserves to cover 3 months of imports. This is not necessarily comforting news taking account that the prices of fuel, which represents a sizeable portion of imports, is on the rise. Even if the reserves remain unchanged, should oil prices continue on its current trend then the available 3.2 months of import cover could very well fall below the international benchmark.
We also expressed concerns regarding the pressures on the Guyana dollar recognizing lower export earnings with a reduced foreign exchange reserve offers very little flexibility to maintain our dollar’s value. On this score, we recognized that keen attention has to be paid to our productive sectors as a depreciation of our dollar at this time would be gravely disastrous. The GAWU spoke about the increasing borrowing by the Government in recent times. The IMF did advise that over the next two (2) years, Guyana’s GDP to Debt ratio would exceed the benchmark of 60 per cent. Nevertheless with oil inflows from 2020, the ratio would decline to acceptable standards. Of course this is not necessarily a guarantee as they are so many factors at play. On the matter of oil, we also shared our concerns regarding the agreement inked and the take for Guyanese. Moreover, we shared with the IMF that we do not believe it is wise to put all our eggs in the oil basket as we are seeing the Government is doing at this time. Such a policy, we said, can prove to be regrettable in the long run.
The GAWU also shared its concerns about what is taking place in the rice sector, where many farmers are barely keeping their heads above water. We decried the Governmental bungling which led to our catfish exports to the USA has been banned. And, we noted that high land rents and drainage and irrigation charges for farmers are serving as another pressure on them whilst acting as a disincentive.
We considered our engagement with the IMF as fruitful and our frank discussions, we believe, helped the team to have a better understanding of workers concerns and the situation in the sugar industry.
