The need for deeper dialogue on the economy
In quite blunt language, the acting vice-president of operations at the Caribbean Development Bank (CDB) Therese Turner-Jones has cited the ineffectiveness of Bank programmes in Trinidad and Tobago where there isn’t an overarching national plan which is insulated from changes in government.
Her concerns were thematically similar to those recently raised by another major multilateral financier in the region, the Inter-American Development Bank (IDB) through its Chief Economist, Eric Parrado Herrera.
According to a report in the Trinidad Express, Ms Turner-Jones believes Trinidad and Tobago and the CDB’s “story” is not impressive, given that many projects were not completed despite the benefits they would bring. Speaking last week during a panel discussion hosted by the Central Bank of Trinidad, “Building T&T’s Economic and Financial Resilience—The Role of Multilateral Financial Institutions”, in Port of Spain, Ms Turner-Jones attributed this large gap between identified projects and completed ones to administration changes.
“In the last country strategy, we identified over $430 million in projects and less than $10 million actualised. So, that is a concern because in the strategy we identified doing more on water and sanitation…there is a lot of room there and we are doing some technical assistance for your master plan for water resources in the country, but it hasn’t been outstanding in terms of what we have been able to do,” she said.
Citing a comment by Mr Parrado Herrera on the impact of democracy, she said there was a need for deeper dialogue with citizens as opposed to only policymakers.
Ms Turner-Jones said, “Parrado Herrera mentioned something just in passing about democracy and the way we interact with members of our government who are members of our institutions… that dialogue tends to focus on a relationship at a point in time and I think what we need to be doing is going deeper where the dialogue is extended to civil society and the beneficiaries so it is not just seen as being associated with a particular administration.”
She added, “Trinidad’s story, I think, for me, is a good story for maybe how not to do a country strategy meaning it’s typically not aligned with an election cycle and what happens is if it doesn’t get done in an administration then it’s abandoned and we have seen this across the region.”
Ms Turner-Jones said administrations dump projects which are considered to be fine because they may not align with their mandate or they do not see the benefits of it during their administration.
Given the dervish-like wind over the economy here, the words of Ms Turner-Jones and Mr Parrado Herrera should serve as sentinels of caution on the way forward for Guyana. Both the CDB and the IDB have major portfolios here and there will inevitably be ongoing evaluations of progress, execution capacity and the critical mass of the skilled workforce that is necessary for success. That should, however, not detain a national introspection of how this government is proceeding.
The more than US$1b gas to energy project which the government hurriedly conceived on its own and gratuitously based on disparate studies commissioned by the former APNU+AFC government which it has never had anything positive to say about is a case in point.
To overcome the risk of project failure or the possibility that a different government could pull back from it there should have been widespread engagement with Parliament and civil society on the way forward. First, does Guyana really want to be tied to dirty fuels for the next four decades or more considering the primacy of containing carbon emissions? If not what should have been the mix of green energies to be relied on even if the upfront investment had to be extensive? Second, is this largest ever expenditure on a public sector project financially feasible? Will it indeed cut electricity bills in half utilizing associated gas from oil platforms instead of Heavy Fuel Oil? What about its running costs over the life of the plant and won’t this make inroads into the savings? Third, can the public be certain of the managerial and oversight prowess necessary for the success of this project when PPP/C governments haven’t demonstrated such a track record? These are some of the discussions that should have engaged Parliament and civil society before the government set off in great haste. This failure to engage widely was one reason why the Amaila Falls Hydropower Project disintegrated even though there were many justifiable doubts about the thinking behind it including the stress to its reservoir in dry weather, having the base load dependent on a single source and the vulnerability of a transmission line so far from the centre.
The obstinacy of the government on the gas to energy project will likely require more self-financing in the near future on top of the dizzying spending and project launches that are being announced on a regular basis, not to mention the draining of the Natural Resource Fund. The Finance Minister’s visit to Washington last week did not yield an announcement that approval from the US EXIM bank is forthcoming for a US$660m loan for the gas to energy project. With the US general election just months away and given the Biden administration’s stance on new gas projects it is unlikely the green light is coming anytime soon.
With an election here a year away, President Ali is throwing caution to the wind and tying the country down to pumped up spending levels that have not been adequately measured, costed and assessed for sustainability. Fresh off of announcing toll free bridges, the President has now on his own ordained a new hospital to be built on the West Demerara. It is not that a new hospital might not be needed but what is the process involved? Surely on a programmatic basis and a budget presented early in the year it is folly to invite tenders for the construction of a new hospital in September? What will be the features of this new hospital? What examination has been conducted of the current facility to inform the process? Where will the personnel be found to man this hospital given the several others that are currently under construction?
It is worth repeating what Mr Parrado Herrera said in a July 19 Project Syndicate column about entrenching state policies.
“To escape the yoke of political short-termism, LAC (Latin American and Caribbean) countries should embrace a bold solution: national autonomous institutions tasked with designing and implementing long-term, evidence-based policies in key development areas, such as infrastructure, pensions, and education. These institutions should be staffed with independent experts who are appointed to terms that are longer than election cycles and insulated from political pressures”, Mr Parrado Herrera proposed.
Noting that several countries, within and outside the region, have already established independent bodies to offer evidence-based advice on long-term policy challenges he said that these are merely advisory, they recommend policies but have no clout to implement them.
“By contrast, the institutions that are needed in LAC would have the power to design and directly implement policies. Their decisions would be binding – the government could not override them – to ensure that long-term strategic objectives are consistently pursued, regardless of political shifts or short-term pressures, including from powerful special-interest groups”, Mr Parrado Herrera posited.
Particularly because Parliament here is essentially a mirror image of the executive, the government should seek wider berth with the opposition on all of these plans that are being conceived on the float of easy-come oil revenues. It must put the long-term interests of the country ahead of the governing party’s short-term goals.