The Guyana government should consider another round of stimulus grants to households like the one from November in its budget slated for Friday February 12. That one was cheered by everyone although it was felt that the amount was too low. Another stimulus from Finance Minister Dr. Ashni Singh would provide further help to the unemployed and those with low income. It does not necessarily have to be in cash. It could be in kind, indirect transfer (reduction of property tax or utility bills or on VAT for flour and sugar or other staples). It would boost economic recovery as is projected in the US and other countries that have been offering stimulus packages to rescue their economy.
For comparison, US is on its third round of stimulus package that gave every American about US$1800 and a further $1400 coming as a cushion against loss of income.The two previous stimulus packages signed into law by President Donald Trump to address the pain caused by the Covid 19 pandemic were helpful to the Guyanese diaspora in America and by extension Guyana herself because some of it would have been transferred to relatives in the homeland.
The proposed Present Joe Biden stimulus package for America also has enormous implications for Guyana. When money arrived or comes into the hands of Guyanese Americans, as is also the case with other nationalities, they have more disposable money. In fact, with the stimulus cheques, Guyanese, among many other people, had more money than anytime over the last year. Some of this money was remitted to loved ones in the homeland. Some were use for travel to Guyana and even for varied projects there. The proposed Biden stimulus includes money for health care, unemployment relief, social welfare, funerals for victims of Covid, testing, education, grants to businesses to remain open or maintain staff, etc., all of which benefit Guyanese and others affected by the pandemic. All testing and vaccinations in the US are free regardless of immigration status. Those who never worked would get stimulus money. More money enters into the pockets of Guyanese, perhaps even more than they would normally earn, and as such they would have ‘surplus’ money that would find its way to Guyana. Thus, by implication, Guyana benefits from the American stimulus packages.
Many Guyanese lost their jobs in America over the last nine months as a result of the pandemic. The unemployment rate in the US skyrocketed since April. Tens of thousands of Guyanese have literally been on the bread line. Thousands have been collecting unemployment and social welfare relief and or acquiring food from pantries. They could not make bill payments. They faced difficulties in paying rent or the mortgage for the home or meeting car payments. Surprisingly, Guyanese were not foreclosing on property, as happened in 2008 to 2010, and as would have been expected from loss of jobs. The government granted relief passing laws to prevent homeowners from evicting tents or banks from foreclosing. The government also gave money to tents to pay rents.
Guyanese welcomed the first two stimulus packages and eagerly await the third that is now proposed by Biden. The first pandemic stimulus package provided $1200 to every tax payer who earned less than $100K per couple or $70K single tax filer; every child also received some $600. The second package gave every taxpayer and child $600. The third package may amount to US$1.9 trillion. It proposes $1400 per taxpayer and $600 for every child plus monthly payment of about $350 for every child for a period of one year. Money would also be given to cities (local governments) and states to pay educators and to hospitals to provide care for patients. Families of deceased (victims of Covid) would receive $7,500 for funerals. There would also be job programs. The cash stimulus per family would be huge. Almost every Guyanese living in the US (and even some working illegally) would be in an improved financial condition to increase remittances to relatives in Guyana. The stimulus would also help to quicken economic recovery in America and around the globe. Thus, global financial institutions welcome and support the proposed Biden stimulus.Unlike in the US, the Guyana government can only afford just over US$120 in stimulus per family or an average of about US$30 per person for an average household of four. Unlike Guyana, US has fiscal space to provide relief for Americans; US can go into deficit spending and print money. The US can afford it. Guyana and other poor countries lack such capacity with their small economies and limited avenues for revenue generation.
At any rate, anyone who studies basic economics would know that much of the stimulus provided Americans would be recovered in taxes on purchases and travels. People would remain employed and as such continue to pay taxes. New jobs would be created leading to further collection of employment and corporate taxes to offset the stimulus grants. Similarly, in Guyana the government would recover some of the G$25K via VAT when families purchased goods or pay fees for state services (like tolls on bridges or purchase fuel).
There is much economic uncertainty caused by this pandemic in the US, Guyana, and around the globe. Tens of thousands of heads of households in Guyana are still unemployed, terminated even before the Pandemic – lost their jobs as a result of the poor economic policies of the unpopular regime. Further aid should be targeted to those who lost their income during the pandemic or were terminated from employment under the coalition regime. There is still a lot of pain for households and businesses from the loss of income that was worsened by the pandemic. Some kind of tax breaks or soft loans should also be given to businesses to help the get back on their feet.
The population was grateful for the $25K. Another stimulus package of $25K should be considered. Perhaps it can be targeted to the very poor who absolutely need it. It is a smart and well-meaning economic measure. Simply put, the government must do more to buffer the economy against the fallout of the COVID-19 shock by bailing out business and helping the vulnerable. It would be welcomed by the public. It would lift the economy and boost government’s popularity. Much of it would be recovered in tax collection on expenditures.
As I observed during my travels in Guyana last month, conditions around the country make another aid package necessary. It will not break the bank. Further aid would only help with economic recovery of the country.