The Georgetown Public Hospital in Guyana made me pause to reflect a week ago. Like our very own National Insurance Scheme, they issued a “name-to-shame” campaign the likes of which I’ve yet to see elsewhere in the English-speaking Caribbean.
On 23 January, they posted on Facebook pictures of 46 patients seemingly “abandoned” at the hospital. Each photo was individually annotated with the patient’s name and last known address. Forty-one percent are under the age of 60. Four are younger than I am. Approximately 30 percent are women, while 24 percent have no fixed abode. Four of these persons are aged 50 and under. It made me ponder a few concepts we must watch carefully throughout the region.
Guyana has a population of about 800,000 people and is growing, albeit slowly. The majority are women and also younger than 30 years old. It overtook Barbados on a GDP per capita basis just five years ago and, according to the World Bank, recorded total real GDP of US$27.4 billion in 2024. Ironically, some things remain the same. These pertain to the concept of state failure. Allow me to explain.
Guyana has, on paper, all the market-driven metrics that would lead us to think demarginalisation of its population should follow. Inflation has moved, ironically, at a similar pace to Barbados, with World Bank data ranging between 5 percent and 2.8 percent since the COVID-19 pandemic. The Guyanese economy has grown at a faster rate than Barbados has since the mid-1980s. However, the sort of explosive growth (40 percent per annum) experienced since 2020 indicates a few things without diving deeper loads of other the data.
Essentially, any time inflation growth lags far behind real GDP growth, an economist can hypothesise two things. First, growth is driven by investment—on the production side of the economy. Second, wage growth is lagging while consumer spending spikes. Simply put, people are spending more of their wages and possibly saving less. Consumer credit has improved in Guyana, so I am likely to believe the latter, even though the annual value of remittances continues to trend downwards. Therefore, we can assume consumption from local families isn’t being supported by remittances as much as before.
This article isn’t supposed to be solely about the Guyanese economy and society. The lessons, however, are glaring to those economically inclined. The point is that economic growth can work wonders for a few but, if not managed correctly, become a pain for many. Starkest of all to me is that, regardless of its youthful population, Guyana is going to stare itself into a pensions crisis if the attitudes of its people and government don’t align to protect themselves. This blazing economic growth won’t last forever. Development seems to be a secondary concern, however. I’ve gone into why in a previous article, but the government’s concerns have to refocus towards re-education and the preservation of the average Guyanese.
Economic growth does not imply, nor lead to, the sort of alignment I just wrote about. In my experience, modern times have been defined by a tug-of-war between social development and economic advancement. Trinidad and Tobago, and now Guyana, notwithstanding, all the independent English-speaking nations of the Caribbean have this fissure due to debt-laden advancement. In other words, we have borrowed our progress.
This affects us in many ways. There are, however, some brazen similarities. Throughout non-oil CARICOM, we are all afflicted with failing public infrastructure; falling average educational and healthcare quality (similar to what is occurring in Guyana); ageing populations and a definite pensions crisis; and a regrowing wealth divide, amongst many other issues. The common culprits leading to these issues stem from the bulge in public debt and general inefficiencies in public and private-sector spending. Actually, this is the case with Trinidad and Tobago as well, while Guyana is the only nation where infrastructure is actually improving.
It is for these reasons that I tend to be confused about how we view the cost-of-living crisis here in Barbados, as though it is a unique case compared to the rest of the region. I want the public to know that the entire region is humbled by cost-of-living crises, and not just Barbados alone. We are unique in that our debt goes primarily to finance public education and UWI Cave Hill; healthcare; public contracts; physical infrastructure; and wages—all in that order on any good day. I believe that the disbursement of finances, along with monitoring and evaluation, undermines efforts to contain cost overruns and other forms of misallocation. The debt is financed principally by tax revenues.
Barbados has capital controls and a fixed exchange rate meant to protect vulnerable foreign reserves. It is extremely import-dependent for commodities and inputs into manufacturing and services. These, coupled with the aforementioned high dependency on taxation needed to pay down the debt used to finance development, ensure that successive governments will always tax personal consumption. This is why all governments are hesitant to reduce import taxes, levies, personal income taxes, and especially value added taxes (VAT). VAT also serves another important purpose: it is the most efficient form of cash flow the government collects and has become, along with short-term debt financing, one of the main methods used to finance public servant salaries. Note that it is not a progressive tax.
Traditional thought entails that these taxes, therefore, stabilise the economy while ensuring that development costs are continually financed. Moreover, inflation is imported for obvious reasons. Supply of product is often a one-way street: Barbados does not export enough. Most containers that reach our shores often stay here empty, resulting in most importers covering the return costs of cargo ships to other shores. This is a structural issue that won’t be fixed in the near term as we focus our growth on tourism and construction.
Coupled with what I mentioned about the necessity of taxes on consumption, we can see that the cost of living in Barbados will remain high for many. Wages will continue to stay flat simply because Barbados is a low-growth economy as presently constructed. High costs to principally finance development; low growth because we lack competitiveness. These are the crux of why our own economic model is awry.
A major part of our problem also revolves around incentivisation of investment. The country follows a very broken model of the Sir Arthur Lewis economic model, by which it does all possible to attract large-scale capital so as to employ locals. The hope is for effective transfers of skills, by which locals could then become owners of capital in the long run. It just so happens that we never enforced the means to the latter. The concept of explosive growth in Barbados is therefore unsustainable.
Efforts to attract investment by this method always lead to early onsets of growth (spurred on by capital inflows and construction) followed by long-term abatement. Let’s just say I had hopes for the Economic Diversification Act. I understand why it had to be introduced, but it by no means addresses this boom-and-bust model. Let the record show that I have said my piece during this silly season.