GEORGETOWN, Guyana — Although it has bountiful resources, including gold and diamonds, Guyana is in the throes of one of the worst economic declines in the developing world.
Its 750,000 people face chronic shortages of electricity, water, transportation, fuel and food. Jobs are scarce, and prices are soaring. A gallon of milk costs the equivalent of $3, three times the average daily wage.
Its only thriving economic sector is the black market.
Frustration is giving way to violence and strikes.
Fearing riots similar to those that killed 176 people in neighboring Venezuela in late February and early March, Guyana's military is on alert. The unrest here is simmering at its worst since race riots left hundreds dead in the mid-1960s.
The World Bank estimates Guyana, a former British colony on South America's northeast shoulder and the continent's only English-speaking nation, has had the worst economic decline in the Third World over the last decade.
"We have sunk almost to the bottom of the table, perhaps just above Haiti and Bolivia," the Stabroek News, an independent daily, commented recently.
Guyana has had virtually no economic growth in 10 years and in the mid-1980s suspended payments on its foreign debt, now $1.9 billion. Western creditors have stopped most aid to the country.
But not only does Guyana, which is about the size of Idaho, have a big foreign debt for its size, it has no foreign exchange reserves. It has borrowed $1 billion just to keep foreign currencies on hand for emergencies.
Last year, when the government needed more local currency--the Guyanese dollar--it simply printed it.
Without hard currencies such as the U.S. dollar, Guyana cannot afford to import parts or buy technology, and this has left its infrastructure--roads, bridges, sewers, electric and water treatment plants--to deteriorate. An exodus of skilled workers and poor production of its three major exports--sugar, bauxite and rice--also contribute to the slump.
But the crisis also points to the government's establishment in 1980 of a cooperative republic "in transition from capitalism to socialism."
In the last two years, President Desmond Hoyte has backed away from much of the socialism of his predecessor, Forbes Burnham, who led Guyana to independence from Britain in 1966.
Burnham died in 1985 after years of authoritarian rule. During his presidency, he nationalized 80% of the economy and discouraged foreign and private investment in a bid to make Guyana a self-sufficient, nonaligned socialist republic.
Critics also blame the crisis on mismanagement, resistance to democratic reform and alleged corruption by Burnham's People's National Congress, which has dominated politics since he became president in 1966. The elections in December, 1985, which brought Hoyte to office, were widely regarded as fraudulent.
"There is a big question over elections which has never been addressed, and it's a cancer in the life of the country," Anglican Bishop Randolph George said. "The style has changed with Burnham's death, but it's the same old gang. It's a mini-dictatorship."
Although the government maintains Burnham's socialist policies were not responsible for Guyana's decline, a pending agreement with the International Monetary Fund signals a change of course.
"Private enterprise doesn't conflict with socialism," Prime Minister Hamilton Green said. "We need large inputs of money, and we hope the IMF program will provide incentives needed to grow.
"But it's going to be rough, very rough," he said.
Western creditors want an International Monetary Fund agreement before giving Guyana new aid. So on March 31, Hoyte imposed a three-year International Monetary Fund program that devalued Guyana's currency by 70%, doubled interest rates to 35% and triggered 300% price hikes.
To soften the blow, the government gave state workers a 20% pay increase. But that is small change for salaries that dropped in value to $1 a day from $2.50 as a result of the devaluation. Food prices skyrocketed. Workers have to work two days to buy a pound of chicken or a pint of cooking oil.
"A 20% increase is not enough. We need 1,000%," said Lincoln Lewis, president of the Guyana Mine Workers Union, representing 4,000 of the 5,000 workers in the bauxite industry.
About 20,000 workers from the state-owned sugar industry and all workers in the bauxite sector responded to the International Monetary Fund program by walking off their jobs. A sympathy teachers' strike shut down the University of Guyana. In the monthlong walkouts, about 140 people were arrested, most in demonstrations.
Guyanese Urged to 'Agitate'
"We are going down, like the rest of Latin America, with policies imposed by North America," said Cheddi Jagan, a former prime minister and minority leader in the Parliament who has called on Guyanese to "agitate" against government policy.
Guyana has two main ethnic groups--blacks of African descent and East Indians. Political parties are based largely on racial lines.