Dear Editor,
I noted the contents in Stabroek News of January 18, ‘Budget fails to deliver to poor, jobless – Greenidge.’
In the article Mr Greenidge was reported as speaking of widespread poverty and unemployment which the budget does not address; making a number of political statements many of which have no connection with reality; claiming that the last ten years were the worst for security and public accountability; accusing the staff of Parliament of destroying or removing parliamentary records for the Public Accounts Committee (PAC) and parliamentary sittings; and criticizing the use of supplementaries, saying they abuse the total picture and can be inflationary.
Mr Greenidge seems very far removed from the realities in our country. These statements tell us that we must now question how sincere and effective were his representations at the Office of Trade Negotiation. He certainly could not have been able to be objective while harbouring such dislike and envy for the PPP/C administration.
I would like to now deal with some comments.
Employment and poverty
Mr Greenidge critizes budget 2011 as not addressing employment and poverty. He is the last person who should speak on this issue as he has no credibility or track record on this subject.
When he was voted out of government in 1992, over 70% of the people lived below poverty line and more than half of them were living in dire poverty. This has been halved under this PPP/C government.
Mr Greenidge has the distinction of being finance minister for nine years. By the end of his seventh year this was the state of Guyana. I am using the excerpt from page 2 of his 1992 budget speech.
● High and rising inflation
● Extreme and damaging exchange rate volatility
● The loss of foreign reserves
● A growing gap between the official and parallel market rates of foreign exchange
● Declining investment, production and job opportunities
● A fractured relationship with external creditors.
I repeat, this was by the end of his seventh year as finance minister.
It took the late Sir John Compton, the late Mary Eugenia Charles and James Mitchell a special effort to get the PNC regime to change. Mr John Compton, then Prime Minister of St Lucia, was instrumental in getting the International Financial Institutions to make some US$372M available to Guyana so we could pay some of our international debt obligations.
The record under him was one of :
● interest rates being over 30%
● double digit inflation
● over 70% poverty
● over 20% unemployment
● Little to no foreign reserves
● Little foreign investment
Today almost all these indices have been halved and the prospects are extremely good.
● Interest rates at their lowest levels for 20 years hovering around 11%
● Inflation contained to under 4.5%
● Poverty rate at under 33%
● Unemployment – using US Bulletin just over 10%
● Foreign resources that can pay for seven months of imports
● Over US$692M in Direct Foreign Investment
● A stable exchange rate – Finance Minister Singh said the depreciation in 2010 was an unnoticeable 0.12%. Repeat, an unnoticeable 0.12%
Mr Greenidge has no grounds or moral authority on which to criticise this government and the 2011 budget.
Job creation
How did Carl Greenidge’s budget deal with job creation? There were few jobs created. In order to give people something to do he had over 55,000 persons in the public sector and state enterprises – most of them did nothing productive – all the House of Israel people were on some state agency payroll while selling plantain chips; the Guyana Pharmaceutical Corporation alone had 300 of them led by Michael Dorne. To pay them we had to print money driving inflation to hyper-inflation levels. Jobs could not be created as direct foreign investments were scorned. The new entrepreneurs brought bread in suitcases to Guyana. Unemployment was at its peak during the Greenidge years.
This government knows that our Guyanese people are proud and want to earn their own money to upkeep themselves and their families. That is why there is a strong commitment to provide the enabling environment for the private sector to grow and create good paying jobs. The almost US$700 in direct foreign investment has been attracted in doing just that.
Worker shortages are hitting the labour market and wage rates have been rising. Our Central Recruitment and Manpower Agency last year had 400 vacancies which were unfilled. We have revamped and modernized it and 2270 persons found jobs through it in 2010. Today, labourers and cane cutters demand $2500 a day. That was what Carl Greenidge’s budget paid a police person a month.
Our world class sporting facilities, improved road network, ICT backbones, tangible commitment to hydro and reduction of business red tape have attracted unprecedented levels of investment-creating jobs and a growing economy.
Poverty alleviation
How did the Carl Greenidge budget deal with poverty alleviation? He could not deal with that. So he had a means test for old age pensioners introduced. Today 43,000 benefit from a tidy sum each month. Many of these are pensioners impoverished by the PNC. Over seven thousand poor people received public assistance. These monthly payments have been increased annually by the PPP/C government. The increases that are provided in the 2011 budget are not a buy-the-old-people-vote strategy; they are an annual increase which they can look forward to. It has been raised year after year.
How did Mr Greeenidge help the vulnerable? Towards the end of the PNC term the SIMAP programme was introduced, but most of those resources were dedicated to building physical infrastructure. Little went directly to the vulnerable. They gave the vulnerable words and more promises. And what they gave, they had to borrow to do.
This PPP/C government today spends over $45 billion of our own money to offer services in health, education and training, and protecting the vulnerable.
In fact, the amount in the budget to directly protect, assist and empower the vulnerable is in excess of $5 billion.
This is how we care by putting our money effectively behind the vulnerable.
Old age pensions will be provided to the tune of $4.5 billion of which $1 billion will be public assistance benefiting 43000 pensioners and 8000 public assistance persons. Youth empowerment for school drop-outs will see over $300 million to benefit 3000 youth. Women’s empowerment will see over $40 millionexpended to assist; 400 feeding and school uniform programmes will run over $500 million; legal aid $35M. Not forgetting health and education are improved and free.
In effect almost $4.7 billion will be spent in helping the vulnerable, and yet the opposition members say there is nothing in this budget for the poor people.
The government programmes have positively impacted on the poor. Our housing programme last year helped 15,000 families, while 23,000 were given electricity, 20,000 eye care and 93,000 kids a meal every day. In addition, the low inflation rate and an increase in the income tax threshold all impacted to help the poor and vulnerable.
Supplementaries
Mr Greenidge, like many of the other opposition personalities is making a mountain out of a molehill. Our supplementary provisions have not taken our budgets above the nominal totals as approved by Parliament. In budget after budget, since Carl’s time, in spite of supplementary provisions the total budgets have been contained to those approved by Parliament.
Supplementaries in the case of the PPP/C government do not mask the true picture of the government expenditure. Much misconception is created by the opposition and it is made out as if in addition to what has been approved in the budget there are all these ‘wicked’ other interventions – ie, supplementaries.
The evidence shows something different. In spite of several supplementary papers, overall expenditure has been lower than what was projected. For example, look at the table below:
For fiscal prudence we ensure that we do not balloon the budget. However, it makes for great sensationalism and political grandstanding. As MP Nandalall would say, “all fluff!”
Every government will have supplementaries. Why?
1. Some programmes where there is faster implementation will require more money than was approved in the budget. This addition, for it to be spent, has to be approved by Parliament. Foreign inflows are a case in point.
2. There may be some projects that are delayed and we would not be able to expend the approved resources. What do we do? Keep the bank accounts growing when our people need housing, better roads and social amelioration? This PPP/C government would wisely spend the available resources rather than save them. What in fact happens is that some projects are brought forward to replace those that are delayed.
The point is that there is no wild expenditure. If there are emergencies, eg, blackouts to be fixed, we will fix them. If workers are laid off and we can help, we do it; if there is a mechanical breakdown on the ferries, we fix it. But look at the record: overall the total accrued expenditure generally is in line with projections in the budget.
I can go on and on and compare the performances of the Greenidge years and the last five years of Ashni Singh, but it is comparing chalk to cheese.
Parliamentary records
The missing parliamentary records clearly must be a figment of Carl’s imagination. He is accusing the parliamentary staff of removing or destroying these records. The senior members of the PNC would know of the credibility of the men in charge of these records. As soon as the government changed Dr Jagan gave orders that Public Buildings should be for Parliament alone. The PNC had starved the Parliament for resources. Accountant General Reports were not handed in.
Debt and debt management
The PPP/C government has performed well in the area of debt and debt management, in spite of what was left by the PNC in 1992. Let’s look at the external national debt. In 1992, it was US$2.1B using a population of 750,000 that translate to US$2,800 per capita – that is for every woman, man and child in our country.
The GDP in 1992 was US$396 call it US$400 – I am using the figure in the 1992 Greenidge budget. What these two figures say is that it would take every man, woman and child over seven years to pay off his or her portion of the national debt. Eighteen years after with the PPP/C in government per capita debt (external) is about US$1500. Per capita GDP, (our earnings) is US$2,500. Thus it would only require just about 7 months of national earnings to repay our external debt.
What this really measures is the burden the PNC-Greenidge government left on the shoulders of our people, all our people. The PPP/C government has eased this burden from a repayment period of seven years to seven months in less than two decades. This is a remarkable feat! Remarkable.
Also what is different today is that this PPP/C government is servicing our debt, paying some $4B directly to principal in addition to the payments on the interest charges.
Under the PNC and finance minister Carl Greenidge, they borrowed many millions in US dollars just to meet current expenditure. The figures below tell the story.
Look at the PPP/C budget of 2009, 2010 and projected 2011
What this says is that we have enough of our money to invest, and towards servicing borrowing for capital projects.
You can liken that to an individual who has money remaining from his monthly earnings after expenses. So he goes to the bank and based on the current account balance he would get a loan to build a home or invest in a business or buy a car or computer.
The PPP/C has restored creditworthiness. Established a solid foundation to borrow for investment in the capital stock of our country.
Taxation burden
Another achievement of the PPP/C government is the reduction of the tax burden on the people. If we look at the taxes as a % of GDP in 1990, this was 29%, in 1991, 25% and in Greenidge’s last budget 34%. Last year that ratio was 22% and with the tax relief of 3.4B in this budget this will be reduced further in 2011.
There is no denying that the four Ashni Singh budgets so far have performed well, containing inflation to single digit levels and keeping the economy on a sustained growth path. I am confident that 2011 will reinforce this trend.
Congratulations to Ashni Singh!
Yours faithfully,
Manzoor Nadir
Minister of Labour