APNU and AFC are proposing to effect budget cuts that could total as much as $20 billion, in a move that has stunned the government while easing tension hanging over opposition cooperation over the past four days.
The cuts proposed by APNU and AFC, which in some cases overlap, were signalled in notices of motions circulated ahead of the consideration of spending estimates today and they target government’s Low Carbon Development Strategy (LCDS), the Guyana Power and Light Company (GPL), the Guyana Elections Commission (Gecom) and the Office of the President (OP).
APNU’s proposed cuts include an $18.394 billion provision for initiatives under the LCDS, a reduction by $674.5 million of a $918.7 million allocation for subsidies and contributions to local organisations, and the slashing of allocations meant for presidential advisors in the OP.
Further, APNU seeks to reduce an allocation of $6.7 billion for ICT to $6.5 billion, cut totally an allocation to the Government Information Agency (GINA) of $15 million and an allocation of $65 million for the National Communications Network (NCN). It also eliminates an allocation of $95 million, also under the OP, said to be for minor works.
APNU is also proposing a total removal of the $6 billion subsidy to the GPL, under the Office of the Prime Minister.
The AFC, meanwhile, proposes to cut $500 million out of an allocation of $902.8 million for Gecom; $1 billion out of the $6 billion proposed for the GPL; and $75 million out of another allocation of $130.4 million under the OP for GINA. It also seeks to eliminate $81.2 million set aside for the NCN and reduce by $10 million the allocated amount of $37.9 million for contract employees at the OP.
Carl Greenidge, APNU’s front man on financial and economic affairs, proposed the motion on behalf of the APNU, while Khemraj Ramjattan proposed AFC’s motion. Ramjattan stressed that the party will ask the questions seeking the clarifications and explanations and it is only in the event that the answers are not satisfactory that the cuts will be proceeded with. “It is not as if we propose those cuts that they necessarily will happen. APNU and AFC have to listen to the explanations and if the explanations are not satisfactory to both sides, we will cut,” he said.
Defy reason
Government yesterday afternoon slammed the two opposition parties for proposing the cuts and asked that they withdraw them.
APNU and the government had met again on Sunday for the entire day and APNU’s issues were discussed in detail. “I will not say more about the understandings and discussions reached as we have agreed at this point in time not to disclose the outcome of those discussions until they are actually concluded. We did agree that certain statements would be made by the government and those statements were made,” Minister of Finance Ashni Singh said at a press conference.
“Given that the discussions were ongoing, it did come somewhat as a surprise, the tabling of these proposed cuts and it comes at an even greater surprise when one peruses the cuts that are being proposed. And I have to say that they are extremely alarming to put it mildly and very surprising,” he said.
“In fact, I would call on the opposition to reconsider the cuts that they propose – both the APNU and the AFC – because some of them completely defy reason. The parliamentary majority of one must not be used to demonstrate political power, but must only be used responsibly in the national interest. It could not possibly be in the national interest to cut the budget whimsically and fancifully purely for the purposes of demonstrating political might,” said Singh.
Speaking to the proposed cuts to GPL, the minister said that GPL last adjusted its tariffs in December 2007 and fuel prices have increased between 60% and 70% since then without any adjustment to tariffs. “We therefore proposed $6 billion for GPL in order to assist GPL to meet the rising cost of its fuel bill and to avoid this being passed on to the consumers.
“It is astonishing that APNU would propose a complete cut to the subsidy to GPL. The AFC also suggests a cut with no reason or basis whatsoever. I am not aware of the basis of the computation of their cuts. Let me say that this is a proposal that runs directly counter to the interest of the electricity consuming public and is in stark contrast to the position that the [APNU] has taken [with] regard to Linden,” Singh said.
APNU recently adopted the position that the electricity subsidy should be preserved in Linden, Singh said, “bearing in mind that electricity is virtually free in Linden, paid for by residential customers at rates of between $5 and $15 per kilowatt hour,” he said, adding that persons on the GPL grid pay an average of $64 per kilowatt hour.
“I find it astonishing that the APNU would see it fit to propose to deny the GPL costumers a subsidy while… insisting that Linden continues to enjoy its subsidy,” he said.
Singh added that it was completely incomprehensible that APNU would propose to cut all of the LCDS projects from the budget. On the proposed cuts to Gecom, the minister said, “We have provided funds in budget 2012 to enable Gecom to execute local government elections. It would be recalled that the PPP/C in its 2011 Manifesto promised local government elections within 12 months of the 2011 general elections.” He said it is therefore astonishing that the AFC is proposing that half a billion dollars be cut from the Gecom budget.
Still outraged
Meanwhile, Ramjattan, speaking at a press conference earlier in the day, said the spat between APNU and AFC would not derail the tripartite talks, although he said he was still outraged by APNU’s closed door meetings with the government.
“The Alliance for Change wants to say that this does not in any way make our approach both to government and to APNU one that will be treated as if there is antagonism within the parties. No, that is not the case,” he said.
“I want to make it quite clear that what I did indicate, in an email to my executive that got leaked to the press, did express my personal feelings at that time. It is still my feeling,” Ramjattan said. “I still hold on to those sentiments. I feel indeed that there was a betrayal. I feel that there was an amount of dealing without the AFC being present. However that does not mean that if [President] Donald Ramotar or the Minister of Finance or anybody who would like to [speak] on matters very serious and pertaining to what [we want] so that the Guyanese public could get a better deal, we are not going to miss that opportunity. We are going to go and speak to them,” he said. “If that call is made we are going to invite the APNU with us,” Ramjattan said.
“Similarly, if the APNU wants to have talks with us, we are willing… to proceed apace with their engagements with them too. This must not be a moment when there is disunity all over the place. This tripartite scenario that has been produced out of the elections of 2011 requires wisdom, maturity and also an element of give and take… there must be compromises all around,” Ramjattan said.
Outlining the cuts the AFC planned to propose later in the day, Ramjattan said, “We know the predicament the GPL is in and indeed we feel that we have to be wise and mature and we are proposing a cut of $1 billion.”
On Gecom, he added, that in every normal year where there is not an election, the AFC noticed a pattern where the Commission spends about $1.7 billion to $1.8 billion. “This year we noticed [an allocation of] $2.7 billion and some additional,” he said. “We want to cut $1 billion, because we hardly feel that local government elections will be held this year,” he said, noting that the reform legislation needed to prepare for the holding of those elections still have not all been passed and assented to by the President. “Unless that is done, why should we apportion $2.7 billion to Gecom, knowing that they will very well not have the elections this year? If in the eventuality it does happen and we quickly pass these Acts to the satisfaction of the opposition forces, we could then come with a supplementary appropriation for that additional $1 billion so that we could have our local government elections this year,” he said. “We don’t want to be the victim of a sleight of hand. It could very well be that they want to call a snap [general] election. We want to avoid that. [If] you apportion money there for them, they could very well do that,” he said.
Motions to reduce VAT, income tax
Ramjattan said that the AFC proposes to move motions today, including one dealing with the reduction of the personal income tax rate from 33 ⅓% to 30%. This, he added, will cost the government $2.4 billion.
The AFC will also be bringing a motion to raise public assistance from $5,900 to $7,500, with effect from May 1, 2012. “That will cost in the vicinity of $115 million,” he said.
“We are also going to move a motion asking for the government to bring forth a bill to drop the Value Added Tax from 16 per cent to 14 per cent. It will cost the government $2.8 billion. I think that money could be found, we just got to stop this nonsense of a Marriott [Hotel] and look at the money that come in from the GT&T shares sale,” Ramjattan said. “Marriott alone is US$29 million, which is almost $6 billion. You can withdraw that nonsensical investment and [use it to fund] a drop in VAT. It will help everybody in the country,” he said.
He added that money from the Marriott deal alone could fund the almost $6 billion that it would cost the government to put in place the measures being sought by the AFC.
NCN viable
Justifying the cuts to the NCN’s allocation, AFC’s Cathy Hughes explained that NCN had sent a letter to the AFC stating that it gets 90% of its revenue from “commercial activities” and therefore there was no need for a subvention from the Treasury. “We are happy that NCN is a successful commercial viable entity. As we said before, NCN, from the last two elections, has done absolutely nothing to use public funds to provide equal access not only by opposition parties but by other groups in society. Our argument is that you cannot take state funds and only provide access to information that comes from the government and the PPP,” she said.
She stated that the party accepts that there is a need to have an information agency to provide information on government policies and programmes. “And therefore we are not slashing GINA totally. GINA has asked for $130.4 million. We think that is an exorbitant amount of money. We feel that with a tightly run, efficient agency, government will be able to send out need to know information on their policies and on their projects with a tighter unit,” Hughes explained.
