Government yesterday unveiled a $220 billion budget with a whopping $6.9 billion in power subsidies, $6 billion for the troubled sugar corporation, $500 million to clean up Georgetown, bumped up concessions for the elderly and parents but no new income tax relief.
Budget 2014 is $11.2 billion larger than last year’s and has no new taxes. It is themed `A better Guyana for all Guyanese’.
The budget was presented to Members of Parliament (MPs), minus Alliance for Change members who walked out since they charged they were not included in the preparation of the annual estimates.
Finance Minister Dr Ashni Singh, who presented the budget, revealed to the House several measures to be taken “to entrench accelerated growth and social development…but also ensuring that they are made in a manner and at a pace closely aligned with the avoidance of penury and instead with the achievement of prosperity.”
The single highest injection is $6 billion into the beleaguered Guyana Sugar Corporation (GuySuCo). This amount is significantly more than the $1 billion allocated to GuySuCo in last year’s budget and on top of the $4 billion in 2012. Singh told the National Assembly that the investment demonstrates the level to which the government is committed to sugar.
This sizable investment, according to Singh, is expected to “achieve the reversal of fortunes that it so badly needs.” The minister continued that the “very tangible” investment will benefit GuySuCo’s 18,000 employees directly though aiding in the preservation of their jobs, “and a total of 120,000 persons directly and indirectly.”
The sugar industry continues to face stark trials including the failure of the Skeldon Sugar Factory to live up to the hype created by government and slumping production.
This huge subvention is likely to be challenged by the opposition for details considering the continued deterioration in performance by GuySuCo. Said Singh: “GuySuCo must urgently increase production, lower cost of production, diversify target markets, and expand value added production in order to survive”. He also pointed to opportunities it must seize: the demand for 70,000 tonnes of brown sugar in Caricom and the capacity to process 50,000 tonnes of raw sugar annually for packaged sugar.
He added that in its plan to respond to these opportunities, GuySuCo embarked on significant capital investments, field conversions and upgrades and factory modernization.
Power subsidies
Guyana Power and Light (GPL) will be allocated $3.7 billion for vital capital expenditure without which Singh said that “steeper tariffs would be unavoidable” He said this support will redound to the benefit of all 17,000 GPL customers and their families. He contended that fuel prices remained high and the power company faced considerable challenges since 2007 covering the cost of its operations without a tariff hike.
Singh said that since no progress had been made with respect to discussions on electricity tariffs for Linden, this year’s budget allocates $3.2 billion for the cost of maintaining the electricity subsidy for Linden and Kwakwani. This translates to a monthly benefit of over $23,000 for each of the 10,500 electricity consumers in the region.
Last year government sought over $10 billion for GPL but the opposition parties combined to slash $5 billion from the amount, arguing that the company had failed to improve its effectiveness despite years of receiving government assistance.
Meanwhile, the 2014 budget includes provisions to the amount of $500 million for the rice industry towards the preservation of its “competitive market advantage.” Singh said that favourable market prices and other conditions, combined with “supportive initiatives by government” have propelled the rice industry to “a historic high.” At the same time though, he conceded that adverse weather conditions and the unpredictable nature of the world market continue to be a threat to the industry.
Government is also proposing to provide $2 billion in education grants “to the parents of every child attending a nursery, primary, or secondary school in the public education system in the amount of $10,000 per child for the year 2014.” The grants would help facilitate transportation and other expenses, and Singh says he expects enrollment and attendance rates of students to go up, as well as the disposable income of 188,406 families. This initiative is expected to build on the improvements already gained through ongoing supportive programmes such as the School Feeding Programme and the National School Uniform Programne.
Government is also planning to undertake a “Clean-up Campaign” in Georgetown and other parts of the country, a “Hinterland Roads” development programme, and a Rural Enterprise Development programme, at a proposed cost of $1 billion each. The Rural Enterprise Development Programme is aimed at promoting more sustainable progress in rural communities by deepening entrepreneurial activities in said communities.
“To this end our government intends to encourage and promote more aggressively the emergence of entrepreneurial ventures in rural communities with an emphasis on small business and labour intensive activities,” Singh shared.
The “Clean-up Campaign,” titled “Clean up my Community,” will take the form of an action plan and will seek to “address the collection and removal of garbage as well as the reporting of residents who irresponsibly dispose of their garbage,” Singh explained. He added that the plan will be spearheaded by government and will entail several components, including tasking citizens and businesses with the responsibility of “ensuring that their garbage is properly discarded in appropriate receptacles.”
The assistance of several stakeholders, including the private sector, citizens, businesses, and institutions, will be solicited. $500 million of the proposed $1 billion “will be dedicated to immediate efforts to clean up (Georgetown).” Singh said that such investments and efforts are necessary since the “comatose” local government bodies responsible for this task are failing to address the problem.
Government has proposed to up its expenditure towards Old Age Pension (OAP), the non-contributory amount paid to persons over the age of 65. The payment will rise from $12,500 per month to $13,125 this year. The 2014 amount represents a 5 per cent increase and Singh says that Guyana’s 42, 500 pensioners would have $212.5 million in additional disposable income as a result. The increase is to take effect from May 1.
Old Age Pensioners also stand to benefit from a proposed increase in government subsidies to their electricity costs through an “OAP Electricity Programme.”
“I now wish to announce that, with effect from 2014, the value of this electricity assistance programme will be increased by 50 per cent to $30,000 per annum for each eligible beneficiary. This will result in an additional $300 million of disposable income being placed in the hands of our most senior citizens,” Singh announced. This proposed investment seeks to build on last year’s investment which saw an annual contribution of $20,000 payable to every old age pensioner who is a customer of GPL. Government also assists with water charges for the elderly to the tune of $200 million annually.
There are also plans in the pipeline towards bolstering the country’s tourism sector. The budget proposes the establishment of a US$4 million ($800 million) “hospitality institute” which Singh says will ensure “young people are equipped to take advantage of the job opportunities that will abound” as Guyana’s tourism sector continues to grow. He said that overall bed capacity today stands at over 3,400 as the calendar of events has increased considerably. Meanwhile, he further stated, tourist arrivals have increased, and Guyana continues to receive favourable international media coverage.
The minister is of the opinion that the institute, once established, will “produce world-class personnel for this important industry going forward.”
Also, government is proposing to invest $200 million to help diversify Guyana’s agriculture sector. “Whether it is other crops or livestock for meat production,” Singh told the House, “the potential exists in Guyana to meet considerably more of our domestic food requirement from local production.” Moreover, he said that Guyana has the potential to command a larger share in the Caribbean’s food market, and argued that this can be made possible with continued investment.
Notably missing from this year’s “measures” are intentions to either increase or decrease taxes in their various forms. According to the minister, “…Budget 2014 is fully financed and introduces no new taxes.”
Measures
1) $6B is to be pumped into the Guyana Sugar Corporation
2) $500M is to be injected into the rice industry
3) $3.7B will be provided to the Guyana Power and Light
4) $3.2B will be allocated for power subsidies to Linden and Kwakwani
5) $2B in cash grants will see parents getting $10,000 this year for each child in a public school
6) $1B will be spent on a countrywide clean-up, $500M of this is for Georgetown
7) Old age pensions will move from 12,500 per month from May 1, to $13,125
8) The old age pensioner annual electricity benefit will move from $20,000 to $30,000
9) $1B will be spent on hinterland roads including the Linden to Lethem artery
10) $800M will be allocated to a tourism hospitality school.
11) $200M will be set aside for diversified food production
12) $100M will be expended to prepare for the dredging of Port Georgetown
