Chapter 6 of the 2014 Budget Speech contains twenty-two paragraphs covering 13 measures and their justification. The cost of the measures, a significant portion of which represents actual or disguised subsidies, amount to $20,100 million. We now look at those measures and offer our comments.
Support to the Sugar Industry
An amount of $6,000 million has been allocated to Guyana Sugar Corporation to help achieve the reversal of the fortunes the company “so badly needs”. The justification offered by the Minister is tangible support for the 18,000 workers of the company.
Meanwhile, taxpayers have been left in the dark for far too long on what the Minister refers to as the “soon-to-be-appointed new board of directors and senior management.” We may never see a detailed analysis of the outcome under the 2009-2013 Turnaround Plan. On the other hand, the Minister made no mention of the 2013-2016 strategic plan which was reported to have been finalised and submitted to the Parliamentary Sectoral Committee on Economic Services.
In the past four years the sums allocated to the company amounted to a staggering $15,300 million. The Minister noted in his speech that “Government transferred a total of US$195 million to GUYSUCO over the period from 2005 to 2013 in support of its various restructuring and turnaround initiatives. This exceeds the total of €110.1 million equivalent to US$145.9 million received from the EU…”
Rice Industry
$500 million will be injected in the rice sector, which has prospered under the Petro Caribe Agreement with Venezuela, to help the sector increase competitiveness and resilience. The Minister gave no details on how this money will be spent and whether payments will be made direct to farmers. Rice farmers protested the National Assembly on the day of the Ministers Budget presentation and a test of their satisfaction would be whether they return during the budget debates.
Other Agriculture
$200 million will be provided to the sector to promote increased and diversified food production which includes the acquisition of planting material and breeding stock for distribution to farmers.
Unless there is a well-defined and executed mechanism, the allocation to these two agricultural sub-sectors (rice and other agriculture) can be used selectively and improperly. Given the tendency of the Government to help their constituencies, there must be real fear whether these are truly economic initiatives which will enhance production and productivity.
Rural Enterprise Development
$1,000 million was provided for the emergence of entrepreneurial ventures in rural communities with an emphasis on small businesses and labour intensive activities.
Again, the Minister gave no indication how this project will be executed. There are some real risks associated with this allocation and unless it is properly defined, the National; Assembly find it difficult to justify the approval of this initiative. We believe that such allocations without any proper controls invite irresponsibility and attendant corruption.
Tourism Development
The Minister announced that the Government will “commence making a US$4 million investment for the establishment of a hospitality institute to … produce world class personnel for [the] industry.”
Whether intended or not, this is convoluted language which needs to be clarified at in the Committee of Supply stage. A total of $55 million has been included under Capital Expenditure of the Ministry of Education as “Provision for Hospitality Institute and Institutional Strengthening – CDB”. Of this amount, only $5 million is local funding while $50 million appears to be coming from the CDB.
Port Georgetown
A special purpose entity is proposed to execute a project for the dredging of the mouth of the Demerara River. An allocation of $100 million to allow for preparatory work of technical and other assessments has been proposed.
Support to the Guyana Power and Light Inc.
$3,700 million has been allocated to the national power company to support capital expenditure. This is on top of $11,200 million injected in 2013.
Apparently the Minister does not consider it necessary to inform the National Assembly of the financial performance of Guysuco and GPL in 2013 and whether the $6,000 million and the $3,700 million will allow the companies to return to profitability. We are left to wonder whether these subventions will be required for several years to come.
Linden Electricity
The Linden Electricity subsidy will continue in 2014 with $3,200 million being provided to meet the cost of maintaining the electricity subsidy in Linden and Kwakwani. It appears that the Government has abandoned all hopes of regularising the situation or to offer any incentives to promote efficiency and cost-savings.
Old Age Pensions (OAP)
The Minister announced a $625 per month increase in Old Age Pensions, moving the amount from $12,500 to $13,125 per month from May 1, 2014. This represents a 5% increase over 2013.
OAP Electricity Assistance Programme
The Government has also decided to increase the Electricity subsidy to pensioners from $20,000 per annum to $30,000 per annum, or $2,500 per month meet their obligations to GPL for electricity charges incurred.
Hinterland Roads
$1,000 million was allocated for the rehabilitating of critical interior arteries including the Linden to Lethem road.
Clean Up Campaign
$1,000 million has been earmarked for the implementation of a Clean Up My Community action plan/Clean Up My Country initiative for which $500 million will be dedicated to immediate efforts to clean up the capital city.
Seems that the Government is proposing to enter into garbage collection rather than strengthen local government institutions. This can hardly be the way to resolve the crisis in local government and at City hall.
Education Grants
A cash grant of $10,000 will be provided to the parents of every child attending a nursery, primary, or secondary school in the public education system which will total cost of $2,000million annually.
Overall comments
It is most disappointing that this is the best the Minister of Finance could come up with for the economic advancement of the country. It is a spending list not reflective of the Minister’s calibre. An analysis of the proposed expenditure is as follows:
Measure Budget
$(Million) %
Support to sugar 6,000.0 37.5
(Economic) Rice 500.0 3.1
Other agriculture 200.0 1.2
Guyana Power & Light 3,700.0 23.1
Tourism 5.0 0.0
Port Georgetown 100.0 0.6
Hinterland Roads 1 ,000.0 6.2
Total 11,505.0 71.8
(Social) Linden Electricity 3,200.0 20.0
Rural Development 1,000.0 6.2
Education Grants 2,000.0 12.5
Old Age Pension 212.5 1.3
Electricity Assistance
Programme 300.0 1.9
Total 3,512.5 21.9
(Other) Clean Up Campaign 1,000.0 6.2
Total 16,017.5 100.0
The measures announced represent 7.3% of total budgeted expenditure for 2014.
The Minister it seems is inviting, or rather daring the parliamentary opposition to slash many of the allocations which clearly have not risen to the level that deserves being labelled “projects”.
It is unbelievable too that the Minister tabled not a single idea on taxation or identified specific measures to move the economy forward. This menu of spending will have a difficult time winning support.
