Government will be forced to find around US$15M ($3B) to pay rice farmers when they send their next shipment of rice to neighbouring Venezuela due to the previous PPP/C administration’s mismanagement of the PetroCaribe fund, which is now bankrupt.
According to Minister of State Joseph Harmon, it is because of the “very casual and in some cases very callous manner” in which the past administration dealt with the proceeds from the agreement that has left the fund in a state where “there is nothing in it.”
This grim reality was laid out at the last Cabinet meeting by Minister of Finance Winston Jordan.
Attempts to contact former Finance Minister Dr Ashni Singh for comment proved futile yesterday.
“We actually will have to find somewhere in the vicinity of US$15 million to basically pay our farmers when they ship the next set of rice to Venezuela,” Harmon said at a post-Cabinet press briefing yesterday.
Under the PetroCaribe agreement, beneficiary nations can tap concessionary oil imports and source funding for long-term loans from a development fund created from delayed payments for oil. Barter arrangements are also possible as is the case with Guyana’s rice. Farmers here have been paid for rice shipments to Venezuela out of the PetroCaribe fund.
Harmon said yesterday the previous government spent more than what was actually pumped into the fund. He said when Minister Jordan said the government found the “cupboard bare” when it took office, it was not the end of the story.
“Because what you are receiving now, you are receiving demands for sums of monies that had not been paid. So the situation is even grimmer than Mr Jordan had actually said initially because we are getting people who are now turning up to say, ‘Look I was not paid, I was not paid, I was not paid.’ So, it is a very serious situation we face,” the minister said.
Additionally, Harmon said the Minister of Finance indicated that while there was a very long payback period on this fund, it has been reduced to as early as this year as opposed to 2030 because of “a very serious mismanagement” of the fund.
“If you are spending more than you are receiving, then clearly the cupboard would be bare and you will still also have debt to meet. So that is where we are with that fund,” he added.
Meanwhile, in light of Venezuela’s recent decree, which seeks to annex maritime zones belonging to Guyana, Harmon acknowledged that the government is concerned that the issue may have an impact on the PetroCaribe deal.
He said that Minister of Foreign Affairs Carl Greenidge has been in consultation with his counterpart in Venezuela and its Ambassador here, Reina Margarita Arratia Diaz and has been assured that the issue as it relates to the decree will not affect the bilateral relationship between the two countries.
Harmon said money will have to be found as it is no fault on the part of the farmers but has “to do with the way the previous administration managed that fund.”
He also said Cabinet approved the setting up of a sub-committee to examine and to aggressively look at markets for rice. Cabinet was told that, based on the current production, by November of this year production of rice would increase to such a level that the market currently available would not be able to sustain it.
“So Cabinet approved of an aggressive approach led by Ministry of Foreign Affairs and the Ministry of Agriculture to ensure that new markets are found for the production of rice,” Harmon said.
According to Harmon, Cabinet also advised that the governance mechanism within the rice industry be examined carefully to ensure that there was transparency in the appointment of the boards and other entities.
He said while there are rules and laws that cover the government financial systems, the new administration has found “serious deviation from the established system.” “[The] task really would be to bring things back to where it is supposed to be, to bring things back to a recognition that there are laws, there are rules in the way you do things and that we must follow those rules and those laws,” he stressed.
“We have to ensure that entire chain of administration has the respect and so a lot of work will be done in that regard. We are talking about democratic renewal and renewing the strength of the entire democratic institution… we will have to go back to ensure that if this is the law about spending, this is what you do,” the minister further said.
