Finance Minister Winston Jordan’s budget has won plaudits from the private sector and other sections of society for the practical prescriptions and measures announced. Pensioners have been given a significant hike and will also secure a subsidy on utility bills. Public servants have been accorded what has been described as a temporary wage increase and $50,000 has now been set as the minimum monthly wage in the public sector. Questions have already been raised as to why the increase is effective from July 1st, 2015 and not January 1st, 2015. Aside from the public servants’ pay increase there was no income relief for the ordinary woman and man. The tax threshold remains the same and tax relief from NIS contributions won’t be available until year of assessment of 2016. The VAT rate remains unchanged even if a limited number of items have been zero-rated and it is now left to merchants to pass this on to consumers.
While a reasonable period will have to elapse before a verdict can be drawn on the projections and assumptions in this partial-year budget one can say that it is absent of any sign of transformative projects. In fairness, the APNU+AFC government has had to address the fate of major PPP/C schemes such as the Amaila Falls Hydro Power (AFHP) project. Since it has been clear for some weeks now that the AFHP is off the table, one would have hoped that the budget speech would have had a clearer and firmer declaration on the way ahead for hydro and other sources of energy considering that the theme for the budget was ‘A Fresh Approach to the Good Life in a Green Economy’. A green economy would have to be fuelled by non-fossil fuel sources and would require immediate conceptualizing and planning if it is to lift the economy in the coming years. It doesn’t appear as if there is a precise framework for working on hydro opportunities in Region Nine and the Potaro Basin. There should be.
There was no sign of any transformative project which could significantly lift GDP or more importantly, create thousands of high-paying jobs. This is the other area in which the budget was severely lacking. Minister Jordan’s presentation paid little attention to the severe problem of unemployment even though he ironically referenced a Caribbean Development Bank (CDB) study which adverted to a 40% youth unemployment rate in Guyana. Even if there was some dubiousness about that figure it was worthy of serious attention once mentioned. That CDB study did not address the level of adult unemployment and underemployment here which remain severe problems in an economy which has been treading water for months now. There should have been some considered attempt by the Finance Minister to lay the groundwork for the creation of high-paying jobs – without unrealistic assumptions – as this is pivotal to releasing the pressure on communities where unemployment is high and which feeds into anti-social behaviour and criminal violence.
What was further disappointing is that the Finance Minister himself made no reference to the level of unemployment in the country, a key indicator of economic wellbeing. It is true that the PPP/C while in government and while Mr Jordan himself would have been in the Ministry of Finance steadfastly refused to present unemployment figures undoubtedly because these were high. However, no serious economy can afford not to have these figures presented as part of a continuous assessment of economic health. With a new government in place, one would have hoped that there would have been greater attention to this figure particularly as the Statistical Bureau would have gathered a wealth of information in its National Census and not least because the Finance Minister himself adverted to the centrality of data in the evaluation of performance.
In his budget speech, he said, “Mr. Speaker, we will be working assiduously to inculcate a culture of data collection, data use, data dissemination and data storage. In addition to this data culture, we will be emphasising the conduct of evaluations, since we must be aware of how we are performing so as to take corrective actions wherever appropriate”.
The Minister added: “Mr. Speaker, it goes without saying that the timely availability of quality statistics is indispensable to proper planning, policy development, budgeting and a wide range of related activities. Our chief data agency, the Bureau of Statistics, has been performing under pressure and adverse conditions. The Bureau will be modernized and provided with the tools to effectively perform and be of service to a wide range of stakeholders”.
It is hoped that the APNU+AFC government will provide the public with an assessment of the depth of unemployment, its pockets of concentration and how it plans to address this problem in the short to medium term.
The most significant job creator referred to in the budget this year was the non-renewable resource extractor Guyana Goldfields Inc which the minister said had generated permanent jobs for heavy duty machine operators, cooks and suppliers of food items. As has been the case with most resource-based operations here jobs tend to be lower paying and subject to volatility as is now being witnessed with the Bosai bauxite operation. The minister projected that at full operation in 2017 and with an expanded mill, 500 persons would be permanently employed along with another 500 temporary jobs next year. Presumably similar numbers of jobs are expected for Troy Resources’ operations. While these jobs are very welcome it is left to be seen what the government’s strategy is to create high-value positions.
Infrastructure building has always been a fall back job creator for economies in difficulty and it seems the government is also looking in this direction.
In his speech the Finance Minister said:
“Mr. Speaker, it is known that quality infrastructure creates a multiplier effect through the creation of jobs, reduction in cost of production of goods and transportation and helps Government to achieve its economic and social goals. But this cannot be done in an unplanned and unorganised manner, as happened in the past when poor conceptualization led to the redesign, abandonment and/or derailment of many of the so-called transformational projects of the previous regime, including the airport expansion and extension project; the specialty hospital project, and the Amaila Falls Hydro Project. These have led to slow and stifled growth within many sectors and subsectors of the economy while becoming a burden to the public treasury.
“Mr. Speaker, our vision for this sector is to develop a structured and integrated approach to public infrastructure development and management that will be guided by a new national transport and drainage and irrigation policy that is driven by a revitalised and re-engineered transport planning mechanism. This policy will see Government articulating new air, road, drainage and river master plans aimed at facilitating communication and creating linkages between our hemispheric neighbours, on the one hand, and between the coast and the hinterland regions, on the other. Within the context of this developmental agenda, Guyana is poised to become a major transhipment hub and gateway into South America and the Caribbean.”
The blooming of this plan and its potential for job creation will be closely watched notwithstanding the fact that this decades-old aspiration for Guyana to become a major transit point between South America and Caribbean and a transshipment hub has remained firmly unfulfilled.
As has been the case in other budget presentations, the Minister expressed optimism of large scale agricultural investment in the intermediate savannahs and Region Nine, the development of new crops such as carrots, turmeric and black pepper and increased exports of others such as plantains, pineapples and pepper.
As Guyana marks its 50th anniversary of independence in nine months it can only marvel at what Singapore has achieved in its 50th year driven by a focus on education, excellence and services. There is much catching up to do and the creation of well-paying jobs is key to creating the good life for all that this government has promised.