Guyana qualifies for Millennium Challenge Account, launches anti-smuggling programme

Oct 30, 2008 News

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The tourism sector has already started to feel the effects of the US financial crisis. Many hotels in Guyana are empty, President Bharrat Jagdeo said yesterday.

While he can only guess at the areas in the country that will be affected by the global financial meltdown, the Head of State said that he anticipates that the situation will get worse as these ‘things become magnified in small societies’.

President Jagdeo made the comment yesterday at the launching of the Guyana Threshold Country Plan/Implementation Project (GTCP/IP) at the International Conference Centre, Liliendaal, East Coast Demerara.

The programme seeks to help reduce the fiscal deficit of Guyana by improving revenue performance, enhancing expenditure management and control, and improving fiduciary oversight.

It also seeks to improve the business environment by streamlining business registration and investment facilitation services while at the same time provide capacity building and institutional strengthening to the participating agencies.

In his address, the Head of State said the financial sector in some large countries around the world contributes an equivalent of about eight percent to their Gross Domestic Product.

Even though this amount is minimal, he added, those countries cannot allow any single institution to fail.

In Guyana’s case, he noted, the Guyana Sugar Corporation contributes 17 percent of the GDP and as such it cannot be allowed to fail.

The Head of State said that Guyana’s fiscal deficit is high because of the investment in the Skeldon Modernisation Plant, and this deficit has only been high for a year.

He, however, pointed out that the country has come a long way in managing its fiscal deficit, noting that there was a time when the country’s fiscal deficit was 25 percent of its GDP.

Speaking about the Threshold Country Plan, the Head of State said the programme has a logical sequence in its design and it was done in consultation and in depth participation from the Government of Guyana.

In the seventeen indicators that allow for qualification for a grant, he said, Guyana did well in almost all except in size of the fiscal deficit and the number of days it takes to start a business.

The fiscal deficit was 8.12 per cent when it should have been 3.48 per cent. And the investigators found that it took 46 days to start up a business in Guyana when the time should have been 43 days.

However, President Jagdeo said that in his book Guyana did not fail any of the indicators. Some of the objective conditions that operate in major countries would see them having high fiscal deficits.

Further examination revealed that it takes a mere eight days to start up a business in Guyana.

To deal with the cases of inaccurate information, the President said, he will be inviting representatives from the ‘independent’ sources of information to come to Guyana for a conference.

“I hope that that would make a difference in generating a set of transparent and accurate indicators which can then feed into other processes,” President Jagdeo said.

The invitations would be extended to the Inter American Development Bank, the World Bank, Transparency International and Freedom House, who all undertake studies that influence the manner donors look at Guyana.

“The objective of the Millennium Challenge Corporation and the Millennium Challenge Account is to reduce the fiscal deficit…so strengthening that reform is important in reducing the fiscal deficit because it will hopefully bring in more revenue, not necessarily from higher taxes, but by broadening the tax base and secondly from greater compliance with the tax laws.”

The President said that there was need to strengthen expenditure control, expenditure management whilst ensuring that Guyana’s procurement process was getting the value for money.

While he does not agree that Guyana’s fiscal deficit is very high, the Head of State said that he is comfortable with the logic of the programme.

“It sets out a transparent set of indicators (17) against which a country can go online and see how it is performing. I do not agree with some of the ‘independent’ sources that collected the information…but at least it is transparent.

“Countries like Guyana, he said, often have interaction with bilateral donors and multilateral institutions and have to “jump through ‘hoops that we do not know exist.”

The core participating agencies in the threshold programme are the Guyana Revenue Authority, Ministry of Finance, Parliament, Deeds Registry and GoInvest.

Also addressing the gathering at the launching

yesterday was United States Ambassador to Guyana, John Jones, Finance Minister Dr Ashni Singh, and Vice President and General Counsel of the Millennium Challenge Corporation, Geoff Anderson.

Ambassador Jones said that with any Threshold Programme, it is the beneficiary country that has responsibility for identifying their own priorities for achieving sustainable economic growth and poverty reduction.

“This is not a ‘one size fits all’ approach. The particular characteristics of Guyana’s economy, population, and government structure are naturally different from those anywhere else,” Ambassador Jones said.

He noted that investing in the long-term building of local institutions is a key element of the assistance.

“We recognise that in certain circumstances, short-term assistance projects are necessary and do function effectively, but too often the painstaking labour of strengthening critical institutions themselves is overlooked.”

Through Guyana’s Threshold Country Plan, he added, it is being sought to empower the Guyana Revenue Authority, National Insurance Scheme, GoInvest, as well as Parliament, among others, so that the benefits of this assistance will last long after the last assistance dollar is actually spent.

Under the programme, the government has provided $190M in the 2008 budget for the construction of a Customs warehouse, a boat house for patrol vessels and the procurement of patrol boats for anti-smuggling operations.

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