Guyana’s opposition to Economic Partnership Agreement leads to loss of 6M Euros

May 24, 2009 News

It is a ‘striking’ coincidence that most of the difficulties encountered in the implementation of European Union budget support came shortly after Guyana adopted a position that was critical of the Economic Partnership Agreement (EPA), according to the government

In a statement issued yesterday, the government noted that during the early rounds of provision of budget support by the EU to Guyana, disbursements were made promptly and in full.

The government was responding to the European Union Ambassador to Guyana, Geert Heikens, who stated that Guyana had much difficulty in meeting the criteria for a 6 million Euros to the General Budget Support thus losing the money. The incident stemmed from the fact that the Guyana Sugar Corporation submitted its business plan six months after the stipulated deadline as set out by the EU for such grants. Henikens said that Guyana was aware that both the sugar action plan and the expenditure framework for sugar for the period 2009 -2011 were due by January 2008.

According to Heikens, he took the courtesy of extending that deadline until March 2008 but the Guyana Sugar Corporation did not submit the plan. It was not until July that year, Ambassador Henikens said, that the plan was finally submitted but by then it was too late.

Yesterday, the government said that it hopes that the difficulties currently being experienced in securing delivery of promised budget support is not somehow connected to the critique of the EPA. The statement noted that they will continue to argue that the anticipated budget support must be delivered in accordance with the financing agreements.

These developments on the part of the EC, the government statement said, represent a fundamental departure from the principles of the budget support mode for delivering aid.

The understanding has always been, it stated, that budget support emphasises the achievement of certain specified results, and is disbursed when these results are achieved. If the results are achieved early, the statement added, then the disbursement is made early.

If the results are achieved later, then the disbursement is made at that later time. The current position of the EC on this matter, suggesting that funds are lost because certain deadlines were not achieved in their interpretation, departs significantly from this principle, the statement added.

GuySuCo Business Plan

In relation to the GuySuCo Business Plan, the government pointed out that the plan for 2007-2016 containing a detailed time-bound investment plan for the GNAP sugar component is prepared by GuySuCo and was

endorsed by the GuySuCo Board of Directors by December 31, 2007.

This deadline was subsequently extended by the EU Ambassador to March 31, 2008, the company admitted.

The undisputed fact of the matter is that GuySuCo did prepare its business plan by the extended deadline and the plan was approved by its Board on March 29, 2008. This fact was communicated to the EC Delegation by the Government, it stated, in its application for the release of the variable tranche.

According to the government, upon the request of the Delegation, the sugar company subsequently submitted further evidence that the business plan was approved by GuySuCo’s board via a letter of certification from the Company Secretary of GuySuCo.

There is, therefore, absolutely ‘no doubt’ that the condition as spelt out in the financing agreement was met, the statement said yesterday.

The statement added that in response to the EC Delegation’s indication that it also required a copy of the plan, government explained that the plan that had been approved by the GuySuCo Board of Directors was under review by Cabinet, to ensure consistency with national macroeconomic objectives.

Following completion of the Cabinet review, it stated that the plan was provided to the EC Delegation in June 2008.

The EU subsequently took the position that the submission of the business plan in June 2008 rather than by March 31, 2008 constituted non-achievement of the indicator.

It is explained in the statement that Government challenged the interpretation of the EC through Guyana’s Ambassadorial representation in Brussels.

The EU continues to disagree, the statement said, and has withheld the funding despite government representation.