THE AFC IS A FISCALLY RESPONSIBLE POLITICAL PARTY

Oct 16, 2011 AFC Column, Features / Columnists

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By Sasenarine Singh

The critical part of retaining teachers is increasing salaries – as it is for all other workers in Guyana.
As the elections draw nearer and with the chances of the Alliance for Change (AFC) being elected to be the new Government becoming stronger, we have to ensure that our financial commitments in our Action Plan are financially sound, fiscally responsible and fully financed.
This column attempts to, in a transparent manner, present our case to the Guyanese people that every single commitment we made will be fully funded by the AFC 2012 National Budget.
The AFC has always put forward itself as a party that respects the concepts of accountability and transparency and will be responsible to the people of Guyana for providing free access to information on our expected fiscal developments.
There will have to be a review of the failed PPP system, where every quarter their Minister of Finance gallops to Parliament seeking supplementary budgets.  Abuse of the Contingency Fund has become a norm in the PPP and that is unacceptable to the AFC. This knee-jerk kind of financial management displayed by the Jagdeo administration is clearly sub-optimal.
We plan to present a budget and stick with it for the full annual cycle unless we have major developments like floods etc.  Our budgets will be driven and backed by a five-year national development plan that will be developed in our Ministry of Economic Development, with a key focus on human development.  In this light, the AFC proposes the following fiscal measures that will have a direct positive impact on the workers and the engine of growth in Guyana – the Private Sector:
1. Increasing public servant salaries across the board by 20% costing the country some $7.1 billion per annum;
2. Reducing the VAT from 16% to 12%, costing the country some $7.2 billion per annum;
3. Increasing the personal tax-free threshold to $50,000 and reducing the PAYE from 33% to 25%, costing the country some $4.2 billion per annum;
4. Increasing the old age pension and social assistance by some 50%, costing the country some $1.7 billion per annum;
5. Corporation tax reduction for the private sector, costing the country some $2 billion.
This adds up to a total of $22.2 billion in cost.
To attain fiscal stability with such a loss of revenue, the AFC is committing itself as a Government to cutting state expenditure without compromising programs to the most needy, as we deal with any fiscal imbalances as part of our fiscal strategy.  In this regard, we shall have tax gains from other smaller taxes like property taxes, excise taxes, import duties, greater efficiency in the collection of fines and fees and we project to benefit from stable dividends from Government investments resulting in an inflow of new funds into the budget amounting to $2.4 billion.
Further, the AFC Government will review every single line item in the current budget to ensure maximum efficiency in the procurement of goods and services using the newly established Public Procurement Commission to drive this mandate of enhancing value for money.
Based on our preliminary projection, we foresee saving of some $6.6 billion on things like equipment and supplies (better procurement on items like the pharmaceutical supplies for the health sector etc), and on subsidies and contribution to international organizations.  We have a big concern on why the Jagdeo administration has to pay some $12 billion a year for subsidies and contribution to international organizations and this line item in the budget will be reviewed immediately.
The AFC Government, using the services of the independent Public Procurement Commission, will reduce the wastage, corruption and fat in the Capital Budget incrementally, and we project that some $4.3 billion will be realized by cutting estimated corruption by 15% in the first year in office without compromising any capital project that benefits the people.
To preserve this saving, within our first month of office, all capital contracts over a certain size will be reviewed and re-negotiated where necessary in a transparent manner to secure better value for the people.  For certain the Amaila Falls Road Project will be reviewed to ensure that the contractor is capable, fiscally capable and experienced enough to complete this road and there are many other contracts in this category.
Let us make it clear, the Amaila Falls Hydro Project and Road will be built under an AFC Government, but in a more efficient, fiscally sound manner.
That all adds up to $13.3 billion in savings, leaving a gap of some $8.9 billion.  That gap will be funded from a combination of stock and flow funds initially and a temporary increase in the budget deficit all geared to drive the stimulation of the private sector to expand and create new streams of tax revenues and the worker to work more productively to create new streams of output for the nation.  This reconciles with our philosophy that all ships raise with the AFC tide.
We plan to source stock funds from NICIL, the Privatisation Unit and flow funds from the Lotto funds, the GGMC Gold Account, the GT&T Dividends Account, all contributing some $5.5 billion of funds reducing the gap in financing to some $3.4 billion. That $3.4 billion can be used to run up temporarily the budget deficit or drawing down on the Norway funds.
The AFC has been notified that some $6.5 billion will become available to an AFC Government in 2012.  Our preference is to draw on grant funds (Norwegian Funds) to preserve the fiscal position of the budget.
We in the Alliance For Change are calling on all right-minded Guyanese – including those few still left in the corridors of Freedom House, Rodney House, Unity House and Congress Place – to recognize that we are being very fiscally responsible, with our focus being on transparency in our actions, fully accountable to the people and with a view of maintaining fiscal stability in the economy.

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