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Ramsammy blames EU for $4B bailout of GuySuCo
….subsidy will not pull sugar industry out of financial slump–Dr Ramsammy
By Gary Eleazar
Minister of Agriculture, Dr Leslie Ramsammy, sought to defend the $4B bailout for the Guyana
Sugar Corporation (GuySuCo) Friday evening and blamed the European Union, as well as the movement in exchange rates between the Euro and US dollar.
The House, at the time, had resolved itself into the Committee of Supply for the third day to consider the estimates for the Agriculture Ministry.
The bailout for GuySuCo is represented in the budget estimates as a subsidy from the Agriculture Ministry.
Dr Ramsammy told the House that the releases will be from the Finance Ministry and will be utilized to meet operational expenses.
The subject Minister said that there is no clear programme earmarked to be financed from the $4B and rather it will be but part of the pool of resources to meet “operational expenses.”
He told the House that GuySuCo had signaled that in terms of its budget it is likely to face a deficit this year, “and the Government has signaled its intention to support GuySuCo by meeting the projected deficit.”
To this end, and in seeking clarification on the need for the $4B bailout, Volda Lawrence of A Partnership for National Unity (APNU) told the Minister that such a financial position “don’t just happen.”
She suggested that some reasons for such a financial position for the Sugar Industry would be precipitated in part to poor management and shortfalls among other factors.
The Agriculture Minis
Agriculture Minister, Dr Leslie Ramsammy defends the GuySuCo $4B bailout
ter quickly informed the House that it was the short notice of the 36 per cent price cuts from the European Union which has caused the debacle.
This explanation however did not find favour with APNU’s point man on Finances, Carl Greenidge, who quickly reminded the House that he was on the ACP (African, Caribbean and Pacific sugar producing countries) and reminded that the Cotonou Agreement which paved the way for the sugar cut, was inked in early 2000. Even before this, the EU had signaled its intention to cut the preferential pricing for Guyana sugar.
Greenidge told the House that Dr Ramsammy was incorrect to say that there was no notice from the European Union and insisted that even on the Minister’s position of short notice he will differ.
“I differ on the shortness of the notice…The ACP was well aware for a long time that the changes were coming.”
Dr Ramsammy said that he was quite aware that the EU had signaled the intention of making the price cuts but it was an “intention.”
He sought to impress on the House that the actual price cut caught GuySuCo off guard and that the problem was further compounded by the volatility in the exchange rate between the Euro and US dollar.
Dr Ramsammy did remind that as it relates to the Euro, US Dollar exchange rate Guyana has benefited in the past from the movement but on this occasion this is not the case.
As such he said that Guyana has negotiated with the EU to have payments made to Guyana this year with US dollars.
“We hope that with this input that GuySuCo would reach its 265,000 tonnes this year and that with the remedy of the problem at Skeldon we will see a GuySuCo that will be operating at a deficit that is less and soon reach profitability.”
On the issue of oversight in relation to the bailout of the industry and in response to APNU’s Lawrence, Dr Ramsammy told the House that there is a Cabinet Committee in place.
He said that there is a National Action Committee through the Ministry of Finance and also as part of Cabinet oversight that is looking at the activity and the functioning of GuySuCo.
The Minister insisted that the problems started with the EU sugar cuts and were compounded by the loss in terms of the Euro against the US dollar.
Finance Minister Dr Ashni Singh when he presented the 2012 budget had indicated that the government will be providing some $4B to the sugar industry in the form of support.
There was a mixed reaction to the announcement by the Finance Minister but when the occasion presented itself to adjust the amount the opposition did not venture to oppose the bailout.
To date there has been only one substantial challenge to any of the allocations and that was defeated when APNU abstained from voting.
Alliance for Change Chairman, Khemraj Ramjattan had submitted a $9.8M slash to a security allocation for the Housing Ministry after the substantive Minister failed to satisfy the Parliamentarians’ request.
The allocation was for $18.8M, up from $7.3M. Ramjattan unsuccessfully proposed to slash that vote.
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