Cabinet approves $3.8B for sugar sector…We are not pouring money down a dark hole – Minister of State

Jun 18, 2015 News

---

The sugar industry is saddled with $90B in debt until 2017. Its growth has been retarded by grave mismanagement. And though the country spends more and more to produce sugar, it is still unable to receive a good price for its product.

But to demonstrate its commitment to the Guyana Sugar Corporation (GuySuCo), Cabinet gave its approval for the release of $3.8B to the entity. This was part of a request for $16.8B made through the Minister of Agriculture, Noel Holder for the rest of the fiscal year.
Minister of State, Joseph Harmon, at a press conference yesterday at the Ministry of the Presidency, insisted however that government “is not pouring money down a dark hole.”
Harmon said that the Agriculture Minister briefed Cabinet that the $3.8B will be used for the payment of wages and salaries, current payments to the National Insurance Scheme, payments owed to the Guyana Revenue Authority and the urgent need to purchase fertilizers, fuel and lubricants and spares for equipment.
He said that the purchase of fertilizers is to secure the first crop of 2016 cane as it is already late for the application. Harmon said that the $3.8B approved also takes into consideration, payments overdue to suppliers. The Minister said that this is necessary to reduce the backlog of debt created by the Corporation.
As for the remaining $13B which is the balance of the $16.8B request, Harmon asserted that Holder will return to Cabinet to indicate when more funds would be needed and he will of course have to justify his requests.
Harmon said that Government has already mentally prepared for the likelihood of additional requests coming before year end.
He said, however, that the money was granted on condition that it would be returned to the government’s coffers. The politician said that the cash flow from today to the first week in August 2015, for GuySuCo is expected to be about US$1.267M while expenditure is estimated within the vicinity of US$5.079M.
He said, too, that for the period August to December 2015, GuySuCo is expected to rake in US$13.056M. It is expected that once this money is acquired from its usual sales, 60 per cent of the money advanced would be repaid as agreed.
The Minister noted, however, that for the same period, the company’s expenditure is pegged at some $19.51B. This shows a shortfall of US$6.455M. He said that this shortfall is attributed mainly to the declining prices being received for sugar from the European Market as 60 percent of which it sold there.
He said, too, that a team will be working assiduously to determine if and how the income of GuySuCo can be increased and the expenditure reduced.
Harmon said that in the meantime, the Agriculture Minister will lead a drive to diversify the market by identifying new customers internationally.
Harmon said that Cabinet was also briefed on a number of countries where Guyana’s sugar is sold, but said that there is a need for one to develop a better and deeper appreciation of those markets. Guyana needs to get a better price for its sugar.
The EU market price is not as attractive as it was in previous years, he said.
The Minister of State, asked about the time when the new administration will take the decision to undertake a serious review of the sugar sector, thus changing the perception that the nation is “pouring good money (the $3.8B) down a black hole,” said that such a comment was made to the administration.
It is something the government takes seriously hence, it has asked for a full-fledged Commission of Inquiry into the sugar industry to determine what is wrong and the course Government should take.
“It is not something you wake up easily and just make a decision, one that will affect the lives of so many thousands of Guyanese people. Sugar is like the mother of the trade and labour movements in this country. It’s not a decision this administration will take lightly,” Harmon said.
He added, “We are not pouring money down a dark hole. We are trying to clean out the hole into which the money is being poured and as a result, some changes are being made.”
In that regard, Harmon said that the new government was able to save some US$14,000 after trimming labour in some areas. Some professionals including some Indian national engineers were not doing anything much and as such, were let go.
“In fact, Minister Holder presented to Cabinet some of the measures which are being taken in by GuySuCo to make sure that the actual expenses connected with the Corporation will be brought down significantly, and that is a work in progress.
“We believe that once we get the Management and the Board on a certain level and an inquiry into sugar, at that point in time, we will be able to make a decision on the sector. It will be assisted by the people of the country who will make submissions to the Commission when it comes together,” the Minister expressed.

---

---