Draft Budget to be presented to Cabinet in 10 days – Trotman

Jul 16, 2015 News

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– Private Sector recommends proposals for budget 2015, seeks stimulus package

With complaints of there being a lag in the commercial turnover for businesses, the Granger Administration has a number of plans under review to boost the economy. They will however be incorporated in the 2015 budget, a draft of which is expected to be presented to Cabinet within the next ten days, said Minister of Governance, Raphael Trotman.
During a press conference, yesterday, he said that Finance Minister, Winston Jordan, has indicated that he has high hopes of presenting the budget before the National Assembly no later than August month end.
Additionally, the Executive of the Private Sector Commission (PSC) met yesterday with Jordan to discuss certain concerns as well as its proposals for the upcoming budget.
Through a missive, the Commission said that it urged Jordan to consider a stimulus to boost the economy since there has been a slow-down in business. The Minister gave his commitment to consider this proposal.  He also committed to ensuring stability of the currency through appropriate monetary policies.
The discussions between the two also focused on a number of areas, such as the urgent need for liberalization of the telecommunications sector.
In the area of infrastructure, attention was paid to dredging of the Demerara Harbour and the development of road links including the Timehri to Georgetown to East Demerara link, the Linden to Lethem road and the East Bank Essequibo to Bartica Road.
The Finance Minister suggested that a team be put together through the Ministry of Business to look at a Public-Private Partnership for the dredging of the Harbour.
The PSC also expressed its views on the need for renewable energy, especially hydroelectric and solar power projects, but Jordan made it clear that Government does not intend to proceed with the Amaila Falls project in its current form.
The Commission nevertheless urged for the consideration of other renewable energy sources.
With regard to the solid waste dilemma, including problems with the Haags Bosch landfill project, the Commission recommended the consideration of waste to energy systems since Guyana now generates enough solid waste to make these feasible.
It also recommended the establishment of a solid waste management authority.  The Finance Minister then suggested that private capital be mobilized for recycling facilities.
Also coming into focus was reform of the taxation system. The Minister informed the PSC that the Government is about to commission a tax study which would be utilized, along with a study conducted by Duke University, to develop a comprehensive taxation system for the country.
The Commission then urged the Minister to consider a reduction in the rate of corporate taxation since this could increase government revenues.
Jordan shared with the Commission his Government’s intention to examine the Value Added Tax rate with a view to its amendment.  He also shared the Commission’s view that property taxes need to be revisited.
The Minister of Finance assured the PSC that its proposals would be given consideration in the formulation of either the 2015 or 2016 budget. He said that Government’s current priority is the implementation of its 100 day plan with an attendant focus on increasing pensions and salaries.
As it relates to the traditional drivers of the economy, such as gold, rice and sugar, Minister of Governance, Raphael Trotman, did not provide details on what the possible projections can look like given the challenges facing each sector. He said that this will be noted in the 2015 budget.
Trotman said that the Finance Minister is reviewing the performance for each industry and Government is prepared to take the necessary steps to stimulate the needed improvement in those areas.
Though Venezuela has signaled that it will not be renewing its oil for rice barter arrangement with Guyana under the PetroCaribe deal after November 16, Trotman said that the Spanish-speaking country is still taking local rice.
He noted that while Venezuela takes 30 percent of Guyana’s rice exports at concessionary prices, Guyana still has other markets it supplies.
Trotman assured that those who depend on the booming rice industry, such as the rice farmers need not worry about the possibility of impending dangers given Venezuela’s decision. The Granger administration is committed to taking care of them.
He added, “Rice farmers are being taken care of. Even though it is a burden we inherited, we will not allow them to go on without paying their bills… It is not our desire to see them suffer even if it is because of the wrongs of the past administration.”
As for the gold industry, Trotman expressed that Government is aware that it is affected by falling prices on the world market, along with local challenges. The 2014 midyear report by the Ministry of Finance, said that the world market price for gold remained low compared to recent years, even though it increased by 4.4 percent to US$1,279 per ounce during the first six months of 2014.
Trotman who also has responsibility for the natural resources sector said that if need be, Government is prepared to have a stimulus package for that sector to lift productions to a higher level.
He said that the Finance Minister and his team are looking at the different drivers of our economy, and is drafting the budget taking into account their performance thus far.
The 2014 Midyear report of the Ministry of Finance reveals that sugar production in the first crop was 79,995 tonnes which was 66.5 percent above the first crop of 2013.
But for this year already, the extended first sugar crop has ended short of its target by almost 5,000 tonnes. However, the Guyana Sugar Corporation (GuySuCo) remains positive over the prospects of the industry and its annual target. The industry had set a first crop sugar production target of 86,201 tons of sugar.
The troubled Skeldon factory was unable to even meet half of the 17,214 target set for the first crop with the corporation saying rains forced an end to production of sugar there.
All estates, excepting East Demerara (Enmore) and Skeldon, managed to surpass their targets.
But the more local economists continue to analyze GuySuCo’s accounts, the more they realize that the sugar industry is in a financially dreadful state.
Presidential Advisor on Sustainable Development, Dr. Clive Thomas, had said that the industry has now found itself “buried” in excess of $90B in debt until 2017. Based on an overview of GuySuCo’s accounts, he said that it was just less than this for the period 2012 to 2014.
Dr. Thomas said, “The sugar industry is now sitting on an economic time bomb.”
He currently sits as a member of the Commission of Inquiry launched into the sugar industry.
The board members of GuySuCo and the entity’s CEO were forced to step down after years of failing to nurse the ailing industry back to “good health”.
Additionally, in mid-June, Dr. Thomas had said that certain factors affecting the rice sector leave it poised for a dispiriting future due to explosive growth of output, increasing difficulty in finding lucrative markets and the level of unit production costs.
He had said, “As is common knowledge, the Venezuelan market is at great risk generating a potential demand/ supply market imbalance. This imbalance risks a collapse of rice and paddy prices later this year, thereby impairing livelihoods, in contrast to what prevailed in the first half of the 2010s.”
Since the decision by Venezuela to not renew the oil for rice better arrangement after November, Government has now been forced to redouble its efforts to finding new markets for Guyana’s rice.

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