Sloth in executing capital projects will affect future budgets - PPP

Sloth in executing capital projects will affect future budgets – PPP

Nov 26, 2015 News

The slow rate at which Government is executing capital projects was flagged by the People’s Progressive Party (PPP). The party is adamant that it is having a severe effect on the economy and future budgets.

from left; PPP MP Irfaan Ali and PPP Chief Whip Gail Teixeira

During a media briefing at Freedom House yesterday, Chairman of the Public Accounts Committee, Irfaan Ali, asserted that Government has been slow in implementing key projects provided for in the 2015 budget and all sectors are in the midst of a slowdown.
“If you look at the implementation rate of the 2015 budget, in many instances projects have not been awarded as yet, tenders are not out; there is hardly any work on the ground outside of Georgetown.”
The Shadow Finance Minister said that outside of Georgetown, there is not much going on in the other regions. He cited several projects, including the expansion of the roadways in Region Three (West Demerara road).
He noted that the implementation of major projects identified in the budget have to be sped up, so that through expenditure it can benefit the economy and citizens at large.
“You will hear people on the street saying there is not enough flow of money, or people are not spending. Government expenditure drives private expenditure,” he stated
A perusal of the Bank of Guyana’s half year report reveals that Guyana’s Gross Domestic Product (GDP) has reduced to 0.7 percent in the first half of 2015, the lowest recorded growth rate since 2011.
This is in contrast to the revised growth of 4.8 percent growth for the same period in 2014. The bank flagged this performance to the decrease in gold and bauxite output and contracts in the construction sector.
“If you look at the Bank of Guyana Report you will see that that lack of interest in investing is clearly demonstrated,” he said.
“You have decreased levels of local investments; you have decreased activities in the various sectors, (such as) construction sector, services sector, mining and the forestry sector,” he went on to note.
Ali made it clear that if the 2015 budget is not fully implemented by the time the 2016 and 2017 budgets come around, a crisis can arise in trying to implement them.
“In some Neighbourhood Democratic Councils (NDC), (there) are supposed to (be) a lot of construction going on, for instance Stewartville and the Tuschen/Uitvlugt housing schemes.”
“In some cases, we have a decrease (in activity) of 50 percent in some NDCs, compared to 2014.”
He also pointed to the number of containers coming in and leaving the country. He claimed that the aggregate figure shows a decrease of 37 percent compared to last year.
Ali observed that numerous stores, which should have been bustling with activity, have not even brought in the amount of stock they previously would have as consumer spending is reduced.
He also expressed worry over the widening difference between the buying and selling rates for the US dollar.
“Domestic investment decreased by 2.7 percent during the first half and this would have even deteriorated over the last quarter.”
Ali also flagged the report’s highlight of non-performing loans. The report showed that non-performing loans (loans for which the monthly installment has not been paid for three consecutive months) increased by 69.7 percent as of June 2015.
This means that in comparison to the same period for last year, non-performing loans in Guyana increased from $8.3M to $20.4M. It also represented 8.3 percent of total loans.
Worse yet, the report recorded significant increases in non-performing loans for the first half of 2015 in the business sub-sectors.
This means that more and more investors in the business sub-sector, namely mining and quarrying, manufacturing and agriculture are unable to pay back their loans.
“This is a serious indication of what is coming out of the financial sector and the banks themselves,” Ali said.
“In some economies, if Agriculture is not doing well, gold does well to make up,” Ali posited. “But across the board gold is not doing well, quarrying is not doing well (and) construction is not doing well.”
Government has been blaming the delayed budget of 2015 for the slow expenditure. Works on other roads, including the East Bank Demerara Public road, have been suffering.
However, the fact that Parliament was prorogued in October by former President Donald Ramotar has been cited as the major contributor to the slow down being experienced now.
Parliament was in turn dissolved and new elections held in May 2015. All of this occurred without a national budget being passed and many projects reportedly did not get funding.