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Decisions on GuySuCo to take crucial IMF commitments into consideration – Harmon
– Says, “In their view, we are basically skewing the economic plans and arrangements of the country when you pour so much money into an industry…”
By: Kiana Wilburg
Discussions on the future of the sugar industry will take into account, commitments made to the International Monetary Fund (IMF) earlier this year.
This is according to Minister of State, Joseph Harmon.
He was at the time being reminded by this newspaper of Government’s promise to the IMF to reduce bailouts to the sugar sector.
The IMF documented this in its Article IV Consultation report in March, last. The report said that, according to the authorities in Guyana, planned budget transfers for the sugar industry have been substantially reduced for 2016 and are expected to steadily decline and eventually cease over the medium term.
The IMF also noted that transfers to the loss-making state-owned sugar company (GuySuCo) remain a drag on fiscal performance.
In its report, it noted that transfers to GuySuCo were equivalent to 1.8 percent of GDP in 2015 and is budgeted at about 1.3 percent of GDP for 2016.
Minister of State, Joseph Harmon
IMF Staff urged the local authorities to adopt a restructuring plan for the sector that will improve cost efficiency, productivity, and alternative revenues streams, drawing upon the reforms proposed by the Commission of Inquiry into GuySuCo. It said, too, that the scope and pace of reform should take into account social implications.
With the aforementioned in mind, Kaieteur News asked Harmon at his most recent press conference to state whether Government’s plans for GuySuCo will take into consideration, the commitment made to the IMF to reduce the bailouts to this sector.
He was also asked to say whether the entity has indicated how it intends to address its huge debts.
The Minister of State said, “As I explained, there are a continuum of options and that included how the debt will be addressed, how it will be worked down to zero and what is necessary to allow that to happen…None of the options we have at this time are ruled out because they came out of the process into GuySuCo, they came out of the COI.”
“As for the GuySuCo and the IMF, certainly. The fact that you have to spend so much money in one sector of the country will become a matter to be discussed. In their view, we are basically skewing the economic plans and arrangements of the country when you pour so much money into an industry…Even the people in the sector are saying that this is not a viable option if we do not change certain things …”
Additionally, a number of options on the way forward for the sugar industry were presented to members of Cabinet on Tuesday last.
Kaieteur News was able to confirm from two Government Ministers that the options up for consideration include privatization as recommended in the Commission of Inquiry into GuySuCo and the most extreme being the closure of the sector.
According to the COI report, it was recommended that the process of privatization should start as early as practicable, with an aim to be completed within a three-year period. As a consequence, the report said that the state should divest itself of all assets, activities and operations currently associated with GuySuCo.
Furthermore, Harmon, during a post cabinet press briefing, told reporters that some decisions regarding the sector will have to be made by year end.
He said that this position was taken after “detailed and frank” presentations by GuySuCo officials to members of Cabinet.
Harmon said that the GuySuCo team was led by its Chairman, Dr. Clive Thomas. Also on the team were GuySuCo Chief Executive Officer Errol Hanoman, and the Chairman of the task force on diversification possibilities in GuySuCo.
In preparation for the next step, Harmon revealed that Cabinet appointed a subcommittee to look at the presentation made by the GuySuCo officers. He said that the team is expected to take into consideration, the points raised by the presenters and craft an approach which will mostly likely be used by the full Cabinet.
The subcommittee is expected to complete and present its report to Cabinet within two weeks. The members of the subcommittee include Minister of Agriculture, Noel Holder; Finance Minister, Winston Jordan; Natural Resources Minister, Raphael Trotman; and Minister of State, Joseph Harmon.
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