Dear Editor,
To no great surprise, Ashni Singh’s latest Budget was yet more of the same – biggest budget ever rhetoric. This is just a plain vanilla tax, borrow and spend budget, with very little policy measure for the workers at the bottom of the economic ladder. While the Minister of Finance pledges $1 billion to GuySuCo which he said will help 18,000 sugar workers, he fails to take accountability for the state of the sugar belt. Instead, he used the cop-out to again blame the workers for “industrial relations disruption” when the facts remain that it was extremely poor and incompetent decision-making at the highest level that primarily caused the meltdown in the sugar industry.
We remember Jagdeo promising the people in October 2010 that even if he “personally have to get involved, he will get involved to ensure that it is fixed…that it’s delivering the kind of results that it should deliver”. Well the sugar industry still is not delivering the kind of results that he promised. After spending some $40 billion, the people are left with a factory producing at 56% of its rated capacity. In normal democracies, for such massive mismanagement of people’s resources, people go to jail.
To our surprise, Minister Ramsammy confirmed in a Stabroek News article that the Chinese company “delivered what was in their contract.” Were the contractors legally bonded for a 200 tons per hour factory but got paid instead for a 350 tons per hour factory? This is tantamount to public fraud at the highest level.
So the biggest budget ever does not impress us at all; the reality is how much of this will result in real human development for the poor and the working class.
This budget is filled with numerous inconsistencies. As an example the Minister stated that in the Caribbean sub-region growth was “listless”. A major factor causing this listlessness according to the Minister is that “the service-based economies such as the tourism dependent ones are lagging behind”. Yet the Minister is advising the Government to pump over $40 billion into two tourism-related projects, to which the paying public have no right to see the feasibility studies – the Marriott type Hotel and the Airport Expansion Project. So the tourists are not coming to the sun, sand and blue seas of the Caribbean but they will rush to the garbage infested Kingston foreshore. Who do they think they are fooling?
The capital budget of 2012 spent $56.4 billion, but the Minister comes to the National Assembly and announces with élan, that his Government has the capacity to increase capital spending by $29.3 billion to $85.7 billion. Is he serious?
In a nation where 80% of its University graduates are migrating, and spending $56.4 billion on civil-works type projects is a struggle; what “voodoo magic” is the Minister using to increase that by over 50% in 12 short months? Or are we importing Chinese engineers and workers to Guyana now by the hundreds?
Why should Guyanese borrow $29 billion in the name of the Guyanese people to fund Chinese engineers and workers? Since that is what the fiscal deficit is – $29.1 billion. When a government’s total expenditure exceeds the revenue it is called a fiscal deficit. How is it funded?
Fiscal deficits are funded from increased taxation, printing of money, borrowing, running the external reserves down, or sale of fixed assets. Are they funding this $29 billion by printing more money? The inflation rate appears very reasonable, so this is not the case. Are they running the external reserves down? Again this does not appear to be the case since the Minister boasts of the highest external reserves ever totaling US$862.2 million. Are we selling state assets and depositing proceeds in the Consolidated Fund? Not once the private slush fund at NICIL remains in existence.
So where are they funding this $29.1 billion deficit from? Taxation and borrowing!
Taxes collection went up by 6.2% in 2012 to $118.3 billion and is expected to go up by a further 6.3% to $125.7 billion. In addition to that the external debt went up. To fund this $29.1 billion deficit, we can expect an increase in borrowing of some $22 billion of new cash mainly from China all contributing to our debt service cost going up; denying the future generation their fair share of the economic pie.
More of the same is not the answer for Guyana’s future. Guyana, especially those at the bottom of the economic ladder deserves better than this.
Yours faithfully,
Dr Asquith Rose and
Harish S. Singh
