What has been deemed as a “critical” phase of a US$6.7M project from Washington under the Millennium Challenge Account (MCA) programme was kicked off yesterday aiming particularly at cutting the number of days to register a business and revamping the revenue body.
The Guyana Threshold Country Plan/Implementation Project (GTCP/IP),
which among other objectives seeks to improve the country’s fiscal performance, was officially launched at the International Convention Centre at Liliendaal.
USAID Mission Director Peter R. Hubbard asserted that yesterday’s launch marked “the beginning of a critical phase in the process toward improving and strengthening Guyana’s fiscal and financial management reforms”.
The Threshold Program is designed to improve the country’s fiscal performance, enhance Parliament’s fiduciary oversight and reduce the number of days to start to business. The two-year $1.34B project commenced on January 14 this year and is funded by the Millennium Challenge Corporation (MCC) and implemented locally by the United States Agency for International Development (USAID). Government agencies directly involved in its implementation include the Guyana Revenue Authority (GRA), the Ministry of Finance, the Deeds Registry, the National Insurance Scheme (NIS), the Guyana Office for Investment (Go-Invest) as well as Parliament.
According to background information circulated, the project which was signed in August last year, has already registered achievements.
These include:
● Transformation of the Guyana Revenue Authority (GRA) into a functional-type body from its previous tax-type structure is over 70% finished;
● A comprehensive training programme that fully addresses the training and career development needs of the GRA has been developed;
● A draft plan for the computerised link-up of the Deeds Registry, GRA, NIS and Go-Invest has been developed;
● The government has earmarked around US$1M in this year’s budget for a warehouse for smuggled goods, a boat house for anti-smuggling patrol vessels and the acquisition of anti-smuggling boats.
Logical
Delivering the feature address, President Bharrat Jagdeo commended the programme for being country driven and the “logical sequence in its design”. He noted that Guyana had done well in all but two of the 17 indicators that allowed the country to qualify for the programme and these were the size of the fiscal deficit and the number of days it takes to start a business.
While stating that he did not agree that Guyana had a high fiscal deficit, Jagdeo said that the objective is to reduce the deficit. “Strengthening tax reform is important in reducing the fiscal deficit because it will hopefully bring in more revenue not necessarily from higher taxes but from a broadened tax base and secondly from greater compliance with the tax laws”, he stated. He noted that the second component was on the expenditure side and expenditure control and management would have to be strengthened.
Later explaining his belief that Guyana did not have a high deficit, the president declared that there was a time when the deficit was 25% and if the current deficit was examined, it would reveal that it was as a result of one project, the Skeldon (Sugar Factory Modernization) Project, which swelled the deficit in a single year. Noting that the Guyana Sugar Corporation contributed 17% of the country’s Gross Domestic Product and it cannot be allowed to fail; Jagdeo declared that it is because of the investment in the corporation that the fiscal deficit is so high.
In expressing his approval of the project, the president said that the programme was unique also because it sets out a transparent set of indicators against which “a country can go online and see how it has performed”. He added that he did not agree with some of the sources from which information was collected “but at least it’s transparent”. He further stated that countries like Guyana, in interaction with bilateral donors and multilateral institutions often “have to jump through hoops that we do not even know exists and it’s really a pleasure to be jumping through hoops that we know are there, clear and will not be moved”.
As to why he did not agree with some of the indicators, the president asserted that with regards to the number of days that it takes to start a business locally, while the World Bank Institute said 40-odd days the government checked it with the local private sector and came up with eight days.
Jagdeo commented that everything being done in the programme is consistent with the country’s medium term strategy and alluding to a statement made by American Ambassador, John Jones regarding governance reform at the national level, the President declared that he did not know of any other country in the region “that has had so profound a governance reform through the parliament and through the constitution that we have had”.
He further asserted that what is needed now is implementation and urged that when the indicators are looked at, that it is not done in a “mechanical” way. He noted that while there are challenges such as climate change there are also favourable things that can transform the economy.
Flourishing
Meantime, Ambassador Jones pointing out that the project underscores the strong bilateral relationship between the US and Guyana, noted that the programme seeks to empower the GRA, NIS and Go-Invest and the benefits of assistance will last long after the last dollar has been spent. He noted that by its very nature, the assistance is intended to improve policy performance as well as to help the country to address its policy weaknesses. For there to be broad-based participation and a flourishing economy there must also be certain pre-conditions particularly a stable democracy, the ambassador stated. “In this respect, governance issues such as the rule of law, transparency and accountability must be promoted as a matter of priority”, he declared.
Speaking at the ceremony also was Vice-President and General Counsel of the MCC, Geoff Anderson, who revealed that so far the MCC has committed over US$440M in Threshold programmes in 19 countries worldwide, including Guyana. He noted that the Threshold programme seeks to improve Guyana’s performance on MCC’s fiscal policies where the country still faces some of its key challenges to development. He stated that Guyana’s Threshold programme focuses on four key improvements namely reforming the country’s tax structures, helping the government to control spending by increasing transparency and efficiency in the country’s procurement pro-cess, increasing Parliament’s fiduciary oversight, and reducing the number of days and costs associated with starting a business. He said that some progress is already being seen noting that the transformation of GRA is already underway. He commended the country for the progress made but noted that there is more work ahead.
Also delivering remarks at the ceremony were Minister of Finance, Dr. Ashni Singh, GTCP/IP Chief-of-Party, Dr. Coby Frimpong, who was also the chairperson of the proceedings and representatives of agencies involved in the project.
The MCA rewards developing countries that have been undertaking reforms to improve economic growth and alleviate poverty. To do this, it analyses their performance against other countries in the same income bracket by reviewing 17 indicators in three broad categories namely, ruling justly, investing in people and promoting economic freedom. Guyana was approved for MCA participation in 2005 and its country plan was approved in August 2007 by the MCC Board.
