– challenges EC ‘interpretation’
Government, in defence of its actions regarding budgetary disbursements by the European Commission (EC) said it has met required deadlines and specified conditions but funds are still being withheld.
Stating that recent developments by the EC represent a fundamental departure from the principles of the budget support mode for delivery aid, the administration charged that most of the difficulties encountered in the implementation of EU budget support came after Guyana adopted a position critical of the Economic Partnership Agreement (EPA).
The administration said disbursements were made promptly and in full during the early rounds of provision of budget support by the European Union to Guyana, and addressed the recent issues surrounding disbursements for general budget support as well as support for the sugar sector.
“Government would hope that the difficulties currently being experienced in securing delivery of promised budget support is not somehow connected with the critique of the EPA, and will continue to argue that anticipated budget support must be delivered in accordance with the financing agreements,” a statement from the administration said on Friday.
In advancing its position on the budgetary support for sugar that was not disbursed by the European Commission this year government said the funds were withheld though the conditions described in the financing agreement were met, but admitted that a copy of the plan was submitted three months after the deadline.
Cabinet was reviewing the plan which was approved by GuySuCo board of directors to “ensure consistency with the national macroeconomic objectives”, government said adding that this was explained to the EC delegation which also required a copy of the plan.
The plan was submitted in June 2008 following the review, but the EC had concluded that the submission in June rather than on March 31, 2008 constituted non-achievement of the indicator.
EC Ambassador to Guyana, Geert Heikens disclosed last week that Guyana lost 6 million euros in budgetary support because of the late submission of the sugar action plan. He also said that as far as he was aware, the Government of Guyana did not give any reason for the delay in the submission of its action plan. According to the ambassador, Guyana failed to meet all the necessary criteria, which he stated were interpreted with some form of flexibility.
The deadline in the financing agreement with the EC was extended from December 31, 2007 to March 31, 2008. Government argued that GuySuCo did prepare its plan by the extended deadline and that the board approved it on March 29, 2008. It said also that this was communicated to the EC Delegation in the application for the release of the variable tranche.
Government said that it subsequently submitted further evidence that the business plan was approved by GuySuCo’s board via a letter of certification from the Company Secretary of GuySuCo upon request of the delegation, adding, “there is, therefore, absolutely no doubt that the condition as spelt out in the financing agreement was met”.
Government said also that it challenged the interpretation of the EC that the indicator was not met at the level of the local delegation as well as the EU headquarters via letters from the Ministry of Finance and through the ambassadorial representation in Brussels, adding that it made the case for the reversal of the commission’s decision to withhold funding.
“The fact that the EC Delegation received the plan in June 2008, after Cabinet completed its review, does not alter the fact that the condition was met by virtue of the plan having been approved by GuySuCo’s Board of Directors by March 31, 2008. The EU continues to disagree and has withheld funding,” government added.
The administration also responded to comments made by Heikens in relation to the Poverty Reduction Strategy Paper (PRSP) saying there is no requirement for the PRSP to be completed and approved by Cabinet or “by any other authority for satisfactory progress to have been made and for the condition to be met”.
Heikens had said that the EC was awaiting Cabinet’s approval of the strategy before it could disburse 12 million euros of the 40 million euros allocated in the ninth European Development Fund for budgetary support.
According to the administration, there is a requirement related to the PRSP under the General Budget Support Programme which points to satisfactory progress being made in the establishment of a second generation poverty reduction strategy drawing from lessons learnt from the first PRSP, but no requirement for cabinet approval.
Government said it supported its applications for disbursement under the general budget support programme with the Cabinet-approved draft of the PRSP to the EC delegation with a confirmatory letter from Cabinet Secretary Dr Roger Luncheon. This, the administration said, was a second generation PRSP approved by Cabinet and “has therefore demonstrated satisfactory progress”.
However, Luncheon had told reporters on Thursday that while the PRSP had Cabinet’s approval it had to be presented in Parliament before it could be accepted as a national document. He said too that the details of the process involved had already been explained to representatives of the EC delegation, and while he stated that the paper needed to be taken to Parliament he gave no indications as to when this would be done.
The government said further that the draft document was shared with the joint donor group for their consideration and comments, adding that because of this further consultative process, the EC delegation had determined that the indicator was not met and that it was not in receipt of the final version of the PRSP.
“Government has consistently reaffirmed that there is no requirement for a final version and that the requirement of satisfactory progress has been adequately demonstrated by the submission of a draft approved by Cabinet to the delegation,” the administration added.
Meanwhile, the Alliance for Change (AFC) criticized the administration in a statement issued yesterday saying that the Agriculture Minister should have raised the issue of the loss of the six million euros at the level of the Economic Services Committee “as part of his bounden duty to give an accurate and honest statues report on the sugar industry”.
The party blamed the problem on incompetence, adding that it is concerned with the loss of the six million euros as a result of Guyana not meeting the deadline.
