Murray, Persaud clash over budget deficit

Shadow Minister of Finance, Winston Murray yesterday ripped into the 2009 Budget declaring that the budgetary deficit has been misrepresented thus 30% of the government’s proposed expenditure is dependent on grants or borrowing money to achieve the targets set.

Robert Persaud
Robert Persaud

However, Minister of Agriculture Robert Persaud charged that Murray was the one doing the misrepresenting but left the clarification to Minister of Finance Dr. Ashni Singh to make in his presentation when the debate wraps up. According to Persaud, the tone and thrust of Murray’s presentation along with others including AFC parliamentarian, Khemraj Ramjattan made them sound like “prophets of doom”.

“They all were skeptical about anything that was being said and it is very sad, Mr. Speaker, very sad in an age where we are confronted with challenges, in a context within which this government is presenting realistic options and realistic solutions we see this undue explosion of pessimism”, he said.

Murray declared that, in light of the global economic environment, it is anybody’s guess as to how severely Guyana’s economic condition will be impacted on and said that he does not share the Finance Minister’s optimism for a 4.7% growth in the Gross Domestic Product.

The PNCR-1G Member of Parliament and economist charged that this year’s Budget is another list of programmes and projects intended to excite the expectancy of citizens while a number of earlier promises made were not kept or the people were kept in the dark about them. Under the alert gaze of Singh, who sat obliquely opposite him, Murray rapped the Finance Minister for not giving updates on projects announced in earlier Budget presentations.

Winston Murray
Winston Murray

He declared that the “misrepresentation” of the budgetary deficit as set out in Table 3 of Volume One of the estimates has been noted and said that this has been achieved by “improperly” describing capital inflows as capital revenues with some key inflows essentially made up of external grants and loans. He asserted that if the monies are properly categorized the true deficit would be $38.6B. “Thus approximately 30 percent of the government’s proposed expenditure is dependant on our ability to achieve the target set for soliciting to obtain grants or borrowing to finance capital works”, he declared. He said that it is important to know what the real deficit is due to the global recession and the fact that other countries face their own budgetary problems that could adversely affect the availability of development financing for countries like Guyana.

The Parliamentarian said that it is anybody’s guess as to how severely Guyana’s economic condition will be impacted on in light of the global economic environment and noted that the problem is that the recession is deepening all around. He advocated that a group of experts should be put together to assess what is going to be or is likely to be the impact of the global recession on economies like Guyana and perhaps CARICOM economies and to make recommendations as to what should be done. He said that President Bharrat Jagdeo had made statements to this effect at the World Economic Forum in Davos, Switzerland and to cheers from the opposition members called upon the President “to practice at home what he has preached abroad”.

Turning his attention to the size of the Budget, he asserted that it has become fashionable for the Finance Minister to boast in each successive year that the budget is the largest ever but declared that the expenditure of the largest sum ever cannot be an end in itself. He said that it has to be scrutinized and examined to see whether citizens have received value for money, whether the priorities set out in the budget accord with those of the people and whether there is adequate transparency and full accountability for the monies spent. In this light, he cited the $108M allocated last year for the airstrips at Leguan and Wakenaam along with the rehabilitation of the airstrip at Baramita and said that the airstrip projects obviously did not materialize as they are repeated again in this year’s Budget. He also noted that the government has budgeted to spend over $2.5B on drugs and medical supplies this year with S2B being for the importation of drugs. He pointed out that Cabinet has decreed by a 2003 decision, contrary to existing law, namely the Procurement Act of 2003 that all drug purchases must be made through the New GPC. “Notwithstanding the comments in this regard by the Public Accounts Committee, there has been no change in this policy. This, Mr. Speaker, is not only a brazen illegality but it robs the country of an opportunity to ensure that it gets value for the money spent”, Murray charged. He said that it was robbery of the Guyanese people.

He further declared that Guyanese see corruption as endemic in the system and a major factor in denying citizens better projects and better quality of service and noted the low rating given to Guyana by Transparency International’s Corruption Perception Index. Persaud, however, asserted that government had confronted corruption head-on. Murray declared that there are serious governance issues which the government completely ignores, noting that the constitution makes provision for the establishment of a Public Procurement Commission to oversee the procurement system while the awarding of contracts in the public sector is a serious bone of contention yet the government persists in administering the system through the National Procurement and Tender Administration Board, all appointed by the Finance Minister and hardly engendering confidence.

With regard to a stimulus package, he said that while some measures might not be feasible for Guyana, there is surely something that can be done. He said that there is no increase in old age pension, no increase for wages of public sector employees, no increase in the income tax threshold, no increase in the minimum wage and this is the reality of the budget for the people of Guyana.

Regarding the sugar industry, he said that there are deeper and serious problems within the industry that must be faced up to and there are at least two fundamental problems facing the industry namely the regular loss of managers at the senior and middle levels without adequate replacement and micro-management of the industry. He declared that political interference in the industry must cease.

Meantime, Murray declared that the framework of 30 months since the last elections, in which the Finance Minister cast the Budget is a “convenience” that has allowed him to interpret performance over the period as though it was a trend but he cannot be allowed “to create an erroneous public impression of the performance of the economy under the stewardship of the PPP/C government in office”. He said that the PPP has had the reins of government for 16 years and it would be “wholly misleading to handpick” the last three through the signpost of an election to determine the government’s performance.

The economist said that objective observers of the economic performance of Guyana since 1993 would agree that the relatively healthy performance of the economy between 1993 and 1997 was due to the continued momentum created by the Desmond Hoyte administration’s Economic Recovery Programme. He asserted that if those years are discounted, then for the eleven years from 1998 to 2008, the economy grew at an average of 1.8% per annum. “For three of those 11 years namely 1998, 2000 and 2003, the economy contracted. When therefore one looks at the period as a whole, a reasonable conclusion is the economy has been really stagnant”, he declared.

Persaud, however, countered that the current global environment must be taken into account stating that Murray is ignoring world realities and portions of his presentation were uninformed. The Agriculture Minister said that the performance of the Guyanese economy was relatively sound and good compared to others. He accused Murray of manipulating data and stated that “our performance last year was on par with the global economic output”. He said too that that the PNCR-1G Parliamentarian has forgotten political instability “orchestrated on that side of the house”, which had an effect on the economy.

Murray stated that to glean an understanding of where the country is against where it is supposed to be, the National Development Strategy can be used as a point of reference and quoting from the document, Murray said that if all the strategies are followed, it is forecast that the average annual growth of the country’s GDP between 2001 and 2010 would be nine percent. He continued; even if the strategies are not followed optimally at the very worst, barring a series of cataclysms, the average GDP growth would be of the order of six percent. He conceded that the 2005 floods is one such cataclysm but noted that the document spoke of a series and the flood was not a series.  He noted that the document said that even if the economy performed well by 2010, Guyana could not be described as an affluent society and would still be far from the forefront of the developing countries though the standard of living and quality of life would have been much improved. “But during the period 2001 to 2008, with only 2009 and 2010 to go, the GDP grew at an annual rate of just under 2.5 percent, which was less than half of the six percent per annum which we should have grown by, barring cataclysmic events”. The logical inference is there has been really no significant improvement in the standard of living and quality of life.

Murray said that against the background of the international environment, some questions have been raised about how reliable is the growth rate figure of 3.1% for 2008. He said that according to the Minister, sugar declined by 15.1% last year compared with 2007. He stated that when sugar declined by 24.1% in 2005, real GDP fell by 1.9% and all things being equal a decline of 15.1% would have caused a GDP reduction of 1.2%. He pointed out that the Finance Minister says that non-sugar GDP grew by 5.9% last year but this figure must come under scrutiny given that other sub-sectors declined compared with 2007. Murray added that there is great skepticism in relying on the growth rate of 3.1% announced for 2008 and even if it were a believable figure, it should be noted that it is 35% less than the projection of 4.8% for 2008.  He quoted a Stabroek News article by economist Dr. Clive Thomas, who wrote on ‘dubious economic data’, and said that despite the obvious magnitude of the economic reverses the official data do not fully portray their impact on ordinary citizens. Murray said that he shared the view that the bases of the national statistical collection need to be revised and improved.
The economist reminded Minister Singh that he had spoken of updating national statistics, rebasing national accounts and of “the introduction of the new 2006 based set of national accounts later this year”. He said that in last year’s budget speech, the minister had promised full implementation by the start of this year and is now behind that schedule.

Meantime, Murray rapped the Finance Minister for not giving updates on specific activities outlined as part of the agenda for those years, in his 2007 and 2008 budget presentations. He said that Singh either gave no report to the nation or gave a report without any reference to what he had told the nation in the earlier budget speeches. He cited the Minister’s Budget speech last year in which he mentioned that a study of the tax system would be done but made no mention of the status of implementation during 2008 nor was mention made of the furthering of the study in this year’s agenda. Murray also cited the mention of a possibility of establishing an offshore financial sector in last year’s Budget as well as the pursuing of private sector investment in the alternative energy sector, specifically hydropower and bio-fuels. He said that no update was given and the party has strong reservations on the realism of the minister’s expectations. Additionally, he referred to the 2007 Budget speech regarding Guyana’s part in capturing a larger share of CARICOM’s food import bill and noted that Guyana had proposed to Trinidad, cooperation in agriculture that would have seen that nation providing initial funding for farms locally. “Silence and non-information are what prevail on the part of the government”, declared Murray.

He said that his party shares the view that the Region should sharpen focus on the need for accelerated progress in implementing the Caribbean Single Market and Economy (CSME) but believes that the sloth in progress in this regard is already hurting the movement and given the dynamic and pace of global events “we may well find that the institution of a CSME may be inconsistent with those developments taking place”. He declared that the window is closing on the CSME and asserted a more dynamic and functionally relevant framework for the furtherance of the goals of CARICOM. “The institution cries out for being streamlined and possibly being restructured. It is by no accident, I wish to observe sir that the heads of important international agencies are generally not permitted to serve more than two terms, normally a period of ten years”, he said.

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