Budget highlights
EDUCATION Given the importance the PPP/Civic places on the delivery and expansion of education, a massive total of $8.7 billion has been allocated to this sector. The Guyana Education Access Project and the Guyana Basic Education Training Project (two new programmes) will see improvements in the upgrading of the secondary level. Equipment will be provided and infrastructure upgraded. Twenty-six new schools are to be constructed and 42 schools are to be rehabilitated or upgraded across the country. The University of Guyana Campus in Berbice will be opened for classes in September. HOUSING About $1 billion will be invested to develop new housing schemes, to upgrade existing ones, and to improve existing squatting areas and schemes, nationally. Those to be targeted include Lima Sands, Onderneeming, Zeelugt/Tuschen, Corneila Ida, Par Fait/Harmony, 75-77 Villages, Corentyne, Mon Repos, Non Pariel, Lowland/Hope, Bath Settlement and Fort Lands/Ordinance. The Central Housing and Planning Authority will be strengthened to implement and manage a US$30M low income settlement programme, which will upgrade and regularise squatting communities, develop new sites and services for housing expansion. The private sector will also be encouraged to assist in the development of the housing sector. EMPLOYMENT Following the historic Presidential Business Summit last October, several measures were agreed to that would stimulate growth in the business sector, thus creating more employment opportunities. The government will continue to support growth of the small business sector. The Institute of Private Enterprise Development will be disbursing about $830M to about 6,200 new entrepreneurs, while a new window has been launched to help disadvantaged young people. The Guyana Youth Business Trust inaugurated by the President and the Prince of Wales complements this focus. The scheme targets under- and unemployed youths and initial funding will come from the Government and the European Union. The PPP/Civic government will give priority attention to vocational and skills training through increased allocation to technical schools and the increased focus of SIMAP and the Guyana National Service on skills training. PAY Teachers, public servants, police and army ranks, firemen and other members of the disciplined services will receive a 26.66% across-the-board increase in wages and salaries effective from January 1, 2000. The minimum wage has been increased from $15,000 to $19,000 per month. Pensioners and other beneficiaries of social assistance will also benefit from this increase. For the first time ever, no pensioner will receive less than 50% of the new minimum wage. Some $2 billion will be allocated to fund this increase. (Since 1992, the public service minimum wage was increased by 500% from $3,137 to $19,000.) THE NEEDY To tackle poverty frontally, the budget has allocated $1.4 billion for the continuation of the poverty reduction programme executed by the Ministry of Finance, the Social Impact Amelioration Programme and the Basic Needs Trust Fund. Sums will be used to support the most vulnerable groups - youths, street children, mothers, senior citizens, disabled and those who fall below the poverty line. A strategy to expand on the current programmes in a sustained way will be finalised shortly and is to be funded with help from the donor community. WATER About $1.4 billion will be spent to continue improving the water sector nationally. Three major integrated water systems - Pouderoyen, Rose Hall and New Amsterdam will be completed and become operationalised. Some of the areas where works will continue include: Yakasari, Williamsburg, Adventure and Melanie/Paradise. In the hinterland regions, water distribution systems will be installed at Siparuta and Kamarang. Water storage tanks will be refurbished at Hosororo, Barabina, Wanaina, Morakabai, Achiwib, Annai and Sarararu. FARMERS Farmers will benefit from a $1.3 billion drainage and irrigation programme aimed at further developing the agricultural sector. This sum will be used to reopen and clear clogged drainage and irrigation systems, and to construct or reconstruct damaged or worn sluices, kokers, regulators and other drainage and irrigation structures. Pumps and engines will be replaced at Mibicuri and the station house will be fixed. More than 25 miles of farm-to-market/access roads will be upgraded at Parika, Essequibo, Coglan Dam, Pouderoyen, Mahaicony and the Nos. 70-71 sideline dam, among others. ROADS The Essequibo Coast Road will be completed this year, thus bringing relief and comfort to thousands of residents and road users in the region. The East Coast Highway between Sheriff Street and Mahaica, including the railway bypass and the Soesdyke/Linden Highway (taking in Burnham Drive in Linden) will be repaired. Rehabilitation of the Mahaica to Rosignol Highway and resurfacing entire Corentyne Highway are scheduled to commence this year. More than $700M will be used to rehabilitate deteriorated sections of the Guyana/Brazil road, Mabura/Issano/Madhia and Black Bush Polder roads and various urban and community roads throughout the length and breadth of Guyana. AMERINDIANS About $65M has been directly allocated for specific Amerindian development projects. These will be used for among other things, refurbishing the Amerindian Hostel in Georgetown, providing outboard engines for riverain communities, and support for self help and employment projects for Amerindian women. These programmes are expected to enhance the living standards of all Amerindians. In addition, various Amerindian communities will benefit from central government and regional development projects to be executed in the coming year. HEALTH A mammoth $4.6 billion has been allocated for the health sector. The focus this year will be the development of human resources and general operations. The New Amsterdam, Port Mourant, West Demerara and Bartica hospitals will receive more rehabilitation. There is provision to ensure that all hospitals and health centres receive adequate amounts of drugs and medical supplies. SANITATION This year, the second phase of the Georgetown Sewage and Water Commissioners project will commence. Sewage pumps and lift stations will be rehabilitated. Also the life of the Mandela Avenue waste disposal site will be extended. Some $300M has been allocated to this sector. TRANSPORTATION Efforts will continue to modernise the Cheddi Jagan International Airport at Timehri. The runway will be paved, lights will be installed and a civil aviation authority will be created. The Ogle airport, which is a component of a national airport-upgrading programme, will be listed for private sector participation in order to receive municipal airport status. The programme to upgrade ferry vessels and stellings will commence with the rehabilitation of Lady Northcote, Malali, Torani, Makouria, Barima and Aruka, along with the rehabilitation of the Leguan, Georgetown, Adventure, Wakenaam and Kumka stellings. Highlights of 1999 ** The economy grew by 3%, more than the targeted 1.8% and a -1.3% in 1998 ** The rate of inflation was 8.6% ** Securing debt relief under the HIPC initiative amounting to US$258M ** Sugar production increased by 25.8% or 321,438 tons (the highest production in more than 20 years) ** Rice production grew by 7.6% with a harvest of 365,469 tons ** Forestry production grew by 12.9% ** Financial services rose by 2% ** Mortgages grew by 44.6% or to $2.3 billion, a reflection of the government accelerated distribution of house lots ** Foreign currency transactions grew by 6.2% ** Manufacturing sector recorded an increased output of 6.8% ** Central government revenue grew by 4.7%, although there was a $200M shortfall by the customs department, due mainly to the 55-day public service strike
Budget 2000 targets ** The economy is to grow by three per cent ** Rice, manufacturing, other crops, forestry, fishery, bauxite, gold, construction and financial services sector will increase output ** 22,000 house lots will be allocated to the homeless ** Revenue collected is set at $38.3 Billion ** Inflation is expected to be 9.5% ** Export earnings should increase, reaching US$530M ** Town councils and Neighbourhoood Democratic Councils will receive $252M, while $241M will be provided for the payment of rates and taxes to the City Council
Budget 2000
GROWTH has returned to the Guyana economy, Minister responsible for Finance, Mr Sasenarine Kowlessar assured yesterday in presenting Budget 2000 to the National Assembly. Excerpts from the minister's speech: "A little over two months ago, we bade goodbye to the second millennium. In the process of doing so, many of us took the opportunity to undertake some reflection and introspection on the past - a past that was replete with struggles. The first, and, perhaps, the most enduring of these, was the struggle to free ourselves from the shackles of colonial subjugation and domination; next, came the struggle for Independence; and, finally, the struggle for democracy, and economic and social justice. It is a tribute to the resilience and the dogged determination of our people that at all stages of these struggles, victory was achieved in the face of overwhelming odds. Since assuming office in 1992, the PPP/Civic Government has ensured that the development of our country, as outlined in our Manifesto, has been synchronised with the development of our people and the environment. After having inherited an economy that exhibited all the signs of prolonged decay and neglect, the Government immediately set about the arduous task of rebuilding the infrastructure and restoring hope to the people. Growth has returned and has been maintained in the context of a stabilised macroeconomic environment. A successful campaign for debt relief, coupled with a re-orientation of expenditure, has resulted in a dramatic increase in spending in the social sector. There has been visible improvement in the educational, health, housing, water and sanitation facilities in the urban, rural and hinterland areas. Thus, while the expanded national product has seen an increase in per capita income, the focus on the social sectors has witnessed a reduction in poverty. Our achievements, over the past seven years, have won praise from admirers and detractors, international institutions and bilateral organisations. As we begin the third millennium, we are steadfast in our resolve to rapidly develop Guyana, and, in the process, make it a better, more prosperous, and more secure place for our people. We intend to create the environment that would catalyse development and position the country to grasp the opportunities inherent in the liberalisation that is taking place globally. Notwithstanding the trepidation and fear that the Y2K bug might have engendered, I believe that our people have already begun to look forward to the prospects the new millennium brings. But the realisation of those prospects will remain illusory and the gains we have made so far will dissipate if the fractures and fissures in our society are not healed and closed quickly. This is why we have chosen the theme, Working Together for an Improved Standard of Living, for this budget. The theme highlights the fact that in today's world, in which Guyana must function and compete, it is imperative that we harness and harmonise all of our resources - human, physical and financial - in pursuit of the common good. It emphasises that co-operation, as opposed to confrontation, is necessary if we are to achieve and maintain the desired levels of growth and development in our society. It also signifies a process that involves the continuous interaction of the various segments and strata of our society in the search for a better standard of living. If there is a burden on this generation, it must be that it has to work untiringly and unceasingly to build a united Guyana that would endure through succeeding generations. Continuing with my theme, this budget, like those of my predecessor, has benefited from dialogue and discussions, suggestions and recommendations tendered by various individuals, groups and organisations in the country. Many of the groups shared their concerns and offered ideas and strategies for tackling some of the problems bedeviling development of our country. This sharing of ideas has not only enriched the budget process, but it has served also to reinforce the commitment of the Guyanese people to the task of nation-building. Madame Speaker, as I present my, and the PPP/Civic Government's, first budget for the millennium, as I review our progress in 1999 and elaborate on the policies and programmes for the year 2000, I ask that we rededicate ourselves to the pursuits and causes that can make Guyana a great nation. ...in last year's budget presentation, the then Minister of Finance highlighted the difficulties faced by the economy in 1998. He attributed them to the contagion effects of the Asian financial crisis, the unfavourable weather conditions that were occasioned by the El Nino weather phenomenon, and political instability which disrupted various facets of the society. Those developments caused the growth rate in that year to be negative, after five continuous years of positive growth. However, he did express optimism that the negative growth performance in 1998 was only temporary, and that the package of policies and measures which the Government proposed to implement in 1999, would stimulate growth and cause an immediate turnaround. I am pleased to inform this Honourable House that the confidence he showed in the resilience of the economy and the Guyanese people was not misplaced. Real Gross Domestic Product (GDP) expanded by 3.0 percent, compared to the target of 1.8 percent and the negative 1.3 percent recorded in 1998. This 4.3 percentage point turnaround in the economy was due mainly to the performance of the agricultural sector, particularly sugar and rice. Sugar production increased by 25.8 percent to 321,438 tonnes, the highest output by Guysuco since 1978. Among the factors that contributed to this performance were the improvement in yields, arising from favourable weather conditions; the introduction of new varieties; and the use of artificial ripeners. In the rice sub-sector, total rice production for the year was 365,469 tonnes, or 7.6 percent more than in 1998. Most of the year's increase came from the second crop, where, as a result of better weather conditions - which allowed for the harvesting of a higher quality of paddy - the national average yield reached 25 bags per acre. However, because wet weather impeded land preparation and sowing for the second crop, lower-than-expected yields were returned. But this setback, while curtailing greater production, did not affect the achievement of the target. After declining steeply in 1998, as a result of lower demand and prices, forestry output rebounded in 1999, to reach 498,400 cubic metres, or 12.9 percent more than in 1998. In fishing, there was an observed fall in the declaration of prawns' catch, compared to 1998 level. The decline was, however, offset by increases in fish and small shrimp catches. This resulted in an overall modest growth of one percent in this sub sector. In the area of other agriculture, livestock production increased sharply, in response to the Government's sustained efforts and support to the sub-sector. Poultry meat increased by 10.2 percent to 12.4 million kg, while egg production increased by 7 percent to 25.7 million. Falling gold prices and the mining of a lower grade of rock were mainly responsible for the 8.4 percent fall in output of the mining and quarrying sector. Largely as a result of an 11.8 percent decline in production by Omai Gold Mines Limited, gold declaration fell by 8.9 percent to 414,390 ounces. There was a slight increase of 4.1 percent in total bauxite production to 2,359,272 tonnes. However, the higher-valued calcined (RASC) and chemical grade bauxite (CGB) fell by 27 percent and 33 percent, respectively, compared to the 8.4 percent growth in metal grade bauxite (MAZ). Through a combination of aggressive marketing techniques, greater processing capacity, and increased use of modern technology by firms in the sector, manufacturing made a strong recovery in 1999, growing by 6.8 percent. This was in spite of disruptions created by the Public Service strike during the second quarter of the year. Several commodities performed unexpectedly well and showed significant growth in output. These included stoves (24 percent); laundry soap (62 percent); stockfeed (22 percent); flour (8 percent); paints (53 percent); and margarine (11 percent). However, garment production declined by 1.5 percent, because of a contraction of external markets; while output of refrigerators fell by 71 percent, as a result of the main company going into receivership. The engineering and construction sector registered a decline of 10 percent. This was partly attributed to a reduction in expenditure on the public sector investment programme by 10.1 percent. In the services sector, the growth in financial services was 2 percent, the same percentage growth recorded in transport and communication. The former's growth was due to increased after tax profits of the commercial banks, while the latter's was as a result of increased telephone and telegraph traffic and increased international travel. On the other hand, land transport declined by 20 percent. In addition, while government increased by one percent, distribution services fell by 8 percent. "Other services" grew by 1.7 percent. The merchandise trade deficit narrowed to US$25.2 million, from US$54.2 million in 1998, an outturn that reflects slower growth in imports. In spite of an increase in the volume of agricultural exports, earnings from merchandise exports declined by 4 percent to US$525 million. Specifically, even though the volume of sugar exports increased by 19 percent, receipts increased by only 5.6 percent. This was as a result of a steep reduction in the average price, from US$544.8 per tonne in 1998 to US$483.5 per tonne in 1999. A similar, though smaller, price decline was observed in the average export price of rice, from US$293.5 per tonne in 1998 to US$282.7 per tonne in 1999. This had the effect of reducing export earnings by 3 percent to US$71.1 million, even though there was a slight increase in the volume exported. Declines in export earnings that were associated with lower prices were also recorded for bauxite and gold. In contrast, through a combination of higher prices and export volume, timber exports earned US$37.3 million, or 20.3 percent more than in 1998. Merchandise imports declined by 8.5 percent to US$550.2 million, mainly on account of a 9.7 percent and a 16.7 percent reduction in consumer and capital goods, respectively. Net imports of services of US$89 million was about the same as in 1998, while transfer payments of US$39 million was US$5 million less than last year. These developments resulted in a 24.7 percent improvement in the current account deficit, or from US$98.5 million in 1998 to US$75.2 million in 1999. After adjusting for a capital account surplus of US$71.4 million, the overall balance of payments strengthened from a deficit of US$22.7 million in 1998 to a deficit of US$4.4 million in 1999. During 1999, the monetary base declined by 4 percent in 1999, compared with an 11.8 percent growth in 1998. This outturn resulted from a 20 percent decline in the Central Bank's liabilities to the commercial banks, since there was an increase in currency in circulation. Net foreign assets, excluding the debt relief granted under the HIPC Initiative, increased by 75.3 percent, while net domestic assets declined by 54 percent. Broad money expansion of 12.1 percent, in 1999, represented a faster rate of growth than the 6.8 percent in 1998. Narrow money grew by 21.1 percent. Both components of narrow money experienced stronger growth. Demand deposits grew by 25.7 percent, up from 4.7 percent in 1998, while currency with the public increased by 18.4 percent. Whilst there was a slowdown in the growth of total net domestic credit, loans and advances to the private sector increased by 7.7 percent, to reach $55.8 billion. The manufacturing sector continued to be the main beneficiary of banking system credit to the private sector, averaging 27.9 percent over the past three years. In 1999, credit to this sector grew by 17.2 percent. Mortgage loans grew by a massive 44.6 percent, to $2.3 billion, reflecting the increased demand for housing loans, arising from Government's accelerated distribution of house lots. In contrast, credit to the agricultural sector contracted by 8.9 percent, because of the restructuring taking place in that sector. Total net deposits of the public sector amounted to $25.6 billion, an increase of 81 percent. Central Government's deposits - net of loans, advances and treasury bills - with the banking system, increased by 247.7 percent or $15.7 billion. This was due to increased revenue collection, a reduction of capital expenditure, and inflows from the HIPC Initiative. The gross international reserves fell short of the target by US$20 million, because of the non-disbursement of an IDB loan. This loan has since been disbursed in January of this year. In spite of the shortfall, the reserves still represented 4.2 months of imports of goods and non-factor services, or about the same coverage as in 1998. The Government, through the implementation of prudent monetary and fiscal policies, was able to contain inflation to single digits. The inflation rate for 1999 was 8.6 percent, compared to the target of 5.5 percent and 4.6 percent in 1998. Among the factors which contributed to this outturn were the weakening of the Guyana dollar, the quarterly increases in electricity tariffs and the significant increases in fuel prices in the latter half of 1999. Two observations were noted. First, the rate of increase in the price level was not uniform throughout the year; there was slower growth in the second half of the year than in the first half. Second, unlike in previous years, the increases were centred on the non-food sub group. Thus, while movements in the food sub-group of the Consumer Price Index were marginal, it was items in the non-food subgroup that registered appreciable changes. The 91 day treasury bill rate, which is the market benchmark rate, increased from 8.84 percent at the end of 1998 to 11.07 percent at the end of 1999. The weighted average lending rate declined by 21 basis points to 18.08 percent, while the annual average savings rate increased from 7.06 percent in 1998 to 8.12 percent in 1999. The weighted average time deposit rate was 9.52 percent. The Government has expressed concern, repeatedly, about the high intermediation spreads of the commercial banks. We have implemented measures to facilitate a reduction. The latest of these was in February 1999, when the statutory reserve requirement rates applicable to all liabilities of deposit-taking financial institutions were lowered to 12 percent, from 14 percent, in the case of time liabilities, and 16 percent, in the case of demand liabilities. While this no doubt influenced the marginal decline in the spreads in 1999, the commercial banks must continue to explore avenues for further reduction, quickly, so as to stimulate private sector investment in the economy. In spite of higher export volumes, lower export prices resulted in a reduced supply of foreign currency to the market. On the import side, there was a marked increase in the price of fuel. These two developments, combined with the shallowness of the foreign currency market and speculative activities, were largely responsible for the depreciation of the exchange rate by 9.8 percent. The Central Bank's timely intervention into the market helped to smooth fluctuations in the rate, which remained relatively stable over the last two quarters of the year. The volume of foreign currency transactions increased relative to 1998. Purchases by the cambios rose by 9.3 percent, to US$433 million, while sales grew by 6.2 percent, to US$416 million. There were significant developments in the wages of public sector employees during 1999. Arising out of the Arbitration awards for teachers and public service employees, the wages of teachers were increased by 10 percent for Grades 1 to 5, and 12 percent for the other grades, retroactive to January 1999. As a result, the minimum wage for junior teachers and teaching aides increased to $12,590, while the starting salary of an untrained graduate teacher increased to $37,647. The salaries of traditional public servants were increased by 31.06 percent; in the process, the minimum wage increased from $11,445 to $15,000. The salaries of other categories of workers in the public service were increased by between 8.5 percent and 12 percent. These increases, which, in some cases, resulted in a higher wage rate in the public service when compared to similar jobs in the private sector, put pressure on wages in the private sector. By the end of the year, they were instituting measures to remain competitive both in the labour and goods markets.
Largest ever budget - opposition not impressed THE 2000 National Budget of $62.2 billion, presented yesterday by Minister with responsibility for Finance, Mr Saisnarine Kowlessar, is the largest ever to be presented in the National Assembly. Themed `Working Together for an improved standard of Living', the budget contained no new taxes, fees or fines, and has something for every sector and persons. Two leaders of the opposition parties in parliament, commenting shortly after the presentation, welcomed the across-the-board 26.6 per cent pay increase for public sector employees. But they said they were not impressed with the budget. Leader of the main opposition People's National Congress (PNC), Mr Desmond Hoyte, claimed the budget among other things, lacks a comprehensive economic framework and says nothing about tax reforms. "We have heard the same old tired rhetoric...(it) is a long list of alleged infrastructural projects that they have completed or intend to complete", he said. "If you listen carefully to (the minister), you will see that a lot of the budget speech is taken up with promises, of things that they will do. Well, we hear that every year", Hoyte said. "What we haven't got is a comprehensive economic framework against which the economy of this country will be managed", he argued. He said he had expected proposals for comprehensive tax reforms and "not the ad hoc kind of matter that he has dwelt upon." "One would have expected a policy investment, a real programme carefully spelt out for poverty alleviation. It is no use telling us that you've set aside so much money for poverty programmes", he said. He said there are no programmes to generate employment and to deal with the various crises in society According to Hoyte, there is a crisis in the rice industry but the budget does not address this. "...the rice farmers know that the banks are descending upon them every day, seizing their machinery and equipment, many rice millers are in receivership. "There is nothing good, only the prices in forestry and a threat which we read in the newspapers to cancel leases. "All in all, we have had the typical PPP budget, no policy elaboration, but a number of things hopefully to be done", Hoyte said. Mr Manzoor Nadir, leader of The United Force (TUF), feels the budget presented by the Minister is stagnated. "We have just been presented with a stagnated budget. In terms of the numbers, yes, it's bigger. But in reality terms, it's less than last year", he said. He also feels that the Government in its package for disadvantaged persons and the poor, in terms of the squatter settlements, "is seeking to buy some votes in this election year." According to him, no new taxes in the budget is not a big deal because comparing the budget in the context of last year's numbers, the difference will not be significant. "What the Government is hoping, is that there will be a revving-up of the economy, and by the revving up at the same tax rate, they will be able to get enough money in order to meet the projected expenditure that they have in the budget. "I suspect that this will not be realised because in an election year the investor is cautious...the level of economic activity which they are projecting will not materialise and as such, we will end up with a bigger deficit than is anticipated", Nadir argued. He added that after sitting through eight budgets, he can literally predict what is on which page and claimed it is almost a standard package with just the changing of a few words here and there. " ...if you look at all the budgets from the (PNC) Carl Greenidge budget of 1992, this budget for the last ten years is just a cut and paste job and changes the numbers here and there." "There is nothing much in order to really stimulate and rev up this economy, and provide hope to the Guyanese people that this economy will take off and provide them with the jobs and standard of living that they are looking for", he said. Nadir said he expected the Government would have wanted the private sector to access more of the funds which would be available and not compete with itself for the money in the bank. He added that the private sector can only do so if certain things are in place. He had expected too that there would have been an increase in the threshold for income tax. "Nothing much was done to stimulate the confidence of the private sector. It's just by passing that the Minister promises that Government will acknowledge the contract it established with the private sector at the Private Sector summit. That was a year ago and we are a year later and we haven't heard the concrete proposal." He feels that the Government is hoping to lead development by the public sector investment programmes which it had been seeking to do for the last eight years, adding, "it has been a relative failure in terms of creating wealth and generating the kind of good jobs that the young people in particular are looking for." On the issue of the pay increase for the public servants, Nadir, though questioning the amount, said what is significant is that "the Government has decided now to extend that increase to all sector of public employees. "I hope they are including agencies such as Guyana Television Broadcasting Company (GTV), Guyana Broadcasting Corporation (GBC), and so forth." Noting the increase will be welcome for quite a few persons, Nadir said one third of it will go back to the Government coffers as tax. Dr Rupert Roopnaraine, co-leader of the Alliance for Guyana said the budget does not focus on the central problems. "The central problem is not economic, it's political. The Finance Minister briefly mentioned about the problems that will arise as a result of the elections", he said. On the increased pay for public servants, he said, "We welcome the across-the-board increase for workers...we hope that the rise in prices doesn't wipe out the effects of the increase. "As far as the massive investment that they are talking about, I don't know where this is going to come from while the political instability continues...we have to hear something about the political issues, and as long as the budget skirts around these issues, we are going to be in difficulties." Responding to a comment that much of the funding talked about seems to be coming primarily from overseas and the newly-established Revenue Authority, Roopnaraine said: "Well, it has to come from there because the truth of the matter is, the conditions don't exist for increased revenue collection in this country." "No creation of a revenue authority is going to create magic, it's not going to create magic. In any election year, you're not going to raise the 12 billion or whatever it is estimated to raise in the budget, it's not going to happen," he added.
|