Focus on the Budget
(a detailed analysis of the year 2000 budget
INTRODUCTION This Budget was a first in many ways: for Minister in the Office of the President responsible for Finance Mr. Saisnarine Kowlessar, first for the President Jagdeo’s administration, the first to be presented with a woman presiding over the sitting and the first for the century and indeed the millennium. It was presented whilst the petition challenging the 1997 Elections is making its way through the Courts, and as the country heads for another elections based on the Herdmanston Agreement time table. The year 2000 Budget however had the fewest number of budget measures reported in a Budget Speech since the introduction of the Economic Recovery Programme. If those individuals, groups’ and organizations who participated in “the dialogue and discussions, suggestions and recommendations were flattered at having “ enriched the budget process”, they must be extremely disappointed that their recommendations did bid not find favour with the Minister for inclusion in the measures announced. Except that it is a tax-free budget in that there are no new taxes or fines it can not be accused of being an “elections” budget. That it offers no new or radical measures is either an indication that the current policies are considered as effective or that the Government felt constrained about its capacity and freedom to act outside of the tried path. Minister Kowlessar is the first Minister in post-independent Guyana, indeed in the post self-government era to have presented a Budget without the full authority of a Finance Minister. His predecessor now President Jagdeo had the benefit of understudying the experienced Asgar Ally for three years. On the other hand Minister Kowlessar was plucked from the Turkeyen Campus of the University of Guyana to preside over the day to day administration of the Ministry of Finance which saw a number of key staff transferred to the Office of the President. This did not allow Minister Kowlessar to stamp his authority on his first Budget. Despite the return to growth the economy is still not buoyant and badly needs a boost -investment, incentives and encouragement. The personal allowance, last changed in 1997 and eroded by inflation needed review. In the 1 hour 35 minute Speech there was in fact only one genuine budget measure - the wage increase for public servants. No new taxes is almost becoming a virtue - it is as though taxation is no longer considered as an important instrument of economic policy. Again this year there was no acknowledgement to the work being done on the NDS, when it would be ready and what would be its role in the future direction of the economy. Every Guyanese must have been hoping for reassurances on the exchange rate, a vision for the country and investments so badly needed to provide jobs. Labour participation and unemployment appear to be taboo in budget speeches and our women must be particularly disappointed at not having warranted a mention in the entire speech two weeks after the country observed International Women’s Week. So dependent has Guyana become on the Multilateral Financial Institutions that Guyanese would be forgiven for believing that an IMF-directed and controlled economy is a permanent situation. We are left to wonder for how much longer we will have to follow IMF prescriptions which President Jagdeo only recently had cause to criticize as posing “impractical conditionalities.” It is now almost accepted that the Budget is presented to the National Assembly only a few days short of the constitutionally set deadline. To present a Budget three months into the year reduces its usefulness and the Minister should have offered some explanation for this continuing tardiness. Overall there appears to be declining interest if not apathy among the populace in the annual budget. Neither the Stabroek News nor the Government-owned Chronicle contained any reference to the Budget in their Sunday or Budget day issue. The time must be fast approaching when we will have to consider whether we should not be considering abolishing this annual exercise altogether. The cornerstone of the economic management is stability and longer term planning. The sensible running of the nation’s finance requires daily housekeeping and what is now parcelled into the national Budget does not have to be there at all. Many of the measures which are saved up to make the annual Budget Speech worthy of the attention which the National Assembly still accords it are routine affairs. Whatever its shortcomings - and there are not a few - it would be uncharitable to hold the new Minister responsible for them. The institutional arrangements for his effective functioning are just not present. 1999 Facts Measures - 2000 Financial targets - 2000 REVIEW 1999 Real GDP growth/(decline).............................///3.0% ..........................3.0% ...................1.8%
The crippling 57-day public sector workers’ strike in the early part of the year had seemed certain to ensure further negative growth. However good performances by the sugar (39.1%) and rice (37.7%) sectors in the first half of 1999 neutralised the effects of the strike and in fact recorded net positive growth for that period of 2.1%. Growth was reported in fishing, forestry, mining, quarrying, transport, communication, manufacturing, rent of dwellings, financial and other sectors. There was decline in the distribution, engineering and construction sectors. The improvement in the economy continued thereafter to record GDP growth of 3.0% for the year whilst inflation ended the year at 8.6%. Mid-year inflation had been reported at 5.8%. Sugar production, the highest since 1978 and rice production were the principal contributors to growth during 1999. Comparatively better weather conditions, the introduction of new varieties of cane and the use of artificial ripeners for cane contributed to improved yields for both crops. Sugar production increased by a massive 25.8% to 321,438 tonnes surpassing the projected output rate by more than four times. Rice production increased by 7.6%, 4.6 percentage points more than the projected output for 1999. Forestry products rebounded with production being more than 12.9% over 1998. Fisheries fell short of the budgeted increased output of 1.9% by 0.9%. Livestock production increased sharply by 10.2% while egg production increased by 7%. The Budget Speech did not comment on the performance of traditional crops. The mining and quarrying sector and the engineering and construction sector continued their decline. The mining and quarrying sector registered a decline of 8.4% compared with a projected decline of 3.6% due to falling gold prices and an 11.8% decline in production by Omai Gold Mines Limited. There was a slight overall increase in the production of bauxite though the higher-value grade declined significantly. Despite a 10% decline in the engineering and construction sector compared with projected growth of 4%, the manufacturing sector made remarkable recovery growing by 6.8% against a projected 1% growth. Other services which include tourism and hospitality grew by 1.7%. Banking and Interest Rates As is now a familiar refrain in Budget speeches, the Minister lamented the high intermediation spreads of the commercial banks which the Government had sought to address by a lowering of the statutory reserve applicable to all liabilities and deposit-taking financial institutions from 14% (time liabilities) and 16% (demand liabilities) to 12%. The weighted average lending rate declined to 18.08% while the average savings increased from 7.06% to 8.12% in 1999. Loans and advances to the private sector increased by 7.7%, the manufacturing sector being the main beneficiary averaging 27.9% over the last three years. Mortgage loans grew dramatically by 44.6% reflecting the demand for housing loans arising from the accelerated distribution of house lots. Budget Performance Collections by the IRD increased by 13.2%, 7.5% more than budgeted. This included collections of $850M more in personal income taxes and $795M more in company taxes. Customs revenue collection was short of the budgeted target by almost $200M, although it exceeded collections for the previous year by 6.1%. Again it seems as though the public sector strike which affected the operations of the Customs and Excise Department during that period had little overall effect on its revenues. Though revenue collection was significantly higher than in 1998, there was also increased expenditure. Non-interest expenditure in 1999 was $24.1Bn (an increase of 22.5%). Personal emoluments increased by 20.8% from $9.8Bn to $11.8Bn. Expenditure on other goods and services was $6.9Bn and transfer payments $5.4Bn. Domestic interest was $3.6Bn ($200M less than budgeted) whilst scheduled external interest payment amounted to $6.5Bn but under the HIPC Initiative only $3.9Bn was actually paid. There was a decrease of $600M in capital expenditure and net lending. Overall total expenditure was $46.5Bn, approximately $3.5Bn less than projected for 1999. This was despite the fact that Budget 1999 did not provide for increased wages for public servants which were being negotiated with unions at the time of presentation of the Budget. The overall deficit before grants improved to $9.9Bn and after grants $3.3Bn. Slower growths in imports accounted for the merchandise trade deficit narrowing from US$54.2M in 1998 to $25.2M in 1999. The Balance of Payments suffered from falling prices in the country’s major export products - sugar, rice, bauxite and gold. Whilst merchandise exports declined by 4% to US$525M, merchandise imports declined by 8.5% to $550M, both in consumer and capital goods. The overall balance of payments reduced from a deficit of US$22.7M in 1998 to a deficit of US$4.4M in 1999. Inflation *the weakening of Guyana dollar He also noted two observations: *the rate of the price level was not uniform and there was slower growth in the second half of the year Ram & McRae’s Comments The importance of Government’s contribution to the economy is emphasised by the more than coincidental and equal decline in the Public Sector Investment Programme and the negative growth in the engineering and construction sector. Economist Dr. Kenneth King had criticized the rationale for reducing the interest rate cap on treasury bills as “confused” pointing out that “you can’t increase the value of the Guyana dollar by limiting its supply, but only by increasing the supply of the US dollar.” Whilst interest rates in the economy have by definition to be market determined, the commercial banks operating in Guyana display all the signs of a cartel and firmer Government persuasion may be called for if businesses are to enjoy more acceptable interest rates. As a professional services firm with regular contact with the Inland Revenue Department, we are unaware of any switch in the method of assessment of companies and find it difficult to speculate what the Minister might have meant. Omai’s production will necessarily start to decline in another year or two and the country badly needs major, medium-scale and small investments with a focus on value-added exports and/or import substitution. The business community has lamented the falling value of sales which is confirmed by the Balance of Payments statistics. The suggestion is that consumers do not have sufficient disposable income to maintain their needs. The Balance of Payments statement tellingly reflects the vulnerability of Guyana’s economy, with its focus on primary products to the vagaries of the international commodity market. Despite all the talk about added value the over dependence on our primary products will forever stultify our growth. The Government has noted the increases in fuel prices internationally and has reduced the consumption tax on fuel to reduce the price at the pumps. Highlighted hereunder is legislation passed in 1999 which is of particular interest to the business community.
Ram & McRae’s Comments: The Minister addressed the necessity for this Bill but gave no reason for the delay. As part of the conditionalities to which Guyana is subject, it has passed a large number of legislation which are either yet to be brought into effect or are not properly executed. It is over on year since the Securities Industry Act was passed but the Council required under the Act has still not been appointed. The same situation applies to the Insurance Act which requires the appointment of a Commissioner of Insurance and an Insurance Arbitration Board. The guidelines required to give effect to the 1998 Amendment to the Income Tax (in Aid of Industry) Act are yet to be issued creating further uncertainty in the business community. The present arrangements for the administration of the finance functions are clearly confusing and inadequate. Focus last year called for a strengthening of the Ministry of Finance with a strong Finance Minister, supported by a Junior Ministry of Finance and a team of competent professionals. Instead, just the opposite has taken place and the Ministry is now less able to execute some of the onerous obligations imposed under legislation for which it has statutory responsibility. UNFINISHED BUSINESS - 1996 to 1999 This year Focus takes a look at key issues identified in Budget Speeches over the period 1996 to 1999. The table below identifies some of the critical activities of continuing importance which have not been achieved to date:
The Ministry of Finance’s functions have been split between the Ministry and the Office of the President. To ensure that nothing falls between the cracks, careful consideration and planning is required between these two offices. Helping Distressed Companies - The FIA has forced the commercial banks to take action against their more delinquent customers. Focus believes however, that it is in the interest of the economy to help these distressed companies wherever possible in a win-win-win situation. The following model is suggested: The lender agrees to restructure the facility including write-off of interest; 2000 POLICY ISSUES & TARGETS In announcing the policy agenda for 2000, the Minister referred to the 1997 Elections Manifesto of the PPP-Civic policy initiatives identified by the PPP-Civic noting that the “very packed policy agenda” was set specifically to accelerate the pace of development in Guyana. Tax Administration The two major issues for tax administration in the last budget are once more the key tax features in the 2000 budget, but in more advanced stages of planning and implementation. Guyana Revenue Authority *Value Added Tax A feasibility study conducted by the IMF to examine the strengths and weaknesses of the current tax system and to explore the feasibility of substituting new taxes including Value Added Tax has been completed. The Government has undertaken to consult in 2000 with stakeholders on the recommendations. Improving the Transparency The Government identified that it would introduce far-reaching structural and regulatory reforms, the implementation of a dynamic privatisation programme and improvement to the business environment. Structural Reforms *Tender and Procurement Reform Discussions are currently ongoing regarding the tabling of a new Procurement Act which will address issues such as standardisation of bidding documents and a centralised management for tendering. *Privatisation and Management of Government Assets Privatisation efforts are expected to be continued this year for Linmine, Bermine, Guyana Stores Limited, Guyana National Printers Limited and GNCB Trust. The entities are being privatised with a view to improving efficiency and productivity. The operations of the holding company, National Industrial and Commercial Investment Limited (NICIL), will be merged with those of the Privatisation Unit (PU) but NICIL will be expected to retain responsibility for all of the government’s equity investments and properties. Economic Infrastructure for Accelerated Growth Allocation of $1.3Bn for drainage & irrigation and to construct or repair sluices, kokers, regulators and other structures. Job Creation & Growth *Improving Business Climate *Promoting the Small Business Sector *Initiatives to Boost Tourism Legislation governing the establishment and operation of the Tourism Advisory Board to be completed. The Government has allocated $20M to part finance the Board’s activities. Social Sector Programme Health & Education The Health and Education sectors are to benefit from increased allocations of G$4.7Bn and $1.3Bn respectively. Water and Sanitation Three major integrated water systems will be completed and operationalised in Pouderoyen, Rose Hall and New Amsterdam Housing Twenty thousand house lots will be prepared for distribution and US $30M loan will be undertaken for a Low Income Settlement Project. One billion dollars will be spent on upgrading and regularising squatting communities, developing new sites and services for expanded house construction. An incentive is to be created for increased mortgage lending. An amendment to the Act will soon allow for NBS to accept security other than transport or certificate of title. The amendment to the Income Tax Act will allow for other financial institutions to operate like the NBS when extending mortgages to borrowers. Pursuing Additional Debt Relief Government will seek debt relief of US$ 322M from our bilateral and multilateral creditors. Maintaining a Viable Macroeconomic Environment The major concern of the economic management of the country has been the maintenance of a viable macroeconomic stance. This concern includes high and positive growth rates, single digit inflation rates, and sustainable balances of balance of payments and the Government sector. These indicators are expected to deteriorate in 2000 because of elections among others. The Government’s need for financing from commercial banks will be reduced and this will allow the private sector more access to credit. Investing in the Priority Areas The beginning of this new decade and century is viewed as being one of expanding the scope and impact of public expenditure in pursuit of development with a human face. 33% of the resources will be invested to stimulate growth in the economy. Economic Targets Growth Rate and Production Targets Agriculture Industry Service Financial services will grow by 5.5%. Inflation and Monetary Targets Inflation is projected at 9.5 % in 2000. For comments on this section please refer to Commentary & Analysis beginning on page 28. The table on the next page presents a summary of the Government's projected fiscal operations for 2000. Some of the 1999 figures have been restated in the Estimates without attention being drawn thereto. The Plan projects a negative current balance of G$3.289Bn compared with a positive balance of G$4.965Bn in 1999. Current revenues are projected to increase to G$38.270Bn in 2000 from G$36.584Bn in 2000 with the Inland Revenue Department (IRD) and Customs and Excise projecting increases of 7.87% and 10.76% respectively in 2000. Total interest expenditure is projected to increase by 55.6% from G$7.494Bn in 1999 to G$11.657Bn in 2000 or approximately 30.5% of current revenue compared with 20.5% in 1999. Interest on domestic debt is projected to increase by 64.8% and that on external debt is projected to increase by 47.2%. Current expenditure is projected to increase by 23.9% from G$24.125Bn to G$29.901Bn in 2000. Interest represents 28% of total current expenditure as compared with 31.78% in 1999 whilst personal emoluments represents 34.3% and other charges account for 37.6% of the total current expenditure. Budgeted current balance of G$(3.289)Bn (1999 - G$4.965Bn) represents -8.6% of current revenue in 2000 compared with 13.6% in 1999. Capital revenue is projected at G$6.37Bn (1999 - G$4.09Bn) and capital expenditure at G$14.6Bn (1999 - G$12.332Bn). The revenue figure is made up principally of Balance of Payments support and commodity assistance loans mainly from the IDB and the IDA. The capital expenditure budget for 2000 represents an 18.4% increase over 1999. This follows decreases of 5.4% in 1999 and 20.4% in 1998. Debt repayment is projected at G$5.96Bn (1999 - G$5.07Bn) leaving an overall deficit of G$17.482Bn compared with G$8.351Bn in 1999. It is projected that the deficit will be financed from external sources of G$11.545Bn and G$5.267Bn from local banks. The overall balance is projected at a deficit of G$17.482Bn which is more than double the deficit of G$8.351Bn in 1999. Domestic and External Debt Repayment as a percentage of current revenue is projected at 15.6% compared with a revised percentage of 13.9% in 1999 and a budget of 16.1% for last year. Projected current revenues of $38.3Bn is more than the revised for 1999 and the actuals for 1998 and 1997 but may be an achievable target since revenues in 1999 exceeded the target by 4.7%. In 1998 and 1997 revenues fell short of target by 12.9% and 11.1% respectively. Ram & McRae’s Comments Focus 99 had predicted that that year’s revenue targets were over-ambitious having regard to shortfalls in 1997 and 1998. As it turned out the target was exceeded by 7% in the case of the IRD but fell short by 1.5% for the Customs and Excise Department. Whilst the economy is expected to grow by only 3% total tax revenues is expected to grow by 9.3%. Personal emoluments expenditure is expected to increase by 20.5%, less than the 26.66% wage award suggesting that the Budget anticipates success in the rationalisation of the public service. Government’s commitment to effectively eliminate the highly debated Sugar Levy is demonstrated by a reduction from $1.8Bn in 1999 to $1Bn in 2000. In the first PPP/Civic Budget in 1993 the Sugar Levy was $3.2Bn. It is worth noting that interest expenditure is almost double total debt repayment and the combined total is in fact largely financed by borrowing externally and locally. The substantial increase in projected interest expenditure has to be seen against the under-expenditure in 1999 necessitating a reduction of 27.5% of budgeted 1999 charges. It is however, likely to continue to fuel the debate whether Guyana has benefited from debt write-off at the expense of debt relief. Budgetary allocation for elections due in January 2001 is $1Bn. The Government has approached the International community for financial assistance but it is not clear whether that assistance is in addition to the Budget allocation. It can hardly be encouraging to find that we have to borrow an almost identical sum to service debt. WHO GETS WHAT IN 2000 Current Non-Interest Expenditure In this section we consider how the budgeted expenditure is allocated among competing ministries, departments, programmes and projects. Central Government's non-interest current expenditure (employment costs and other charges) for the year is budgeted at G$29.901Bn which is 19.31% above revised 1999. The Ministries/ Departments with the most significant budget allocations are:
It is useful to note that the percentage of total current expenditure that the majority of Ministries received in the 2000 Budget decreased over those in 1999 as shown in the table above even though the absolute values increased. This is due to the substantial increase in the Ministry of Finance’s allocation in 2000 to finance the charge for employment cost. The Georgetown Public Hospital, which was established as Corporation in 1999, has been allocated G$1.3Bn or 4.8% of Central Government current non-interest expenditure. The Ministry of Culture, Youth and Sports which came into being in 1998 has been allocated $240.6M or 0.8% of total budgeted expenditure as compared with 0.9% in 1999. The Ministry of Trade, Tourism and Industry has been allocated $168.4M or 0.6 % of the budget as compared to 0.7% in 1999.
* Represents % of regional allocation. Significant changes from the previous year latest estimates occurred in the following Ministries / Departments:
Almost the entire allocation for the Elections Commission for the year is in anticipation of elections in January 2001. Capital Expenditure Central Government's capital expenditure for the year is budgeted at G$14.600Bn which is 18.39% above revised 1999 and 23.5% of total 2000 expenditure. The Ministries / Departments with the most significant capital expenditure allocations are:
The most significant capital allocation was for the Ministry of Public Works and Communications due to the extensive rehabilitation and construction of roads, bridges and sea defences identified to be done in the 2000. The Ministry of Housing and Water which was established in 1998 secures a 6.4% increase in allocation over 1999 representing 15.24% of the total capital expenditure budget. This allocation exceeds those earmarked for both the Education and Agriculture Ministries. A significant portion relates to capital projects to be administered by the Guyana Water Authority. Guyana Police Force Total budgeted expenditure allocated to the Guyana Police Force for the year was G$2.016Bn which is 27% above the revised 1999 of G$1.583Bn. Major components of this allocation are wages and salaries G$881.669M or 43.7% of the total and overhead expenditure of G$700.002M or 34.7%. Office of the Auditor General Total budgeted expenditure allocated to the Office of the Auditor General for the year was G$103.486M which is 32.49% above the revised 1999 of G$78.108M. Ram & McRae Comments The Guyana Police Force has been heavily criticised for the escalation of crime in Guyana. In response it is argued that salary levels did not attract the right calibre of persons and that the other resources were grossly inadequate. The Year 2000 proposal should partly meet these needs. The Office of the Auditor General has been publicly but unfairly criticised by an Officer of the World Bank for late delivery of work. The increase allocation is reasonable but not adequate to meet the increasing standards demanded of the State Audit Office. Critics of the Government at a first glance may wish to accuse the Government of preferences for certain regions but such criticisms have to have regard for the nature of the expenditure proposed to be incurred.
COMMENTARY AND ANALYSIS It is difficult to detect any real vision in this Budget. If the Minister is awaiting the completion of the National Development Strategy he should have stated that. That omission leaves the reader to wonder about the wisdom of allowing an economy that has slowed to run on autopilot. For those individuals, organisations and groups who made submissions to the Ministry of Finance, the Budget 2000 will be a major disappointment. Except for the teachers and the members of the disciplined services the Budget offered nothing to anyone. The Government has clearly and rightly made housing a key pillar of its social programme. In 1999, it was announced that it would allocate 10,000 house lots. Unfortunately without offering any information on how successful that has been, the Government now proposes to double that number without indicating whether the Ministry or the Central Housing and Planning Authority has the capacity to execute this and whether the allocation for infrastructure is adequate. The capital expenditure proposals indicate otherwise. Every Budget leaves a trail of unfinished business much of which represents promises to the private sector. Critics of course blame the government for over-commitments and under-achievement. Much of the blame however must be placed squarely at the feet of the leaders in the private sector who seem afraid to hold the government accountable. Too many of our private sector leaders prefer cosying up to the Government for favours to their own businesses rather than lobbying selflessly for the sector they represent and the economy as a whole. The Guyana Manufacturers Association in a letter to the Private Sector Commission noted “ its grave disappointment in not being afforded a reply to its submissions over the years.” The Association continued “ Our Association sees this (the Budget Consultation) as being an exercise in futility and is seriously considering the advisability of future submissions for the purpose of consideration within the National Budget Estimates.” It is unlikely that the Private Sector Commission did anything about the complaints. The leadership of the Trade Union Movement has equally failed to make representations on behalf of workers. Whilst the personal deduction has been eroded and NIS contributions increased, the Trade Unions have by and large been extremely silent, more concerned about protecting turf than about defending the living standards of the workers. Macro-economic Environment The macro framework calls for single digit inflation, and perhaps slightly optimistically but dangerously close, the inflation target for the year is 9.5%. This no doubt depends on the exchange rate remaining fairly stable, an assumption that cannot be taken for granted. Elections are due to be held very early into the new year. These are seldom without contention and disruption, which could destroy just about every one of the targets set for 2000. Growth Whilst projected growth is perhaps realistic, the economy is far too dependent on the traditional areas when Guyana is a price-taker. The performance of the economy in the past two years is well below that of the early years of the Economic Recovery Programme. The modest growth projected for this year will barely help us recover to the situation we were in two years ago. It certainly will not produce the transformation required if Guyanese are to see a future here. Tourism continues not to rank high on the priority industries despite Guyana’s unique product. In 1999 the Government committed itself to the establishment of a Tourism Board and an allocation of G$15M. One year later we are told “during this year the Government expects to complete legislation governing the establishment and operation of the Board.” This must be most disappointing to the operators in the sector but do not expect them to complain. Tax Reform Six years ago then Finance Minister Asgar Ally tabled a State Paper on Policy for Tax Equity and Reform. Religiously in every Budget Speech since we have heard plans to reform the tax system only to be repeated one year later. Yet we appear to play lego with the tax system. Bits stuck on when needed not only stay there but make serious changes later more difficult. Focus and its counterpart Business Page have always been convinced of the benefits of the Revenue Authority if not for the reasons often advocated. That Authority will take no less than 3-5 years to fully establish itself. It would be a major risk to impose VAT on the Authority during that time. Capital Gains tax, a small Corporation Tax rate and Property Tax cry out for action. Why can’t these be addressed as a matter of urgency? Two additional points are worth making. Tax rates are too onerous and need to be reduced. Second, tax policy will have to change in response to e-commerce, tax treaties, removal of controls and the ever-changing business structures. High rates of tax make evasion attractive and discourage effort particularly when the income is taxed both when it is earned and when it is saved. Transparency Concerns about corruption are widespread and were recently rated as major by respondents to the Business Outlook Survey 2000. The Tender and Procurement policies of the Government have for years been criticised for the ease with which they can be corrupted. Hopefully, those procedures will now be seriously addressed. It is interesting to note that the budgetary allocation or the overworked and understaffed Office of the Auditor General is being increased in the year 2000. Nothing will inspire more confidence than constitutional changes that will enhance its independence. Debt Relief The PPP/ Civic has been particularly successful in obtaining debt relief and the external debt has now been substantially reduced. However the Government has to ensure that the arrangements for long-term debt write-off do not cause onerous debt servicing in the short term. Institute of Private Enterprise and Development (IPED) The Budget seems to place much faith in IPED to assist the small entrepreneur. It should be aware that IPED’s interest rate policy is often the subject of adverse criticisms similar to those levelled at the banks. That same organisation will be managing the Guyana Youth Business Trust. Youth unemployment is too serious a problem to leave almost entirely to one organisation. In 1999 President Jagdeo had announced plans to assist distressed companies. Widespread bankruptcies have to be avoided by creative restructuring which allows those companies to return to viability while providing higher recoveries to the lender than they would otherwise have received. No New Taxes? Whilst the Minister spoke confidently of no new taxes, workers and employers are only too well aware that NIS contributions have doubled over the past three years. Even if this is not theoretically a tax, it certainly reduces the take-home pay of workers. Issues Not Addressed The Acting Speaker of the House and indeed all women would have been disappointed at the absence of any women-related issues. The same is true of Amerindians and in the Budget to a lesser extent youth and technology. These are rather unfortunate oversights. Y2000 is going to be a challenging year, both for the economy and the government. Despite a commitment by both major parties to have elections within the time-bound Herdmanston Accord, there remain considerable doubts about the feasibility of these elections being held within that time. Whilst many would have hoped for a Budget that broke from the recent past with vision and creativity, perhaps the Budget presented by Minister Kowlessar was what he and his Government considered most feasible given all the circumstances. There still seems a marked reluctance to respond to the pleas of the Private Sector. On the other hand, the Private Sector is hardly distinguishing itself by courage, innovation or commitment to the general good of the country. Minister Kowlessar deserves the understanding of his fellow Guyanese for attempting to prepare his Budget in the most difficult administrative arrangements possible. He needs to be given far more authority and more technical resources to manage the Ministry of Finance and Budget 2000 effectively. Unless this is done the economy will continue to move at a pedestrian pace when what is needed is rapid acceleration. 
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