Opposition leader Desmond Hoyte has flayed the 2002 budget presented two weeks ago by Finance Minister Saisnarine Kowlessar, describing it as containing nothing to raise the morale of the ordinary citizen nor to stimulate the business sector.

"The 2002 budget is in the tradition of all previous PPP/C budgets. It is a hotchpotch of unrelated programmes, confused ideas and wishful thinking. It has no coherence," Hoyte said.

The People's National Congress REFORM leader was addressing a well-attended forum on Wednesday afternoon at City Hall in Georgetown held by the party to discuss the 2002 budget.

The PNC/R is not participating in the budget debate in parliament which concluded yesterday with the passage of the appropriations bill.

The party has embarked on a programme of active non-cooperation in protest at what it says is the improper functioning of parliament and the non-implementation of decisions taken in the dialogue process between President Bharrat Jagdeo and Hoyte, also Leader of the Opposition.

Hoyte said the budget provides no opportunity to assess new programmes against existing ones and has been formulated without adequate consultations both within and outside the public sector.

"The 2002 budget is fundamentally flawed and useless as a tool for management of the economy or to stimulate national development. It is therefore unrealistic," he stated.

Hoyte said that Budget Director, Dr Ashni Singh conceded that the measures contained in the budget were inadequate to stimulate growth and aid businesses in distress.

He posited that that statement flatly contradicted that of Kowlessar who described the budget as "our growth-inducing and poverty-reduction programme."

The Opposition leader stated that in every budget, government listed policy issues which are supposed to be implemented within the course of the year to improve efficiency of economic management and stimulate growth.

It was his view that all the matters were quickly forgotten and not implemented.

He recalled that some of the promises made last year included: completing a tax reform study; tabling new procurement legislation and establishing a new procurement supervisory body; reforming the civil service; bringing into operation a new semi-autonomous Deeds Registry; improving the institutional framework for trade and investment facilitation; appointing a Commissioner of Insurance; restructuring the rice, sugar, and bauxite industries to enhance their ability to compete internationally and their net contribution to society; and diversifying the economic base.

"None of these things has been done, yet the minister has the gall to repeat these proposals this year without offering any explanation for the regime's failure to implement them," he said.

The PNC/R leader stated that for many years the ruling People's Progressive Party/Civic (PPP/C) has presented policy objectives in the budget which were never implemented.

These include:

* Establishing with local and international banks financing and related services for the manufacturing sector.

* Improving the lot for Amerindian citizens generally, and developing market networks in the Caribbean and extra-regionally for Amerindian arts and craft.

* Launching a youth employment programme.

* Supporting distressed companies.

* Establishing a Non-Governmental Organisation Coordinating Unit.

Hoyte noted that in Kowlessar's budget speech, he asserted that government looked forward to the early fruition of the Free Trade Area of the Americas as, according to him, this would provide Guyana with expanded markets and compensate for the impending loss of preferential markets.

He described this as naive thinking since Guyana would not be able to compete considering the way the local economy is currently organised.

Hoyte's opinion on the performance of the economy last year differed from Kowlessar's, who said there was a growth rate of 1.9% and the rate of inflation was 2.6%. He said according to the minister's own numbers, government's fiscal and balance of payments targets were erroneous and this raised the suspicion that the numbers were inflated and manipulated in 2001 to present a favourable picture.

He stated that current revenue declined by $2.6 billion which was 5.9% short of the target.

The current account of the balance of payments which had declined in 2000 registered a further decline of US$19.6 million to a deficit of US$128 million, he said, with the overall balance of payments deficit at US$8.4 million also worsening.

Hoyte said it was difficult to define how government was going to achieve its projected real growth rate of 2% for this year given the unsatisfactory performance of the economy last year.

He pointed out that the minister had forecast an increase of current revenues by 5.8% from $41.5 billion to $43.8 billion, and a deterioration of the overall balance of payments deficit to US$16 million.

Noting the size of the budget, Hoyte said government would have to garner the necessary financial resources to achieve that level of expenditure but would be unable to do so.

He asserted that the minister has said nothing realistically on how the expenditure would be financed and even though government planned a massive increase in local borrowing, the local resources would be insufficient. This would leave government dependent on foreign inflows.

Hoyte noted that Guyana survived on loans from the international financial institutions and grants from donor countries to cover its deficits and finance its projects but there was little certainty these would be forthcoming.

Hoyte argued that the international financial institutions and donor countries were becoming more sensitive to issues of governance.

They are more insistent in their demands for fiscal rectitude, an end to corruption, and equitable disbursement of resources to benefit all segments of society, he said.

He added that they were also keen on the government being able to generate a national consensus for its policies and programmes.

Hoyte noted that government has not yet reached an agreement with the IMF and that several donor countries have been investigating the way their resources were spent, transparency of the system, and corruption.

The PNC/R leader said government did not achieve its targets in 1997 but the Heavily Indebted Poor Countries relief was granted on the understanding that government would institute macroeconomic reform programmes with the World Bank and IMF to achieve sustainability and reduce poverty.

He said there was no macroeconomic reform and the poverty reduction strategy was so flawed that the PNC/R and other entities had to write the World Bank and the IMF expressing their concerns about the manner in which government was proceeding.

There has been no acceptance of government's strategy paper and no indication as to if and when resources would flow, Hoyte said.

Hoyte, who recently signalled he would be quitting as party leader in the near future, declared that the 2002 public sector investment plan was defective and inconsistent with a stable economic framework.

He charged that the proposed huge investment in the sugar industry was based more on political than economic considerations.

He contended that while the industry needed to be modernised, government's proposals were infeasible.

"The industry will not be able to modernise, reduce costs and increase efficiency without closing down mills and laying off large numbers of workers," he said. "It seeks to fool the public, and particularly the sugar workers, that it can achieve the objectives of modernisation without that cost."

He pointed out that the objective of government's programme was to bring down the cost of production to US$0.11 cents per pound when the world price was around US$0.9 cents.

Hoyte said government's programme cannot be achieved without the establishment of facilitating institutions that would support both business enterprise and generate investor and public confidence.

He said the programme cannot succeed without a civil service that is competent, highly motivated and properly remunerated.

"Since 1992 the government has destroyed the professionalism of the service. It has become highly inefficient, its morale is low and its output unsatisfactory," he stated. "As far back as the 1993 and 1994 budgets, the government has promised civil service reform to address the problems affecting the quality of service. This has not yet happened. A wages policy promised in 1995 has not yet materialised. In the meantime, however, the government has demoralised the service, placed incompetents in key and critical positions, circumvented the authority of the Public Service Commission, and pursued policies calculated to destroy the unions representing government workers."

Hoyte proclaimed the tax regime as having reached oppressive levels, especially for the small man.

He said even though government has trumpeted that there would no increase in taxes, Guyana's revenue collection is 32% of the GDP, much higher than those of low middle income countries.

Hoyte lamented that government continued to tax the Guyanese people indirectly by raising fees for a range of services, by allowing the exchange range to deteriorate, and by imposing import taxes upon the increased G$ equivalent for imports, among other ways.

"Its refusal to increase the threshold for tax exemption falls heavily on the masses of poor people who struggle on the periphery of the economic arena," he stated.

Hoyte stated that good governance was a major factor in government's programmes being achieved successfully and key to this was the functioning of the parliamentary system. He said even though relevant laws were passed in parliament their implementation has been stymied by the government. Hence, there is no Ethnic Relations Commission, no Sectoral Committee of Parliament, and no All Party Management Committee for parliament.

"As far as the PNC/R is concerned, we have given government the space and the cooperation since the last flawed elections in March 2001, to institute meaningful reforms. Nothing has happened," he said. "In the light of this, we have indicated that we are no longer going to involve ourselves in a parliament whose activities have become meaningless and futile."

The bottom line, according to the PNC/R leader, is that the budget cannot generate growth and development and a mere "wish list" for which funding was not guaranteed.