Ali responds to AFC/APNU $21billion budget cuts

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MINISTER of Housing and Water Irfaan Ali has expounded on the implications as a result of the actions of the combined Opposition A Partnership for National Unity (APNU) and the Alliance For Change (AFC), cutting the budget by some $21B.
Focusing on the policy implications as a result of the actions of the Opposition, the People’s Progressive Party/Civic (PPP/C) Member of Parliament (MP) said it is important that the country understands this.
“Moreover, the region and the international community are looking at what is taking place here in Guyana because the areas that were the target of the cuts have fundamental implications for international trade, international agreements, regional trade and regional agreements,” he outlined.
“This is a very critical point that we must understand because these cuts are not confined to within the borders of Guyana but these cuts will be sending a strong message to our international partners, the donor community and this will be testing Guyana’s trustworthiness and credibility in relation to our international commitments,” Ali offered.
He added: “Our credibility as a nation, our predictability as a nation, and our stability as a nation are the important issues that are on test in the international community because we made certain agreements and arrangements with the international community based on our vision as outlined in varied development strategies for Guyana all cumulating into the core strategy that is known as the Low carbon Development Strategy (LCDS).”
He said in making a decision, there are some basic assumptions in economics, policy formulation, and governance mechanism that one needs to consider.
“I challenge the opposition to outline to us the basis on which this decision was made and the guiding principles that they utilised in making this decision to cut the budget in the areas they did. What were those guiding principles?” he asked.
“This is something that I think the media and Guyanese need to understand. The opposition would say to you in a very fractional manner that they were cutting to get savings to put into other areas. Well first of all, that assumption is wrong by law because the Opposition does not have the ability to increase the budget. This is prohibited by law, but they can cut the budget,” he explained.
He went on, “However, if you want to cut an economic activity that would grow wealth and say that that cut will be used to pay salary increases it does not match because that economic activity is budgeted for the creation of wealth in the country and based on the creation of that wealth it is utilised in the other segments of the economy, so you cannot say that you are cutting a future sector of the economy to pay more wages, for example, and give no consideration for the lost cost in terms of wealth creation.
“When you are talking about policy formulation, economists will say something very fundamental: you have to take your personal emotions and biases out of the policy. This is the reason why policies are put on the scale of test,” he insisted.
He pointed out that it was made clear, especially by the AFC with Mr Khemraj Ramjattan and Mr. Moses Nagamootoo making no secret of this – that a lot of their actions were based on revenge, vendetta, personal ego and wasteful adventurism.
“I want to emphasise the last term “wasteful adventurism”. Why do I say “wasteful adventurism”? Let us take the example of CANU. They will say to you that the law says that CANU must fall under the Ministry of Home Affairs and whatever was under the Ministry of Home Affairs and whatever was under that ministry they voted in support of. However, we must remember that CANU was operation in the first four months of this year and required resources and an institution such as CANU cannot do planning on a monthly basis – they have to make three-year and five-year programmes – so they will have a master plan for 2012 with various targets based on the assumption that the human and financial resources will be available to implement those programmes and to achieve those targets,” he said.
He said what they have done in effect was to immediately put a time lag in the system, noting, “They could say to us now that when we bring everything under the Ministry of Home Affairs they are going to approve the additional amounts, but what is the cost of the time lost as a result of the cut? Does it embolden the drug traffickers? Does it give the international community the idea that is not serious in its approach to fighting drug trafficking?”
He said the opposition’s cuts were carefully calculated to destroy the future economy of Guyana and to destroy the expansion of the services sector, to destroy the linkage of the development infrastructures to economic growth and expansion in the future.
“Their primary aim is to create a failed state. The cut for CANU is to reinforce the long held misconception that relates to Guyana and drug trafficking,” Ali said.
“In the long term they are trying to create a failed state, but if you look at today’s paper they said that they are not afraid of a snap election because they have this at the back of their head. They want to ensure that whatever they do in the short run is strong enough to ensure the failure of the government. They believe that in the event of a snap election, their actions will be enough to ensure that the PPP/C government loses the snap election,” he further said.
“This is where we are and this is how I will attempt to interpret the thinking of the AFC and APNU and the basis on which they have designed these cuts,” he lamented.
He noted that Mr. David Granger, Leader of the Opposition, described the cuts as “reversible”, but they appear to be looking at this issue very fictitiously.
Looking at the LCDS, the PPP/C MP said the LCDS is the country’s core development strategy with both backward linkages and forward linkages.
He said the backward linkage of the LCDS include the National Development Strategy, the Poverty Reduction Strategy, and the National Competitiveness Strategy.
He reminded that when the LCDS was designed, it was made clear that this strategy focuses on the integration of all these other strategies towards a common developmental goal in a sustainable manner for Guyana.
“What is now the predictability of our development strategy? How effective can our development strategy be when they cut the resources that were to finance the strategy? This sends a very serious message to the donor community,” he put forward.
Turning to the forward linkages, he said the LCDS is the product of a series of consultations and it benefited from the inputs from the private sector, the manufacturing sector, the national stakeholders forum and a project steering committee.
“It was a strategy that was developed and defined through public-private partnership in collaboration with the primary stakeholders, especially in the hinterland communities. What is the cost of this policy reformulation?,” he further stated.
Noting that the LDCS outlined very succulently the economic direction of the country, for example, the ICT sector, he alluded to the link with investments in ICT and poverty reduction.
Also, he reminded that part of this LCDS is to have the fibre optic cables in Guyana so as to achieve 100 percent ICT literacy and access which will create the ICT markets.
“What did they do? They will say that they did not cut the One Laptop Per Family project, but they in fact did cut the OLPF. Worse than this is the fact that even if we go ahead with the OLPF and we don’t have the fibre optic cable coming into Guyana then we would immediately lose the full potential of that programme,” he said.
He said all these projects are critical for each other because they are integrally interlinked with each other.
On the other side of the equation, he said, there are the implications for international trade, trade agreements and regional trade, adding that the LCDS is no secret since it has been the base document used by the United Nations and many developing countries in crafting a macro agenda.
“So here it is that Guyana is successfully integrated into a collective whole and has provided the leadership in crafting an international policy that would reshape the way we operate in the global environment, but what happened? The leader of this global environmental effort is struck a fatal blow. How can we now go and lead after our parliament has rejected the financing that comes out of the strategy?,” he said.
He said the Opposition has undermined the strategy and Guyana’s position, and worse than this, they have undermined the position of the developing world, claiming, “This is a break in the solidarity movement of the developing countries.
“What becomes of our agreement with the Kingdom of Norway? What becomes of the agreement that we have signed for the MRV system? What becomes of our international commitments regarding our carbon footprint? What are the implications of these cuts?” he questioned.
He also touched on the implications as they relate to the hydro-power which is a project that has severe forward linkages that are critically integrated into the future expansion of the economy since it will ensure the necessary competitive advantage.
Additionally, Minister Ali said two fundamental pillars of the LCDS and the “village economy” are agro-processing and community based tourism.
He underscored that the private sector has made it very clear that the cost of power limits the investment potential for Guyana and needs to be one of the most critical issues to be addressed by government.
“And here it is that the long held position of the people of Guyana for the development of a hydro-power is lost by the strike of a pen. On what basis can a decision like this be made?,” Ali stated.
On the cuts to the Office of the President (OP) budget, he proclaimed, “This would be the first President who would not have access to any resource to help directly in vulnerable times”.
He said there were also Presidential Grants but now 178 communities would suffer because of the cuts made on estimates for the Office of the President.
On the issue of VAT and the reduction of VAT, he made it clear that the President had promised during the elections campaign that he is committed to the review of not only VAT but also the entire tax system, and as such, the first policy announcement that the President made after he was sworn in was that he was establishing a special committee to review the entire taxation system inclusive of VAT – an independent committee.
Ali said the work of that committee has not concluded and the President has made a public assurance that the recommendations of that committee will inform all decisions that relate to VAT and the entire tax system.
He said that even during the interim period, the President made an offer to the Opposition to set up a special poverty fund that would specifically target certain communities that are classified as depressed – or certain poverty areas so that this can develop small economic projects that can uplift the lives of the people.
“If the aim of reducing VAT is to bring more benefits to the poor people, then a fund like this would definitely have major positive impacts on the poor and vulnerable. The government even went further and proposed to the Opposition for us to review all the zero rated items to see which items excluded out of the list is an essential requirement for the poor and vulnerable,” he stated.
“All of these the government has offered to the Opposition but yet they did not budge. In local terms we would say that the government bent backwards, but let me make it very clear that this PPP/C government’s commitment on the issue of VAT is that we await the completion of the works of the special committee, and the President has made it very clear that he is committed to a review of the taxation system, including VAT,” he said.