– Foreign debt US$1 billion
– Three-quarters paid back since ‘92
MINISTER within the Ministry of Finance, Jennifer Webster, debunked assertions that the national budget presented over a week ago is an elections one, and said that rather, it is testimony of Government’s stewardship to the economy, which has seen debt levels come down significantly.
Speaking on the opening day of the budget debates at the National Assembly yesterday as Government and Opposition traded barbs on levels of spending, and the state of the economy, Minister Webster said:
“This budget is not an election year budget; it does not reek of expanded deficit.” she said.
She added that in 1992, the budget presented by the PNC administration showed a budget deficit of 39.8 per cent as a percentage of GDP, some 21.2 per cent higher than the previous non-election year of 1991.
“In 2011, under this responsible PPP Government,” she said, “the fiscal deficit is budgeted to decline in an election year. This highlights our government’s unwavering commitment to fiscal prudence and to ensuring a sustainable development path that does not see our country returning to the days of old where the debt burden was the albatross that strangle the then administration’s ability to do anything for the Guyanese people.”
Noting that the PPP/C government has moved Guyana from an insolvent and unsustainable debt position to one of debt sustainability, Minister Webster said: “Over the past five years, the net present value of debt-to-government ratio — Guyana’s main debt sustainability indicator — has consistently remained below 200 per cent; well below the sustainability benchmark of 250 per cent, which inspires confidence in our economy both domestically and internationally.”
“Government acknowledges that despite these achievements, there remain challenges in the area of debt management, such as the decline in the availability of new conditional resources and the potential risk of exogenous shocks, such as high food and energy prices that can affect our future debt sustainability position,” she said, adding:
“We on this side of the House refuse to go back to a past where debt is incurred in an irresponsible and unsustainable manner, and where our people are denied access to basic services.”
Addressing the issue of supplementary provision, she said that the provisions brought to the House by the government were driven by circumstances of a nature that was unforeseen, unavoidable or urgent.
She said that during the PNC’s last five years in office (1988 to 1992), the annual average or total supplementary provisions came up to “an astonishing” 57 per cent of budgetary allocation, while under this present government, the annual average is a mere 14 per cent of the budgetary allocations.
“Mr. Speaker, this is testimony to the prudent, fiscal discipline applied by this administration with regard to the managing of this country’s finances. This administration’s track record of fiscal responsibility and prudent debt management is in stark contrast to that of the PNC administration, which saddled our country with an external debt burden that reached approximately $2 billion in 1992, or five times the GDP at that time. Today, thanks to the PPP/C government, sound economic management and practices, Guyana’s external debt stock now stands at about US$ billion, or 54 per cent of our GDP,” Webster said.
This tremendous achievement of the administration’s, of lowering the external debt, she said, was due in part to the significant debt relief obtained under arrangement with Guyana’s bilateral Paris Club and non-Paris Club and commercial creditors, and some multilateral creditors under the Heavily Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative.
Another key factor behind the lowering of the external debt stock, she said, is the fact that from 1992 to 2010, Guyana had repaid principal amounts totalling US$750 million to external creditors. “Moreover, with regard to debt relief obtained, it should be noted that this was not automatic as part of international debt arrangements as some would have us believe. This was contingent upon Guyana’s proven track record of sound economic performance, the implementation of necessary reforms and responsible new borrowing practices,” she said.
Noting that Government has had to lobby strenuously on many occasions for debt relief to be obtained, the minister said: “Mr. Speaker, over the past year, debt service payments increased by 64 per cent to approximately US$28 million, and Guyana commenced repayment to several creditors including Venezuela and the International Monetary Fund (IMF).”
Continuing, she said: “Despite this increase last year, external debt service payments only accounted for about 5.4 percent of Central Government’s revenues in 2010. This is a dramatic improvement from the dismal days of the PNC regime when in 1991, total debt service payments amounted to close to US$100 million and consumed approximately 90 percent of Government’s revenue.”
She said that as a result of the lower debt service payments over the last year, Government has been able to use resources to invest in people and the development of this country. “The evidence of this investment is clearly visible… in the improved and expanded healthcare facilities as seen in the five new diagnostic centres, the National Ophthalmology Hospital and the upcoming surgical specialty hospital which further expand the many services being currently offered to our people,” she said, also mentioning new schools and expanded curriculum and feeding programme.
The Minister said that the role of the Public Sector Investment Programme (PSIP) in transforming the infrastructure landscape has been very significant. “Mr. Speaker, the PSIP has over the past five years concentrated in investing in selected areas of high priority with its focus primarily on the social sector. In fact, capital investment in the social sectors increased from 20 percent of the total PSIP in 2006 to 38 percent of PSIP in 2010, showing a 100 percent increase over the period. This accomplishment came as a result of both the immediate and medium term needs of education, housing, health and water sectors being identified through their respective sectoral plans to maximise the growth and services of these sectors,” she said.
Minister Webster rejected the insulation from a member of the Opposition, Jennifer Wade, with respect to road works being done.  In addition to calling for more roads, Wade, of the PNCR, yesterday in her budget contribution said that farmers continue to suffer and there must be a comprehensive plan for drainage. Hence, she called for the continuation of the MMA Phase Two. She also called for the serious land issues to be addressed since farmers are awaiting answers.
Wade called for emphasis on HIV and AIDS, and for supply of sporting gear and facilities for drama and sports as means of lifting of youths out of depression. Wade also called for an ambulance at Fort Wellington Hospital.
Webster said: “In fact, Mr. Speaker, roads are being done throughout Guyana in all the communities. These road projects are publicly tendered and the awards made on qualifying criteria. These roads are designed and constructed based on the intended functionality of the roadways and are being done at an unprecedented level.”
Speaking on the Economic Partnership Agreement (EPA), Webster said that Guyana on January 14 became the first among member states of Caricom to implement the agreed EPA tariff in fulfilment of the regulatory obligation. She said that this is expected to affect many commodities, some immediately while others will be in the near to distant future.
“Products which would not be affected by this process are those excluded, and these include milk, sugar, vegetables, rice, fish and meat products, most beverages, paint and paper products, soap and detergents, some textiles and furniture. This exclusion is extremely useful and it will ensure that these exports are not replaced by imports from Europe. While products which will be immediately liberalised consist mainly of products within the low duty rate of zero to five percent, not all such products are being liberalised,” she said. Milk is one of these and is excluded from the liberalisation schedule to maintain the necessary policy space for future production interest, the Minister explained.
She said that the final products are those that would be fully liberalised in a phased five to 25 year period and would include motor vehicles and parts, tyres, potatoes, certain plastic articles, cement, certain vegetable fats, medicaments and electric conductors. “We are happy to mention that most of these products are not produced locally,” she said.
“Mr. Speaker, it is important to note that the possible Revenue loss as a result of the implementation of the EPA would be managed by this Government to minimise any dislocating effect,” she said.