Budget debates begin today

ROBUST arguments are expected today in the 11th Parliament as the debates on the 2015 Budget hold sway. The historic Budget of 2015, peaking at $221B, was read before the National Assembly by Finance Minister Winston Jordan, who outlined Government’s plan for the remainder of 2015.
The day also marks the return of the People’s Progressive Party (PPP) to the National Assembly, this time sitting in the Opposition benches after more than 22 years. But this time, the effectiveness of the party will be challenged, given that they only possess 32 of the 65 seats allocated in the House.
The party, which previously served in Government, will be required to strategically manoeuver itself to represent over 202,000 citizens who vested their confidence in them at the May 11 General and Regional Elections.
No stranger to being the majority in the House, the APNU+AFC delegation in the National Assembly is expected to push ahead with their developmental agenda, which will be supported by the Executive arm which they secured at the elections.
Unlikely to face any dissent, however, will be some initiatives which were detailed to benefit the working class.
Incoming Opposition Leader, Bharrat Jagdeo has already signalled support for some of the initiatives, such as increases in public servants’ salaries and Old Age Pension; reduction of the Berbice Bridge toll; subventions for the Guyana Sugar Corporation (GuySuCo), and monies allocated to pay rice farmers.
However, intense debates are expected to focus on issues related to developmental projects which were piloted by the PPP and are proposed to be abandoned.
THE AMAILA PROJECT
Contending that a continuation of the Amaila Falls Hydropower project would be a “downright criminal act of deception,” Jordan stated in his Budget presentation that investigations have revealed that at the current cost of almost $1 billion, the Guyana Power and Light Inc (GPL) would be required to make annual payments amounting to US$130 million to the operators of the hydro facility.
He revealed that this amount will total US$2.6 billion over the 20-year commitment period of the power purchase agreement.
However, contrary to his investigation, Jagdeo argued that with the support of the Inter-American Development Bank (IDB), the cost for generating electricity would “skyrocket” to over US$600M annually by 2035, as compared to US$400M if Amaila is built.
He also refuted the point made by Jordan that GPL will pay US$2.6B for power, using Amaila for a 20-year period, offering that the figure is closer to US$2.0B. “Secondly, the cost, without Amaila, would be close to US$5.5B,” Jagdeo said.
NIS
Last Monday, Minister Jordan announced an end to the National Insurance Scheme (NIS) subsidy of 1 percentage point, which was paid by the Government to cushion the effects of the increase in NIS rates in 2003. He reasoned that it was “opportune” to end this subsidy, given the “substantial increases” in salaries for public servants, coupled with the removal of taxation from NIS contributions.
Unreceptive to this move, Jagdeo had subsequently questioned what the treasury would be benefiting from through the elimination of this subsidy. He argued that only after this is established can one see, in a net sense, what this measure means; whether the funds from this subsidy are larger than the $1.3B the treasury is losing from not taxing NIS.
VAT
Value Added Tax (VAT), which was also listed in the Coalition’s 100-Day Plan featured in their Manifesto, had also demanded attention during the presentation of the Budget.
However, an unexpected announcement of the failure to “immediately implement a phased reduction of VAT…” was justified by the Finance Minister, who reasoned that the three-month-old Government was greeted with a tax system which is in need of an overhaul.
As such, the only move made in this regard was the elimination of VAT on some commodities which were listed by the minister.
But according to Jagdeo, the Government was reducing VAT on some items in lieu of the reduction of the rate that they had initially promises. It is to this end that he noted that after examination of some of the items which will now be zero-rated, he can confidently say who some of the lobbyists were to get some items zero rated.
He suggested that there had been “serious lobbying” due to the fact that there is inconsistency in the items zero-rated.

SCHOOL UNIFORM VOUCHER
An announcement to increase the traditional $1,500 school uniform voucher to $2,000 was also made by the Minister on Monday. This, he said, will benefit 167,000 students across the country, and reflects an additional $337 million investment into the programme.
But the incoming Opposition Leader had contended that the $10,000 cash grant which was introduced by the PPP when in Government is being slashed, but not to the benefit of the children.
“If we take the $10,000 that we had given as a transport grant and we multiply it by 167,000, we’ll have $1.67 billion. So what they have done is that they have given $337 million and have taken back $1.3 billion from the students,” he argued.

PETROCARIBE FUNDS
Subsequent to providing a bailout of almost $4 billion for the Sugar Industry earlier this year, Jordan told the House that the Government was faced with a crisis in the rice industry.
He accused the PPP Government of “mismanaging” the Petro Caribe Fund, with only a small balance of US$0.8 million in the fund at the end of May 2015, whereas outstanding payments to rice farmers was in excess of US$17 million.
But the former President argued that the over $600M Petro Caribe Fund was spent on developmental projects and the remainder to pay off rice proceeds.
Explaining that the fund held an initial amount of $600M, he noted that $16M was spent on the Hope Canal Project, $10M on housing and just over $100M was pumped into GPL.
The remaining $500M+, he said, was used to pay off rice proceeds, since the rice deal with Venezuela was that if the neighbouring country takes $100M worth of rice, then Guyana cancels that amount from the balance.
“We no longer have a debt because the balance in the account was used to pay off rice proceeds,” Jagdeo said, adding that “if the account had money and we were not paying the rice farmers then it meant we were abdicating our responsibilities to the farmers.”
LATITUDE DURING DEBATES
Additionally, the incoming Opposition Leader had lauded the Finance Minister’s efforts to allude to the May 11 General and Regional elections and the perception of “corruption” during his budget presentation, since according to him, it allows for the PPP to rebut these claims in the National Assembly.
“This [elections and corruption] gives us latitude in the debates; because the debates generally are about the economy in the standing order. But once the Minister of Finance introduces elections, corruption and audits, then it opens the door for us to talk about these things in the debates,” Jagdeo said.
He added that the Opposition will be given a chance to defend their position in relation to these accusations by the Finance Minister since they are allowed to respond to issues that the Minister has brought before the House.
Expected to attract some amount of attention too in the National Assembly during the debates will be the issue of sugar and its survival in a rapidly advancing technological world.
The idea to privatise the industry had been touted by elements in the new Government. The PPP subsequently expressed an opposing conviction and stated that sugar is not an industry, but rather a way of life.
Scrutiny of the allocations made to the individual sectors, particularly health, housing and water, education, roads and bridges will stand to reason that since these pivotal areas are at the centre of the transformation process, then funding is compulsory, given the rapid socio-economic progress of the nation.
Other major developmental projects are also expected to release a critical and analytical spirit by both the Government and Opposition in the House, to defend their vision of how Guyana should be transformed for 2015.
Meanwhile, the nation watches and prays that maturity and good sense will prevail as the 2015 Budget debate kicks off to a spirited start today.

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