Coalition gov’t spent over G$1.2 trillion ‘unproductively’

AN assessment of Guyana’s financial assets has shown that the former A Partnership for National Unity + Alliance For Change (APNU+AFC) administration spent over G$1.2 trillion unproductively and abused the country’s Contingency Fund, by withdrawing large sums of money and not reconciling over $4.2 billion.
Senior Minister with responsibility for Finance in the Office of the President, Dr. Ashni Singh, has said that the state of public finances was nothing short of ‘disastrous.’

According to a press statement from the Ministry of Finance, Minister Singh said excessive taxes imposed on the private sector and citizens were exorbitant; the then government collected revenues totaling $992 billion between the period 2015 and 2019.

Despite this huge revenue collection, the coalition utilised these funds in an “unproductive manner” through what he described as wasteful and inefficient government expenditure, with total government spending amounting to G$1.2 trillion. After accounting for grants received, the aggregate fiscal deficit of the central government amounted to G$130 billion over the five-year period.

On the subject of external debt, Minister Singh said the previous administration had accrued new external debt of US$400 million during their five years in office.
On domestic financing, the minister said when the People’s Progressive Party/Civic (PPP/C) demitted office in 2015, they left a net deposit at the Central Bank of G$16 billion. And, after five years of economic ‘mismanagement’ by the previous government, the new government is now burdened with a net overdraft of G$93 billion at the Central Bank.

He added that if this overdraft is counted as domestic debt, this would result in an effective breach of the domestic debt ceiling. The debt ceiling is a limit on how much debt the government can have.
In addition to this, the new government is also saddled with the G$30 billion National Industrial and Commercial Investments Limited (NICIL) bond, of which G$17 billion has been drawn down. Minister Singh also said G$12 billion is owed to the Guyana Power and Light (GPL), while G$7 billion is owed to the Guyana Water Incorporated (GWI).

Dr. Singh was also critical of transactions conducted by the coalition which are being viewed as illicit because they were all conducted after the successful passage of a No-Confidence Motion against the coalition, in December, 2018. The passage of this motion ‘stripped’ the former government of their substantial authority and reduced them to a ‘caretaker’ administration.

A slew of legal challenges following the passage of the motion and the March 2, 2020 General and Regional Elections, however, afforded the former administration to conduct transactions until August 2, 2020, when the new PPP/C government was sworn in.

“Much to our astonishment and during the latter part of 2019…after the Caribbean Court of Justice’s (CCJ) ruling in June 2019….no less than G$4.2 billion dollars was drawn from the Contingency Fund to meet a variety of expenditure that had not been budgeted for,” said Senior Minister with responsibility for Finance in the Office of the President, Dr. Ashni Singh.

Dr. Singh said former President David Granger had acknowledged that his government was in caretaker mode, but, nevertheless, ‘dipped’ into the Contingency Fund to draw $4.2 billion from July 2019 to as late as December 2019.

“Ironically, the government had boasted the previous year that they had not used the Contingency Fund in two years, 2017 and 2018,…and it appeared to have been a matter of great pride to them…yet in the second half of 2019 when they were clearly in caretaker mode, they appeared to have no reservations about turning to the Contingency Fund and drawing down no less than G$4.2 billion,” said the Senior Minister.

A contingency fund is defined as cash or other assets reserved to address unforeseen circumstances or losses in a business. The role of the Contingency Fund is to improve the holder’s financial stability by developing a safety net that the firm can use to fill emergency needs.

The country’s financial situation when Dr Irfaan Ali was sworn into office as President on August 2, 2020, was found to be in a disastrous state, Dr. Singh lamented.
But, President Ali has already committed to getting the economy back on track, starting with the implementation of measures and projects included in the $329.5 billion 2020 budget.

This budget includes a $25,000 cash transfer to every household; a $15,000 cash grant and a $4,000 uniform voucher for schoolchildren; $800 million for the Amerindian Development Fund; $5 billion for the Guyana Sugar Corporation (GuySuCo); a two-week, tax-free bonus for members of the Joint Services; and $150 million for frontline workers, among many other benefits.

President Ali had also said that the government, after re-prioritising and re-programming fiscal measures, has managed to add $20 billion in relief to the “pockets” of Guyanese at a time when the nation is faced with the effects of COVID-19, and the recently concluded protracted electoral process. The conduits of relief include revised tax measures and sweeping incentives.

The broad objectives of those measures, which feature in government’s emergency budget, are to stimulate economic activity; get persons back to work; increase Guyana’s productive capacity; reduce the cost of doing business; improve efficiency; and facilitate growth and development of businesses.