Finance ministry upbraids Indar for ‘wild allegations’

The Ministry of Finance has upbraided People’s Progressive Party/Civic (PPP/C) newcomer, Deodat Indar for his “wild allegations” on critical aspects about the economy.

According to the ministry, Indar sought to “mislead” persons during a recent roadside meeting, where he attempted to persuade voters through the peddling of distorted information, which the ministry said is tantamount to abuse of public trust.
“We are quite appalled at his interpretations of economic issues, and are, equally, flummoxed at his wild allegations and fear-mongering on critical aspects of the economy. To the less informed, his ramblings would have been sure to cause anxiety,” said the finance ministry.

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Among the “false allegations,” Indar said government has spent all the money and sold all of the gold held in reserves at the Central Bank, but the ministry rebutted by saying a cursory check with the Bank of Guyana will confirm that reserves have always been positive. Additionally, the ministry said reserves of the bank are held distinctly and separately from the Consolidated Fund, the latter of which is used by government for expenditure.

Government also responded to Indar’s allegation about Guyana being unable to pay its import bill because the government has spent it all. “The reserves of the Bank of Guyana are used, principally, to pay for the imports of fuel and the servicing of Guyana’s external debts. All other imports are financed through the commercial banks, foreign currency accounts retained by approved persons and/or foreign direct investment,” said the ministry, adding that the Central Bank’s reserves are adequate enough to meet the identified imports.

All of the reports from the international financial institutions on Guyana’s economy including the most recent International Monetary Fund (IMF) Article IV Country Report never commented negatively on the state of Guyana’s reserves. Those reports have even lauded government’s efforts to avoid the resource curse and its management of the economy.

In further dismissing Indar’s claims, the ministry said: “Indar has fallen into the mantra peddled by his political party that the government instituted 200 taxes since coming to office. However, neither he nor his fellow peddlers have been able to list these taxes simply because it is a lie. The truth is, this government has implemented tax reform that is unrivalled by any previous government at a similar stage.”

Contrary to the alleged 200 taxes, government said more than 100 reform measures were instituted that benefitted businesses and individuals.

In listing government’s achievements in this area, the ministry said among the progressive measures were substantial movement in the income tax threshold, from $600,000 to $780,000 or 1/3 of gross income, whichever is higher; lowering of personal income tax to 28 per cent on the first $180,000 of chargeable income per month; removal of income tax on employees’ NIS contributions; lowering of company income tax to 25 percent; lowering of VAT to 14 per cent; increasing VAT threshold to $15 million; and increasing the number of zero rated and VAT exempt items.

In specific response to Indar’s claims about VAT on forestry products causing imported pinewood to be sold cheaper than local woods, the ministry said, the government through the Minister of Natural Resources had stipulated import permits for importers of pine wood as another means of managing its importation and ensuring that it cannot be sold cheaper than local wood products.

“$120 million was set aside to begin a forest inventory; that logs and rough lumber for the saw milling industry became VAT exempt from January 1, 2018; that $50 million was allocated for the establishment of a dimension stockyard. Though sadly, the stockyard was never realised as an agreement could not be reached on a preferred model,” said the finance ministry.

In addition, the ministry said, the Guyana Revenue Authority (GRA), which now enjoys real autonomy, has strengthened its monitoring and enforcement which has resulted in substantial expansion of the revenue base and facilitated the massive increase in workers’ wages and development across the country.

“More persons and businesses are now paying their true and correct taxes as a result. Mr. Indar may have also missed the news that the economy is growing and therefore, it naturally follows that the tax base will grow and, by extension, so will the amount of tax revenues collected,” said the ministry.

Despite the existing “facts” Indar still accused the government of spending $1.2 trillion which, he said, cannot be accounted for.

In response, the ministry said: “this unmitigated lie is really not worth a response; however, the Ministry of Finance has made public all of government’s spending through the publication of the annual budget, the Mid-year report and similar reports and publications from the National Tender Board and Administration.

“In addition to infrastructural, social, educational and other projects, government has had to repay billions of dollars in judgement won against the former government by local and overseas investors and businesses, bail out GuySuCo to the tune of nearly $50 billion, and subsidise the tolls for citizens using the Berbice Bridge.”

With impending revenue from the oil and gas sector, government has promised to improve the lives of every Guyanese, but Indar believes that government has no plans for oil and gas revenues.

The finance ministry, however, made reference to the Natural Resource Fund (NRF) Act, which is a solid piece of legislation that provides for the mechanism that will govern how revenues earned from our natural resources will be saved, spent or invested with full Parliamentary and public oversight.

Further, the government remains committed to managing these revenues according to best practices, including the Santiago Principles, as demonstrated by Guyana’s recent acceptance as an associate member of the International Forum of Sovereign Wealth Funds (ISFWF).

Additionally, the Green State Development Strategy sets out the priorities of the country, and revenues from oil will be utilised within the context of this national development plan. In addition, the final draft of the Local Content Policy is being reviewed.
In referring to local content, Indar said the locals do not benefit from similar concessions as investors in the oil and gas sector.

“This is palpably false; it has been debunked on several occasions by the Minister of Finance and the Commissioner General. The investment agreement signed between the government and operators in the oil and gas sector states very clearly that the operators and their subcontractors will benefit from the same concessions, no matter their nationality,” said the ministry.

Government also debunked Indar’s comment about government giving US$5,000 to each citizen. The finance ministry said Professor Clive Thomas had been calling for the grant, but there is no record of the government saying that it will be handing out unconditional cash transfers to citizens. Government, however, said it will consider avenues to provide incentives to citizens.

With regards to the allegations peddled by Indar, the ministry said the “silly season” (elections period) does not give any person the licence to make unfounded pronouncements and believe that those pronouncements will go uncontested.

“We would like to remind Mr. Indar that he has a duty to be honest with the people of this country whose votes he seeks. We hope he takes the time to remedy his uneven understanding of the economy and how it functions so as to ensure that when he speaks at events, the public is consuming factual and accurate information so that they may make informed and unbiased decisions,” said the ministry, noting that the public must conduct its own due diligence and research in order to reject misinformation.