Mar 31, 2012 News
The government presented a $192.8 B Budget, a package that was anxiously awaited by all, yesterday. That was presented under the theme “Remaining on course, United in purpose, Prosperity for all.”
Finance Minister Dr. Ashni Singh announced projections, earnings, and adjustments to wages and salaries by way of a hiking of the income tax threshold. His presentation took almost three hours. The income tax threshold has been increased from $40,000 to $50,000 per month.
The Finance Minister Dr. Ashni Singh also announced that the monies payable to old age pensioners will also be increased by $600 for some 42,000.
This means that the $7,500 old age pension previously received has now been increased to $8,100.
He also announced that the Public Assistance programme which was some $5,500 per month has been increased by $400 to $5,900.
The Minister did point out that there will be no new taxes to assist in funding the $192.8B budget but stated that the VAT and excise taxes collected almost 50 per cent of the total revenue for Central Government.
Central Government revenue in 2011 amounted to $120.9B, according to Dr. Singh, which is a 12.1 per cent increase over 2010 which he attributed to enhanced collections among both tax and non-tax categories.
Tax revenue collections accounted for 92.1 per cent or $111.4B of total revenue collections, an increase of $10.5B while non-tax collections increased by 37.5 per cent to $9.5B
VAT and excise tax collections, according to Dr. Ashni Singh, increased by 9.7 per cent to $53B, as “VAT on imports of goods recorded (net of refunds) an increase of $3.1B or 21 per cent above 2010, consistent with the higher level of imports as the mining, agricultural and telecommunication sectors increased their demand for several commodities.”
He said that the VAT on domestic supply of goods amounted to $13.1B or 7.7 per cent above 2010.
Speaking to measures that will be taken to support the sugar industry which has been plagued and replete with problems Dr. Singh announced a $6B transfer from Central Government, something that the Opposition immediately condemned as a bail out for the Guyana Sugar Corporation.
According to Dr. Singh, in an address to the National Assembly that was televised live by the State-owned television station and radio, “much is known and has already been said about both the importance of the sugar industry to national life, and about the challenges being confronted by the industry.”
Dr. Singh warned that the government will spare no effort to ensure that the sugar industry is transformed to a viable and competitive one and to that end announced that while significant resources have already been injected by Government into the industry to enable it to recapitalise, and expand into value added products. Some $4B more will be provided this year, he added.
He said that this subsidy is “in order to ensure that the sugar industry is financially able to meet its operating and investment requirements.”
The Finance Minister told the nation that the local sugar industry has the potential to reach some 400,000 tonnes of sugar in the medium term.
He said that production for 2011 grew by 7.1 per cent to some 236,506 tonnes. While the first crop production of 106,871 tonnes was 30.5 per cent above the corresponding performance in 2010, the second crop contracted by 6.7 per cent to 129,635 tonnes, reflecting unhelpful weather and industrial relations conditions.
He did say that output in the sugar industry continues to lag the production trajectory anticipated by the industry’s long term business plans and industry finances are being adversely affected.
The next recipient of a large bailout/subsidy was Guyana Power and Light Company.
The Finance Minister told the House that electricity tariffs were last adjusted in December 2007, when heavy and light fuel oils were relatively cheaper than the current and projected prices.
He said that during the trying times as it relates to oil purchases GPL had to fund the escalated costs without any adjustment to their tariffs.
“Recognising the importance of cushioning as far as possible the impact of imported oil price movements on domestic consumers, Budget 2012 includes a transfer of $6B from the Central Government to GPL.”
Even as he announced what would be more than welcome news for the Power company, the fate of Lindeners will be much different.
According to Dr. Singh since the privatisation of the bauxite operations in Linden and the Berbice River, Government has been subsidising electricity rates in these communities.
“Currently, in Linden, electricity costs between $5 and $15 per kWh, while on the GPL grid customers pay an average of $64 per kWh.”
He said that the total cost of this electricity subsidy was $2.9B last year, the equivalent of 10 per cent of GPL’s total revenues.
The Finance Minister announced that starting this year, “reforms will be initiated to the tariff subsidy with the aim of giving effect to a progressive alignment of the subsidised rates with the national rates that are applicable on the GPL grid.”
The electricity bill that Lindeners have been accustomed to paying for several years now will skyrocket. It has already drawn an angry reaction from members in the Opposition circles.
The Minister announced several large sums for a range of projects that are being undertaken.
One such project is the One Lap Top Per Family (OLPF) Programme which will see another $3.7B being pumped into the project and according to Dr. Singh the remaining computers will be distributed by the end of next year bringing the total to some 90,000.
In Information Communication and Technology (ICT) another $3.1B will be spent.
“Government has been following the twin tracks of installing infrastructure that will see high speed delivery of e-Government content along with ensuring that no household will be left without access to that content,” said Dr. Singh
He continued that to these ends, “amounts totalling $2.6B were allocated to install some 580 kilometres of high speed fibre optic network spanning from Lethem to Providence with drop-off sites at Lethem, Annai, Kurupukari, Mabura and Linden…high speed fibre optic backhaul network connecting Moleson Creek to Anna Regina, with a data centre at Providence for the development of e-Government with high speed wireless access using a 4G network.”
A total of $3.1B is budgeted to be spent in 2012 for the continuation of these networks.
The Minister also announced some $4.5B for the expansion of the Cheddi Jagan International Airport.
“In 2012, a sum of $4.5B has been budgeted for the upgrade, expansion and modernisation of CJIA, which entails the commencement of construction of a new terminal building, aprons, air-bridges, taxiways and the extension of the runway by a further 3,500 feet.
“Also, $180M is budgeted for the rehabilitation of airstrips in Lethem, Imbaimadai and Ekereku Bottom and the ongoing maintenance of our country’s 43 airstrips in Regions 1, 2, 7, 8 and 9.” Furthermore, to improve air navigation services and safety, a sum of $68M will be expended for high frequency radio and security systems.
Additionally, over $717M is budgeted for the docking of vessels and acquisition of spares. Parika and Supenaam stellings will be completed to accept the new roll-on roll- off ferries.
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