…as access to concessional loans dries up – Jordan
Structural and capacity deficiencies in local sectors collectively threaten the successful implementation of Government’s 2015 programmes.
This is the observation made by Finance Minister, Winston Jordan, in his 2015 mid-year report, slated to be presented to the National Assembly on Thursday.
The Finance Minister in his mid-year report did underscore the fact that a late presentation of the 2015 Budget, among other shortcomings, led to a 50 per cent shortfall in capital expenditure for the year. This in turn has led to accelerated spending in the latter half of the year.
But the Finance Minister noted, too, that the late presentation of Budget 2015 which left four months for the new Government to address expenditure issues, presented its own challenges.
“In addition, the Government was faced with unexpected structural and capacity deficiencies in the sectors that needed to be addressed to ensure the ability to move forward…Collectively, these factors pose a risk to full implementation of the 2015 programmes.”
He did say that Government will be looking to put in place systems to improve tendering and procurement and monitoring of expenditure in Budget Agencies in an effort to address the challenges.
On the matter of Guyana’s debt payments, the Finance Minister noted that while the country’s public debt is projected to remain on a sustainable path, there are challenges to be confronted.
Notably, he observed, “Guyana continues to accumulate significant arrears, totaling US$156.6M at June 30, 2015, to its non-Paris Club bilateral creditors, who did not participate in the Heavily Indebted Poor Countries (HIPC) Initiative.”
As such, these debts, according to the Finance Minister, continue to accumulate in arrears.
“To address this issue, Government will continue to actively engage these creditors with a view to normalizing relationships and retiring the debts,” according to the Finance Minister’s report.
Regarding external factors which could pose a threat to the nation’s economy, the Finance Minister noted that while Oil prices are forecasted to remain low, “if this assumption does not hold, several major industries will be impacted.”
He said that the fiscal deficit, balance of payments accounts and inflation could all be adversely affected.
The Minister did state that Government does stands ready to institute appropriate measures to lessen any burden on citizens should the occasion arise.
He did point out that as Guyana’s growth performance and per capita income improves, access to concessional financing continues to decline and becomes increasingly difficult due to loss of eligibility.
“As a result, while government continues to seek and negotiate for concessional terms on new borrowing, the country faces the prospect that new loans may eventually be contracted on terms that are less favourable than those currently obtained.”
Government will continue to seek the most concessional terms of new financing. Jordan said that in this regard two mechanisms are being pursued, namely the blending of non-concessional and concessional financing within individual donor envelopes and the second, across multiple donors to blend donor support of non-concessional financing with donors who offer grant windows of financing.
Expanding on Guyana’s Fiscal Deficit, the Finance Minister said that this would be at risk if any of the elements related to tax revenue, expenditure, debt payments or key external factors changes unfavourably without a compensating favourable movement in another variable.
Turning his attention to the affects of the local political climate on the economic growth of the country, the Finance Minister was adamant, “any deterioration in the political climate can retard the pace of investment.”
According to Minister Jordan, Government being cognizant of this, has embarked on important confidence building measures including, organizing a National Social Cohesion Roundtable to develop actions aimed to promote inclusive governance and extending an invitation to the Opposition for the holding of joint unity talks to ensure effective national dialogue in this regard.
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