Nov 28, 2017 News
Minister of Finance, Winston Jordan, has yet again noted that the Guyana Sugar Corporation (GuySuCo) continues to be an albatross around the neck of Guyana. This was during his recent presentation of Budget 2018.
He said that the bankruptcy of GuySuCo proved to be a major setback of the government in its effort to provide the coveted good life for Guyanese.
Jordan said that in 2017, the performance of the public enterprises deteriorated from a budgeted cash deficit of $12.1 billion to a latest forecast deficit of $12.8 billion. Guyana National Newspapers, Guyana Rice Development Board, MARDS, Guyana Post Office Corporation, GuyOil, Guyana National Shipping Corporation and Guyana National Printers Limited had a combined surplus of $2.5B.
“However, GuySuCo’s production shortfall and Guyana Power and Light’s (GPL) aggressive capital programme helped to erode this surplus.” GPL’s deficit is as a result of the investment made in several projects in order to raise the standards of utility services it currently offers; indeed a desire of the nation which has grown tired of blackouts and power shortages.
Jordan said that in 2018, a Special Purposes Unit (SPU) is tasked with examining and articulating the way forward with respect to the divestment of the Skeldon, Rose Hall and East Demerara estates. With respect to the remaining estates, the Minister indicated that the SPU will also work to reconfigure operations to guarantee economic viability.
The Minister said, “Our taxpayers must no longer be burdened to carry the weight of an un-profitable, inefficient, and antiquated public corporation.”
Nevertheless, later on in his speech, Jordan said that government has allocated yet another $6.3B, in 2018, to support the reduced operations of GuySuCo.
Jordan said that government intends to uphold its duty to the communities and families in the areas affected by divestment, as part of the GuySuCo restructuring. He said that in order to ensure continued livelihoods, a skills re-training programme is anticipated to be offered for those who choose to pursue new opportunities.
“Those who wish to continue with a livelihood in agriculture may see an opportunity to own their own farmland. In addition, the Government will assume responsibility for social services, including health centres and community centre grounds.
“We will also undertake critical drainage and irrigation services for the areas affected by divestment,” said Jordan.
Jordan indicated that GuySuCo is projected to have a $5.2B deficit in 2018 and sugar production is projected to decline to 152,000 tonnes in 2017, a 17.2 percent reduction compared to 2016’s output. He said that opposition to the ongoing restructuring of the sugar industry led to the loss of almost 22,000 man days due to industrial action.
The $6B that government has set aside for GuySuCo bailout, while a big sum, still represents a reduction in bailouts.
In 2015, the coalition had doled a $12B bailout; then 2016 there $11B went towards the sector; and for 2017 $9B. Now, in 2018, there will be a $6B bailout.
Earlier this year, the International Monetary Fund (IMF) said that it is pleased that the coalition administration is committed to restructuring public enterprises to reduce their reliance on government support.
With particular reference to GuySuCo, executive members of the IMF said that the re-engineering of the state entity to a new business model aims to reduce inefficiencies and place operations on a financially sustainable path.
Significantly, during their analysis of Guyana’s financial systems and budgets, they observed that planned budget transfers have been substantially reduced for 2016.
The IMF team said that they were also pleased to learn from authorities here that budget transfers are expected to steadily decline and eventually cease over the medium term.
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