It is too early to draw conclusions on VAT
- Finance Minister
Georgetown, GINA, May 12, 2007
Far too little time has elapsed for any clear conclusions to be drawn with respect to the revenue impact of the Value Added Tax (VAT), which came into operation in January this year, according to the Ministry of Finance.
Minister of Finance Dr. Ashni Singh said that given the nature of the VAT system, which involves a cycle of different transactions including payment of tax, claiming of input credit, and payment of refunds, the observation period that would be required before reliable conclusions could be drawn, will take much longer than a mere three or four months.
Minister Singh argued that in many large sectors, business cycles are considerably longer and since, VAT collections are affected by these cycles, sufficient time has to be allowed for data to be collected over a period of observation, before adequate analysis can be conducted and firm conclusions reached.
In addition, Minister Singh said that, in conducting such analysis, a number of factors would have to be taken into account. These include the level of economic activity in the observation period, which would obviously impact on revenue collection. Additionally, where there are unusual or one-off occurrences or activities, the revenue impact would be difficult to project in advance, such as Cricket World Cup.
Further, Minister Singh pointed out that VAT is, by design, a more difficult tax to evade. Consequently, in analyzing the revenue impact of VAT, the level of evasion of taxes this year relative to last year, would have to be taken into account. Minister Singh stated that an increase in tax collection after VAT is implemented, might point to the possibility that VAT has been successful in reducing tax evasion.
The Minister offered these comments in response to reports in some sections of the media regarding revenue collection in the first quarter of this year. He felt that these reports were unfortunately hasty and very curiously timed to coincide with reports on the outcome of Thursday’s debate in the National Assembly when the Government defeated the PNC/R’s motion on VAT.
During that debate, a number of members from both sides of the House acknowledged that elements of the Motion proposed by the Leader of the Opposition were impracticable and overtaken by time.
In response to reports of price increases caused by VAT, Minister Singh said that it is completely illogical to attribute to VAT some of the price increases being reported. For example, he argued that a number of categories of goods such as basic food items like fruits, vegetables, milk and meat are zero-rated for VAT and, therefore, increases in prices in these commodities would have to be attributed to factors other than VAT.
In addition, he pointed out that where price increases are observed to be in excess of 16 percent, these could certainly not be as a result of VAT, given that VAT is charged at either 16 percent or zero percent. He cited factors such as developments on the world market for certain commodities, demand and supply, and businesses not passing on the benefits of VAT to their customers, as potential causes for some of the price increases. However, he pointed out that prices for a number of items have reduced.
During Thursday’s debate in Parliament, it was pointed out that an objective examination of the Consumer Price Index for the first three months of the year clearly rejects the suggestion that VAT has caused a large increase in the cost of living.
The Minister stated that Government will continue to monitor the situation through the Guyana Revenue Authority and the Consumers Affairs Division in the Ministry of Tourism, Industry and Commerce.
He urged consumers to be more vigilant when purchasing items and report to the relevant authorities the names of persons and businesses demanding exorbitant prices.
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Fishing industry has bright future
- Agriculture Minister
Georgetown, GINA, May 12, 2007
There is a bright future for the development of the fisheries sector in Guyana despite the many challenges currently facing the industry, including piracy.
Minister of Agriculture Robert Persaud made these remarks today at the commissioning of a facility for fishermen at Better Success, Essequibo Coast, to serve the purposes of storage, mooring and drying.
The facility was constructed under the Poor Rural Communities Support Services Programme (PRCSSP) funded at a cost of $9M.
Minister Persaud said “when we make these investments in one area, we don’t do it for a particular set of people; we do it so the beneficiaries can expand their capacity and other generations can benefit.”
He noted that the fisheries sector helps to create employment, enhance export earnings, contribute to the national economy and security.
He pointed out that there are several challenges affecting the industry and Government is working with all stakeholders to address these problems.
With regards to piracy, the Minister said they are working on legislation which will make the offence non-bailable.
Minister Persaud pointed out that Government is also working on creating linkages with neighbours Suriname and Venezuela to work together to help combat piracy. He noted that the Coast Guard needs to play a more active role, since piracy is one of the main factors affecting the fishing industry.
The Minister said that there is apparently an organized network of pirates that must be broken and the Police, Coast Guard and other stakeholders are working in this regard.
“Once we have passed this piracy legislation, we are committed to ensuring that when these persons are caught they feel the full force of the law,” the Minister said.
He noted that there is great market potential in the Caribbean and further afield and that the necessary facilities must be put in place to attract these markets, including compliance with sanitary requirements.
The construction of the facility at Better Success will assist in gaining access to these markets since it will allow persons to produce value-added items.
He noted that Government recently launched the Fisheries Advisory Committee to ensure the sustainable development of the sector. Additionally, the Ministry has finalised the Fisheries Management Plan (FMP) which addresses sustainable development in all aspects of the fishing industry.
To ensure that the plan is effectively implemented and giving support to those in the industry, Government is reorganising the fisheries department to provide better services.
Similar facilities were constructed at Unu Creek and Lima Sands, also on the Essequibo Coast.
Accompanying the Minister were Regional Chairman Ali Baksh, Deputy Chief Executive Officer of the National Drainage and Irrigation Authority Lionel Wordsworth, Project Manager of the PRCSSP Sasenarine Singh and other Regional Officials.
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Corriverton water projects to benefit 30,000
Georgetown, GINA, May 12, 2007
The water distribution network in Region Six (East Berbice/Corentyne) will be improved with the construction of two water treatment plants.
Work commenced in January on the Corriverton water supply treatment plant site at No.56 village. The pile-driving exercise will start shortly.
Minister of Housing and Water Harry Narine Nawbatt during his visit to the site, said that “it will be one of the proud moments for GWI and the Government of Guyana when the plant is commissioned next year.”
Minister Nawbatt underscored that the project will significantly benefit the region and will reflect government’s commitment to providing potable water to all citizens. He emphasised that the magnitude of the investment is testimony to this.
Minister of Housing and Water Harry Narine Nawbatt and Project Manager of Kitano Construction Corporation Mr. Toshimi Kudo inspect the Corriverton Treatment Plant project site at No. 56 Village.
The project entails the construction of two water treatment plants that will enhance both quality and quantity of the water supply and benefit over 30,000 residents from Number 51 Village to Moleson Creek.
Yasudo Uchida, Consultant and Supervisor of the Water Treatment Plant, stated that among the specifications for the project are the construction of a storage tank, pump station, an elevated water tank, generator house and office.
The plant will extract water for treatment from the No.57 pumping station which is the property of the Guyana Water Incorporated (GWI). After the removal of the iron content, it would be distributed on a 24-hours basis, he said.
Uchida said that just over five miles of pipelines will be laid to facilitate and extend the distribution network.
The Corriverton Water Treatment Plant project site at No. 56 Village.
Funding for this project was facilitated by the Japanese Government valued at US$12 M and will be executed in two phases.
The first phase is the construction of a water treatment plant at Number 56 Village which will serve consumers from villages Number 51 to Number 73 and is scheduled for completion in March 2008.
Similarly, under phase two slated to commence in February 2008 and be completed by March 2009, a water treatment plant will be constructed at Queenstown, Corriverton.
Early in 2006, a study team from Japan came and investigated the feasibility of the project and reported that it would be a viable investment.
Kitano Construction Corporation was awarded the contract following a tendering process which was opened in July in Japan.
Sizwe Jackson, Managing Director (ag) of GWI said that in the interim the water company has undertaken to repair all leaks and the company has repaired over 3000 leaks in preparation for the new plants.
The new plants would enable GWI to use only two bore-holes instead of seven which would assist in the reduction of electricity costs.
He noted that the establishment of these plants are consistent with the mission and vision of GWI.
Project Manager and Head of the Asset Development (ag) Altaf Gafoor explained that the plants are unique in Guyana, since they will be the first to use the slow sand filtration approach.
The slow sand filtration does not require pre-treatment. The process percolates untreated water slowly through a bed of porous sand, with the influent water introduced over the surface of the filter, and then drained from the bottom.
Gafoor further stated that the plants will allow GWI to make strides in realising its targets of providing a considerable portion of the coastal community with treated water.
The Corriverton Potable Water Supply Project was submitted to the Japanese Government for consideration for funding under the Japanese Grant Aid in August 2004.
In June 2005 the agreed minutes for the Preliminary Study of the project was signed between the Governments of Guyana and Japan and in July 2006 an agreement was signed for the starting of the project.
Over the years, the Government of Guyana has benefited from a number of projects funded by the Japanese Government under the Japanese Technical Cooperation Programme.
The most notable was the multi-million dollar New Amsterdam Hospital, which was funded under the Japanese Grant Aid assistance.
In 2007 Government allocated more than $2.6B for the water and sanitation sector.
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$36M sluice commissioned at Charity
Georgetown, GINA, May 12, 2007
Drainage and Irrigation (D&I) has been greatly enhanced in Charity and surrounding communities on the Essequibo Coast in Region Two (Pomeroon/Supenaam) with the construction of a $36M sluice at Charity.
The structure was today commissioned by Minister of Agriculture Robert Persaud and forms part of Government’s programme to improve D&I in coastal areas that are usually affected by flooding during heavy rainfall periods.
The construction of the Charity sluice was a promise made by President Bharrat Jagdeo during a visit to the Region in January 2006.
The construction started late last year by the NDIA and will contribute to improved drainage in the entire Charity area including the housing scheme.
During a simple commissioning ceremony, Minister Persaud said that these projects are critical to agricultural development in Region Two where residents are mainly involved in farming. The Minister noted that other projects are currently ongoing in other areas.
At present over $750M is being spent to rehabilitate the Dawa pump and construct new sluices at Westbury and Golden Fleece. This is being done under the Rice Competitiveness Project and will improve agricultural production in the Region, particularly in the rice industry in which most farmers on the Essequibo Coast are involved.
Minister Persaud noted that there is an expanded interest in agriculture in the Region and Government is currently reviewing other activities that will provide better services to farmers. Two excavators are currently working in the Upper and Lower Pomeroon to enhance D&I in those areas.
An excavator will be allocated shortly and a pump will be deployed as part of activities to develop the Cozier Scheme to make available more cultivation land to farmers. Residents have been requesting this facility for a long time. Additionally, $25M will be spent to construct a sluice at Better Hope on the Essequibo Coast to assist drainage in that community and surrounding areas.
While in Charity, residents spoke about the need for improvement to D&I in the New Road area and requested a pump and an excavator to carry out works. Minister Persaud said the work will require a long-boom excavator and the possibility of securing such a machine will be explored with the purchase of a set of equipment.
The Ministry is currently advertising for the purchase of equipment, including drainage pumps. When these are secured, the Ministry will assign pumps to critical areas.
Additionally, the existing pumps at Dawa that will be replaced by new pumps, will be installed in other areas where they can help to improve D&I.
Accompanying the Minister were Regional Chairman Ali Baksh, Deputy Chief Executive Officer of the National Drainage and Irrigation Authority Lionel Wordsworth, Project Manager of the PRCSSP Sasenarine Singh and other Regional Officials.
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Government officials listen to concerns of Cane Grove residents
- child labour, house lot allocation and students’ absenteeism among major concerns
Georgetown, GINA, May 12, 2007
Residents of the predominantly rice cultivating community of Cane Grove, East Coast Demerara, were yesterday given the opportunity to share their concerns with a high-level team of Government officials who visited their communities.
The team, led by Minister of Human Services and Social Security Priya Manickchand, included Personal Assistant to President Bharrat Jagdeo Prakash Gossai, People’s Progressive Party (PPP) Member of Parliament Anil Nandalall, Region Four Chairman Clement Corlette and other officials of the Ministry and the Regional Administration.
During the meeting at the Neighbourhood Democratic Council’s (NDC’s) Office in the village, Minister Manickchand explained that the visit is part of Government’s countrywide outreach to interact with residents, listen to their concerns and to work with communities in improving the situation.
“We want to work with you in making your lives better and so we would need to hear from you what are some of your concerns, so we can work to address them,” Minister Manickchand said.
Residents raised concerns about the impact of the Value-Added Tax (VAT) on the grants offered to pensioners and public assistance recipients and are calling for a review of the system.
To this end, Minister Manickchand said Government has not planned any early review of the system and pointed out that over the years pension grants have increased by 80 percent and this is a massive increase compared to previous years.
The Minister explained that Guyana is a developing country and even though priority is given to pension and public assistance, Government has several areas where money has to be allocated.
For example there are roads, water, drainage and irrigation among others. Minister Manickchand reminded residents of the numerous social benefits provided by the Government, which includes free spectacles and medical supplies.
Maghbarran Ramdin, a resident, called on the team to seriously consider the needs of the farmers and work on clearing and digging the main drainage canal in the village. Ramdin also spoke of the need for a community garbage site since residents are dumping garbage all over in the community and this is contributing to health problems.
The Minister and her team promised to follow up the issues with Ministry of Agriculture and the Environmental Protection Agency (EPA).
Residents complained of having to visit the Ministry of Housing and Water several times concerning the allocation of house lots. One resident said he applied for a house lot over five years ago and the Ministry has not even sent him an acknowledgement. The Minister promised to follow up the issue with Minister Harry Narine Nawbatt.
Concerns were raised about pensioners standing for long hours when they turn up at the post office to receive their pensions and a suggestion was made to construct benches for them to be seated while waiting. Minister Manickchand and her team have committed to providing the materials to do the construction and residents were asked to contribute to the construction process.
Another burning concern for residents was the paddy dust emanating from a nearby rice mill in the community. This issue is engaging the attention of the court for a number of years and the EPA. Minister Manickchand promised to contact EPA for all records on the matter and she will return to discuss a solution with residents.
The Minister and team were informed of the growing problem where parents are neglecting to send their children to school.
Teachers have complained too, that when they confront parents to enquire why the children are not in school, parents would become aggressive and ask them to mind their own business. In the Cane Grove community, approximately 40 school aged children wander on the streets daily and parents are not making any effort to get their children to go to school.
“When we try to talk to the parents and encourage them to send their children to school, they want to assault and molest us. They come to the school with cutlass to assault us. Tell me can this be right? That is why we stopped asking them anything,” said one teacher. Teachers are calling for the enforcement of the law which relates to parents who do not send their children to school.
Expressing disgust at the situation, Personal Assistant to President Jagdeo Prakash Gossai, said that this behaviour by some parents is not acceptable since the Government is making all the provisions for improved education delivery countrywide and all parents are asked to do is to ensure that their children attend school regularly.
Gossai explained that President Jagdeo is ensuring that his Government provide equal access to education and other opportunities for all Guyana’s children and if the parents do not cooperate, then all the Government’s efforts will be wasted.
He explained that in religion a parent who brings a child into the world and do not bear the responsibility of ensuring the child is educated and ensure that all other needs of the child are met is committing a sin.
He called for the enforcement of the penalty on parents who deprive their children of education. Expressing dissatisfaction over of the incident Nandalall said that the behaviour of parents not sending their children to school will not be accepted and called on community members for this behaviour to be reversed.
To this end, Minister Manickchand formed a committee that will report directly to her Ministry on the number of children not attending school and the reasons, so that the Ministry can assist those parents who need assistance to send their children to school.
Meanwhile, on the issue of drainage and irrigation, Regional Chairman Clement Corlette told residents that the Regional Administration will be undertaking the clearing of the major canals and trenches in the village at a cost of approximately $10M, while the Water Users Association (WUA) will be involved in similar works costing in excess of $20M.
Other concerns include child labour, need for medical supplies at the Community health centre and children marriages and the Minister and her team will follow up these issues.
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IMF Executive Board commends Government on implementation of sound macroeconomic policies
Georgetown, GINA, May 12, 2007
Government has been lauded by the Executive Board of the International Monetary Fund (IMF) for its implementation of sound macroeconomic policies which resulted in the improvement of its debt sustainability and better growth and inflation performance. This was recorded in the report of IMF Executive Board 2006 Article IV Consultation with Guyana.
According to the Report, ‘Directors welcomed the introduction of the VAT, a cornerstone of the authorities' fiscal reform program, as planned. They commended the authorities for reversing some of the recent large increases in government spending, noting that adherence to the commitments in the 2007 budget would provide a sound basis for the achievement of fiscal sustainability. It will be critical for the government to address quickly, revenue shortfalls that may arise in the implementation of the VAT, and to resist calls to expand exemptions to it.’
During the last sitting of the National Assembly a Motion by the People’s National Congress Reform (PNC/R) to review VAT was defeated. Minister of Finance Dr. Ashni Singh in his presentation, pointed out that much progress has been made since VAT was first implemented, and that the cost of a number of commodities has been observed to have reduced due to the removal of several other taxes such as the consumption tax. He acknowledged the tremendous efforts made by the private sector and by consumers, along with the GRA, in ensuring a successful transition to VAT. He also urged that all stakeholders work together to ensure that VAT is successfully implemented, and cautioned against attempts to politicise VAT and to reverse the important progress made.
The PNC/R was calling for the immediate implementation of significant levels of salary increases for those categories of workers most adversely affected by the implementation of VAT and for Government to promptly establish a National Commission on tax reform to review the tax system and make recommendations regarding raising the income tax threshold and reducing income and corporation taxes. During that debate, a number of members from both sides of the House acknowledged that elements of the Motion proposed by the Leader of the Opposition were impracticable, could not be reasonably implemented, and were overtaken by time and by the progress made so far in implementing VAT.
Minister Singh has also said that far too little time has elapsed for any clear conclusions to be drawn with respect to the revenue impact of the Value Added Tax (VAT), which came into operation in January this year.
The IMF report further noted that the Directors commended the authorities for pursuing a prudent monetary policy and advised that the authorities remain focused on maintaining low inflation and guarding against potential pressures from the rapid increase in private sector credit.
The Report said, “Directors welcomed the efforts to further strengthen the financial system—which remains fundamentally sound—by enhancing the supervisory framework and modernizing the reporting system. They noted that the central bank's oversight of private lending may need to be strengthened to contain any possible weakening of bank assets accompanying rapid credit expansion.”
In the Report, the Directors encouraged the authorities to persevere with their efforts to improve statistics and strengthen the institutional capacity of the Bureau of Statistics, to support economic policy formulation and development objectives. They emphasized that adequate data on poverty indicators will be essential in the preparation of a new Poverty Reduction Strategy Paper, and called on the authorities to finalize quickly their work to improve the statistical database in this area.
“Directors agreed that the authorities' reform agenda focuses appropriately on improving competitiveness to strengthen growth prospects, speeding up progress in poverty alleviation, and reducing vulnerability to shocks. Directors encouraged the authorities to proceed quickly with the planned reform of the sugar sector to achieve lasting improvements in its competitiveness, and to explore the scope for greater private sector involvement in the sector to minimize the public sector's risk. They welcomed plans to address the high cost of electricity through a public-private partnership to construct a hydroelectric power plant. A sound legal framework for the partnership should be developed quickly to help manage fiscal risks and public sector costs. Directors considered that timely implementation of the National Competitiveness Strategy will be important to foster an investor-friendly climate and stimulate private investment.”
It was pointed out in the Report that Guyana has made significant progress with the Millennium Development Goals (MDGs) in attaining two of the indicators; in eradicating extreme hunger and achieving universal primary education. While this has already been achieved, there is optimism that another two are likely to be achieved by 2015-reducing child mortality rate and providing access to safe drinking water to more than half of the population.
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Building human resource capacity, a government priority
- Head of State
Georgetown, GINA, May 12, 2007
Having a significant intellectual human resource base is an invaluable asset of any country on the path to development. In recognition of this the present administration is instituting a number of training programmes for the intellectually inclined and for those who can acquire valuable vocational skills.
The Head of State while addressing hundreds of youths at the 50th Anniversary of the Guyana Sugar Corporation’s (GUYSCUO) Training Centre at Port Mourant last week, unequivocally stated, migration or not, Government will continue to invest heavily in building Guyana’s human resource capacity.
“We have to prepare people, whether they travel to North America or Brazil to work. You have to give them all the possibilities of having a good life and an education gives them that chance. I am not willing to deny people opportunities because they may migrate. We will train as many people as possible,” President Jagdeo said.
He said very often, people question why government continues to train teachers, nurses and doctors when the migration rate is so high?
The President stated, “We don’t have restrictions today on people leaving as in the past because this is a free country and in a globalised world you are not just going to have free movement of capital and goods and services; you are going to have free movement of people.”
Over the years Government has instituted fiscal discipline and this coupled with debt write-off initiatives is placing the country on a firmer economic footing.
“As our economy grows, hopefully more of them will stay and live a more productive life,” President Jagdeo posited.
With more State resources freed up by significant debt relief, the President said Government has additional money to expend on educating youths and the apprenticeship programme at Port Mourant is just one example.
“We can spend more money on education. This is why we have launched this apprentice programme for 5000 out of school youths and we are building new technical institutes, not just in Berbice. Regions 2, 3, 4, 5, 6 and 10 would have technical institutes, so our young people can go to these places to learn different skills.”
With Guyana moving into the information age through the development of the country’s Information Communications Technology (ICT), emphasis is being placed on making Guyanese computer literate to be part of the fast growing knowledge society.
He said “We are launching a programme to try to connect 80 percent of households to the internet and to make every Guyanese computer literate. I have asked GUYSUCO to pursue that challenge.”
The Head of State recalled the Presidential Information Technology initiative lunched at the Linden Technical Institute early in 2006 to make over 300 bauxite workers computer literate.
“Some of the workers had misgivings that they could not do the programme,… I am pleased to say they all learned to use the computer. If the bauxite workers did, it the sugar workers can do it.”
He said GUYSUCO should embark on such a project with their workforce from factory to field.
The Head of State reiterated, “A more educated worker is a better worker …my Government will continue to create the conditions where workers can be trained… These are things we have to work on in a collaborative way.”
Capital spending in the education sector exceeded $3.1B for 2006 and $15.6 B have been allocated this year
This year the Kuru Kuru Cooperative College, Teacher’s Training Complex, Critchlow Labour College, Government Technical Institute, and Linden Technical Institute would all benefit from construction and/or rehabilitation works or the provision of furniture and equipment.
Practical instruction centres and secondary schools will be equipped with tools and equipment to conduct courses in areas such as woodwork, masonry, home economics, welding, agriculture and electrical installation.
The Head of State has always maintained that there is no substitute for a sound education and Government will work towards providing all, from the smallest child in the most remote Amerindian settlement, to the out-of-school youth, with a solid education or technical skill.
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