BEST OF THE BUDGET SPEECH 2015

BEST OF THE BUDGET SPEECH 2015

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COALITION REMAINS STRONG

Mr. Speaker, many have been the carping about the Cummingsburg Accord that
cemented this Coalition Government. I wish to state here that the Coalition remains strong,
and its viability and longevity remain unthreatened. It is true that there have been the usual
teething problems that are associated with partnership Government. However, our two
groups have discovered that as we work together closely, there are more commonalities than
differences.”

ONLY US$800K LEFT IN PETROCARIBE FUND

The PPP/ C Government had mismanaged the Petro Caribe Fund, with only a small balance of
US$0.8 million in the fund at the end of May 2015, whereas outstanding payments to
farmers was in excess of US$17 million. Worse yet, and this is only now being disclosed to
the public, the Guyana Energy Agency (GEA), under pressure from the PPP /C
administration, was forced to offset the cash amounts due to PDVSA against future
shipments, in order to ensure that current payments to rice farmers were made at the due
dates. Once again, the Government came to the rescue, transferring over $5 billion to the
Guyana Rice Development Board (GRDB) so that farmers could be paid.

 

3.8% GROWTH in 2014

This performance caused the growth rate for 2014 to be scaled down from 5.6 percent
to 4.5 percent. Unfortunately, even that lower growth rate was not achieved, for the
economy contracted to 3.8 percent. This was the first sign that the economy was slowing
down, with the rapidly deteriorating political climate being identified as a significant
contributory factor.

MINING SECTOR DOWN 11.5%

The impact of the varied declines in production within the subsectors resulted in the overall performance of the sector falling by 11.5 percent, a major downturn from the expectation of a 2.8 percent growth, and last year’s performance of 8 percent.

Mr. Speaker, the inflation rate recorded for 2014 was 1.2 percent. Relatively stable fuel prices contributed to the decline in price levels during the year.

$8.2B for SUGAR

“The Government is committed to supporting the reform efforts. In June, it averted a crisis by injecting $3.8
billion into the industry and plans to transfer an additional $8.2 billion for the remainder of
the year. However, Mr. Speaker, this stop-gap measure is neither sustainable nor meant to be
a substitute for, or postponing of, the hard decisions that need to be made”.

DIAMOND TO OGLE BYPASS -$13B FOR ROADS

Mr. Speaker, in 2015, the sum of $13 billion has been allocated for enhancing the
roads and bridges network throughout Guyana. In an effort to ease congestion and reduce
travel time, the Government proposes urgent expansion of the East Coast Demerara
Highway. Additionally, over $1.6 billion is budgeted for the upgrade of the Sheriff
Street/Mandela Avenue Road, making it a modern thoroughfare for Georgetown…
The Government also intends to create a bypass road linking Diamond, East Bank
Demerara, to Ogle, on the East Coast Demerara. The new road will open up unutilized lands
to support a modern housing scheme for 1,100 households, while creating new jobs for
Guyanese, as well as establish a more efficient link between the country’s two international
airports.

CRIMINAL TO CONTINUE WITH AMAILA

The problem, Mr. Speaker, is that as currently configured, it would not only be irresponsible, but a downright criminal act of deception, were we to proceed with the Amaila Falls. Our investigations have revealed that at the current cost of almost $1 billion, the Guyana Power and Light Inc (GPL) would be required
to make annual payments amounting to US$130 million to the operators of the hydro
facility, which will total US$2.6 billion over the 20 year commitment period of the power
purchase agreement.

NIS IN TROUBLE

With respect to the NIS, this organization is beset with a number of problems. It has investments amounting to $5.2 billion that are ensnared in the CLICO debacle. That represents more than 20 percent of its assets that is not earning income. The actuaries have projected that the Scheme is in trouble and something has to be done urgently to address the problem

FIGHTING CRIME

Mr. Speaker, in 2015, the Government will establish a command centre to enhance crime response capabilities. Other interventions include resuscitation of CCTV feeds within the Georgetown to Timehri environs and improvement in 911 services countrywide. The Government has allocated $21 billion to strengthen and improve our national security services. Of that amount, a sum of $11.9 billion will support the operations of the Guyana Police Force, the Guyana Prison Service, Guyana Fire Service, Customs Anti Narcotics Unit (CANU), while $9.1 billion has been budgeted for the Guyana Defence Force.

FORENSIC AUDITS

These forensic audits are expected to establish, at a minimum, the true financial position of these entities. Other benefits likely to flow from the exercise include the identification of revenue leakages, enhancement of revenue collection and restoring public trust. In addition, a State Asset Recovery Unit (SARU) has been established to identify and recover what is likely to be millions of dollars worth of assets illegally
transferred into private hands.

WHY NO VAT REDUCTION

“…In short, Mr. Speaker, the system is broken and we must fix it in a comprehensive manner – one that  results in a transparent and predictable tax system that rewards effort, promotes investment, improves our national competitiveness, and removes distortions between and across sectors. It is for these reasons that we have delayed the phased reduction in the VAT, as we put in
place a Tax Reform Committee to undertake a detailed assessment of the tax system. Since
major work has been completed in this area recently, we expect the Committee to complete
its work by the end of the year.

 

3.4% GROWTH PROJECTED

“With the benefit of the first half performance, the ambitious expectation
of a 5.3 percent growth, in 2015, has now been tempered to 3.4 percent. Growth in the first
half of 2015, substantially a period when the former administration controlled the economy,
was a miniscule 0.9 percent…”

SECTOR FORECASTS

Gold 0.6% increase

Rice 10.7% increase

Sugar 1.7% increase

Bauxite 5.7% decrease

Forestry 1.3% decrease

Manufacturing .5% increase

Services sectors  3%/3.1%

 

Inflation 0.5% Increase

INCREASED GOVT REVENUE

Mr. Speaker, in 2015, Central Government current revenue is estimated at $163.7
billion, or 13.1 percent above collections in 2014. This will be attributed primarily to a 5.4
percent increase in tax collections by the Guyana Revenue Authority. Value Added and
Excise Tax collections are projected to grow by $3.8 billion to $69.5 billion.

RETURNING DEPOSITS FROM COMMERCIAL BANKS

The Government has programmed a phased transfer of accumulated funds from such bodies as the Guyana Geology and Mines Commission, Guyana Forestry Commission and the National Frequency Management Unit. This phased withdrawal does not amount to $60 billion quoted in some sections of the press, neither would it disrupt the lending portfolio of the commercial banks. This action is consistent with the Government’s stance to retrieve all revenues collected by statutory bodies that belong to the Consolidated Fund.

BUDGET 2015 $221B

Mr. Speaker, in spite of the late budget presentation, the size of Budget 2015 is $221 billion, which compares favourably with the $244 billion returned in 2014. Of this amount, some $97 billion is programmed to be spent on current and capital expenditure during the last four (4) months of 2015, a stimulus if ever the economy needed one.

CONCESSIONS FOR FISHERIES SECTOR

“Fishing boats, spare parts, equipment for fishing boats and equipment and supplies for use in the processing plant which the Commissioner-General is satisfied are imported for use in the Fish/Seafood and the Aquaculture Industry.” This exemption will result in $100.5 million in revenues foregone….shrimp
to be made eligible for the export allowance granted to non-traditional exports.

DUTY FREE ATVS FOR TOSHAOS

Toshaos in approved Amerindian Communities shall be exempt from Customs duties on motor vehicles and ATV s”

DUTY FREE VEHICLES FOR JOINT SERVICES

Table A- 9: Eligible members of the Joint Services, qualifying under Section 23 of the Customs Act Cap. 82:01 are exempt from the payment of excise tax for motor vehicles.

SHOPPING LIST OF NEW VAT-FREE ITEMS

yogurt, cereals, fresh carrots, milo and ovaltine, nestum, mustard and mayonnaise, locally-produced fruit juice, locally-made chowmein, vinegar, locally-made uncooked pasta, ketchup, chicken sausages in packets, locally produced Chinese sauce, baking powder, liquid detergent, household cleaning agents, rolls of paper towels, liquid detergent, household cleaning agent, and computer printers for non commercial use.

DUTY FREE FOR SMALL MINERS

Eligible gold miners will be exempted from the payment of custom duties on fuel, matting, ATV s, jack hammer drills, flex hoses, expanding metals, pumps, pump housing, impellers, shaft and engines.

INCOME TAX TAKEN AFTER NIS CONTRIBUTIONS

“…workers will no longer be paying income tax on their national insurance contributions. Thus, in addition to the tax threshold, the Commissioner General must deduct the NIS contributions of the worker before determining his chargeable income. This will result in a loss of revenue of about $1.3 billion annually but,
importantly, it would result in a net increase in the disposable income of all workers. This measure will be effective from Year of Assessment 2016.

BERBICE BRIDGE TOLL FROM $2200 to $1900

“…First of a phased reduction in the Berbice Bridge Toll. With effect from September 1, 2015, the toll for passenger cars and buses will be reduced from $2,200 to $1,900, a 13.6 percent decline. At the same time, the toll for all other types of vehicles will be reduced by 10 percent.”

OLD AGE PENSION TO $17,000

I am pleased to announce that, from September 1, every pensioner will benefit equally from a monthly pension of $17,000, a 30 percent increase on the present amount of $13,125…We have not forgotten those in difficult circumstances. They will see a 10 percent increase in their public assistance, rising from $5,900 to $6,500 monthly, effective September 1, 2015.

NEW PUBLIC SERVICE MINIMUM WAGE $50k

Effective July 1, 2015 all other public servants will receive a 5 percent salary increase plus an additional $5,000 monthly. This, Mr. Speaker will allow for a greater increase in the lower income brackets. For example, a worker currendy earning $50,000 will have a monthly increase of $7,500, or 15 percent; a person currendy receiving a salary of $100,000 would get a 10 percent increase. Since the bulk of the public servants earn $100,000 and below, these are substantial increases, more than was promised to these categories of workers. These increases are payable to workers who were employed on or before January 1, 2015.

CLEANER’S HOURLY WAGE $312

I am pleased to announce, therefore, that with effect from September 1, 2015 every part time hourly paid cleaner will receive $312 per hour, reflecting a 54 percent increase.

NIS SUBSIDY REMOVED

“As a consequence, I wish to announce the withdrawal of the NIS subsidy with effect from September 1, 2015. (1% of contributions dating back to 2103)

$2000 UNIFORM ALLOWANCE

Mr. Speaker, to enable greater access to education, we have increased the uniform allowance voucher from $1,500 to $2,000.

$300M TO RESTORE GEORGETOWN

To assist in the resuscitation of our capital city, we have allocated $300 million for the Georgetown Restoration Programme, encompassing an intense cleanup campaign, while enforcing laws on littering.

COALITION TESTED

In just about three months in office, we, in this Coalition Government, have been tested, by both domestic and international issues, and by an uncooperative opposition still piqued at losing the recent General and Regional Elections. We have made missteps but generally we have proven that we have the mettle to confront the problems and challenges thrown at us.

 

 

 

 

 

 

 

 

 

 

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