Cash-strapped Guyana govt embarks on cost-cutting measures; hopes public sector investment prog will kick-start economy

Last Updated on Thursday, 2 March 2017, 14:28 by Denis Chabrol

Minister of State, Joseph Harmon debating the 2017 National Budget.

The Guyana government is strapped for cash and would be introducing a number of austerity measures including recycling envelopes, while at the same time hoping that the Public Sector Investment Programme (PSIP) and housing projects will kick-start the economy.

“It means that you have to be a little more careful in how you spend your money so that it lasts. It means that you have to reuse envelopes. There are several measures which we will circulate to government ministries on how they can cut back on expenses,” Minister of State, Joseph Harmon told a news conference. He said the austerity measures would include conserving on electricity by turning off lights and air conditioning units.

“There are practical measures which will be used by the government to ensure the austerity that I am talking about and that the monies which you have will last you longer and that you don’t have to go back later in the year (to the National Assembly) for supplementary (funds) so it is really about being very sensible and using the resources which you have to the best of your ability,” he said.

Referring to calls for the 14 percent Value Added Tax to be lowered, Harmon said the economy was doing badly because “unexpected expenditures” such as financial support for the ailing Guyana Sugar Corporation and legal settlements.  Finance Minister, Winston Jordan has forecast lower foreign exchange earnings from rice and sugar as well as a slump in construction.

Asked how government intends to revive the economy, the Minister of State said government would be spending huge sums from the GYD$250 billion budget for 2017 on major projects including housing and better implementation of government’s public sector infrastructure programme. “This year, as you can see the contracts I started to reel off, that we have better organised…We are going to use that (budget) to ensure the economy is basically better positioned.

At the same time, we are going to encourage private sector involvement in the economy. We are going to engage the private sector in a more meaningful and aggressive way so that this partnership between government and the private sector can be used- that energy, that synergy- which the two parties bring together can be used to basically boost and move this country forward,” he said.

Unlike the “ineffective” housing programme by the then People’s Progressive Party Civic-led administration that had largely focused on house-lot distribution, Harmon said government’s new thrust is to build houses in communities. He said the focus would be on constructing houses made mostly from local materials such as wood, concrete and clay-bricks and built by local contractors. “We import into this country a lot of different species (of woods). We have a wide variety of goods in Guyana and we want to encourage the use of the woods that we have made in Guyana,” he said.  “We just can’t continue buying these products from abroad when in fact we have the facilities right here that could do it,” he added.

He explained that a Whitepaper on housing to be tabled in the National Assembly would also focus on the method of construction, methods of payment, mortgages, criteria for allocation and aided self-help programmes and the regularization of squatting in all 10 administrative regions.

Construction of duplexes and town houses, he said, would start in April, 2017.