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Mixed private sector reactions to 2018 National Budget

Two private sector organisations on Wednesday expressed mixed views about the 2018 National Budget, ahead of next week’s parliamentary debate on the package of revenues and expenditures.

The Guyana Manufacturing and Service Association (GMSA) said while the budget includes several recommendations, a lot has not been done to stimulate and expand manufacturing.

“The GMSA was hopeful that proposed measures to address critical areas such as taxation, access to finance, and energy would have been considered. These could have provided a much needed catalyst for the manufacturing sector to achieve the projected 2.4 percent growth,” the organisation which is part of the Private Sector Commission (PSC), said in a statement.

At the same time, the manufacturers noted that several of its recommendations for the forestry and wood processing sector have been taken aboard. Those include Value Added Tax (VAT) exemption on logs and rough lumber; allocation of GY$120 million to begin a national forest inventory; allocation of GY$50 million to partner with the private sector to build a consolidated/dimensioned stockyard.

Government has also imposed a 40 percent protectionist tariff on extra-regionally produced pinewood, aimed at stimulating local production of high quality value-added kiln-dried wood, a move that has been welcomed by PSC executive member, Ramesh Dookhoo. While the PSC has not yet officially issued a statement on the budget, Dookhoo has said described the package as “private sector-friendly”, despite a few shortcomings.

The GMSA expressed concern about the continued decline in the forestry sector, saying that government’s  eight percent projected growth for the forestry sector is only possible if there is a “holistic approach to the sector’s development.”

In its reaction to the 2018 National Budget, the Georgetown Chamber of Commerce and Industry similarly commended Finance Minister, Winston Jordan for “steps in the right direction. The city’s oldest business organisation said it was pleased with the “reversals of tax measures removed from the economy ” including the 14 percent VAT on education, reduction in the Tributors Tax from 20 % to 10 % and the exemption of VAT on the supply of logs and rough lumber to the forestry sector.

The GCCI  noted the reduction of deposits to GRA for contested assessment reduced to 1/3 of contested amount for Board of Appeal and Judge in Chambers. “The GCCI views the Minister’s consideration and incorporation of the measures as particularly encouraging and hopes that this dialogue can extend into the future and other areas of policy-making.”

The GCCI, however, expressed concern about “shortcomings” of the 2018 National Budget, contending that apart from the Investment Act and Aid of Industry Act it failed to provide clear direction on incentive regime for private sector.

The Chamber said it was unhappy that the that budget did not provide stimulus to some main sectors of the economy, and corporate and income taxes have not been reduced and the income tax threshold has not been increased.

In the area of job creation, the Chamber noted that no clear plan has been presented to stimulate job-creating investments and/or facilitate job-creating investments. The GCCI  expressed concern that the budget did not state how government intends to stimulate or create jobs and deal with the loss of jobs due to further closure of more operations of the state-owned Guyana Sugar Corporation.

“Also worrisome, is the fact that no elaboration of a strategy to absorb workers who will be displaced by government’s attempts at GUYSUCO’s divestment/curtailment. The government’s efforts to address the economic and social malaise stemming from this divestment were reduced to three sentences in a paragraph and is a great cause for concern given the industry’s importance and material impact on the economic livelihood of many communities,” The Georgetown Chamber of Commerce and Industry added.

Finance Minister Jordan has said in his 2018 Budget that during 2017, the Small Business Bureau was responsible for creating 392 jobs and training 831 persons from the hinterland and coastland in areas related to business development. He said a GY$100 million revolving fund would be established next year to support small businesses whose goods and services are sustainable and environmentally friendly. Jordan has also announced that the Guyana Office for Investment (GO-Invest) in 2018 expects investments of GY$154 billion that will create about 5,725 jobs. Government said GO-Invest this year facilitated almost GY$23 billion in investments, which, over time, will create over 97o jobs across various sectors, including services, agriculture and energy.

With regards to the development of the oil and gas sector, the Georgetown Chamber signaled its disappointment that government did not provide details about its plans to establish a Sovereign Wealth Fund (SWF) especially since it is important to the creation and promotion of a resilient economy.

Fearing that Guyana’s agriculture sector could eventually become less important in an oil-driven economy, the GCCI observed that the budget did include incentives to cushion the impact of external shocks and fluctuations in international commodity prices. “When taking this vulnerability into consideration, the Chamber expected some emphasis to be placed on the promotion of the agriculture sector, particularly through a suitable incentive regime,” the GCCI said.

Budget debate begins next Monday at 10 AM.