Guyana Focus
The new year will be one in which hope will no longer be a strategy for Guyanese as they are tired of waiting for even a semblance of the ‘good life’ promised by the APNU+AFC coalition. And while the government might have plans to improve their livelihoods, it does not have the mechanisms or resources in place to execute its plans. Rather, it is anticipated that corruption, deception, crime and political disorder will dominate the headlines, in spite of promises of greater transparency which, thus far, has proven to be wishful thinking.
As a result, Guyanese will continue to head for foreign shores, surpassing the net outflow of 18,500 people who migrated last year – a trend that has been increasing since 2015 when the coalition government assumed power. This will be in spite of the prospects of the country’s new-found oil wealth, which is expected to start flowing sometime in 2020.
At a macro level, the country’s GDP growth is forecast at 3.8%, with growth excluding the sugar industry anticipated at 4.6%. The sugar industry is expected to decline by 24% in 2018, largely due to the withdrawal of government subsidies and the closure of estates.
While optimism prevails, it is hardly likely that the forecast growth rate will materialize, keeping with the trend of missed growth targets since 2015. In fact, outside of investments in the oil sector, which are not yet accounted for in GDP statistics, there are no substantive reasons why growth will be higher in 2018.
Plans to intensify the focus on agricultural diversification, including agro-processing, concentrating largely on the interior regions are a well-worn strategy which has had limited success for decades. As a result, it is not expected that material results will be achieved this year, especially since the government does not have an integrated implementation plan.
All conditions being normal, rice, bauxite and gold production are expected to increase in 2018 but gold will continue to be plagued by unreported output which is funnelled through the illegitimate, underground market. While the government plans to deploy wardens and compliance officers to mining areas to prevent illegal activities in the sector, it is anticipated that corruption will be rife, just as it is in the police force.
Incidentally, it is anticipated that the hierarchy of the police force will experience a major-shake-up, but that will not improve its effectiveness. As a result crime will continue to increase, exacerbated by rising unemployment.
In fact, unemployment will reach critical proportions, following substantial retrenchment in the sugar industry. This will also result in a dramatic deterioration of social conditions in sugar-dependent communities along the coastal belt. Plus, the focus on diversification in the hinterland areas, instead of traditional agriculture producing regions, will further depress these areas.
Government promises to assist retrenched sugar workers in finding new jobs will amount to no more than well-practiced deception.
While Guyana will play a more important role on the Caribbean Financial Action Taskforce that deals with money laundering, the country will remain on the blacklists of the US and the European Union, putting pressure on its banking system and importing and exporting businesses.
It will not be surprising if the government moves to shut down cambios which are believed to be a significant source of money laundering.
To improve its banking system, the government will commence work on an automated National Payments System. The government will also initiate regulatory changes to its securities legislation and aim to strengthen its securities market and broaden its offerings to include both equity and fixed income instruments. It will also move to automate transaction processing and the custody of securities.
Discussions about establishing a Sovereign Wealth Fund to manage its oil wealth will also be advanced this year, although contractors for the project might have already been identified.
Increased focus on automation will come to the fore as the government plans to automate several key processes, including the establishment of a Smart Guyana program.
It plans to update its procurement legislation and commence work on establishing an eProcurement platform to improve the efficiency and effectiveness of its existing malfunctioning procurement system.
As well, the government also proposes to commence work on a Smart Guyana programme, which includes a national broadband initiative to expand its e-Government network. This will involve upgrading the existing LTE network, upgrading and constructing data centres, providing capacity building, outfitting smart classrooms and eLibraries, launching eHealth solutions for remote health care services, and increasing its closed circuit television capacities.
On the political front, the country will host its second Local Government Elections in two years. The APNU+AFC coalition lost convincingly during the last elections and its margin of loss is expected to widen this time around, unless the elections are rigged.
Fractures in the APNU+AFC coalition are expected to widen, especially if the coalition government loses the elections. That will bring into question the continued viability of the alliance which was formed out of convenience to dethrone the former PPP administration.
The proposed review and revision of the Cummingburg Accord which solidified the relationship between the two parties could very well strain or initiate the end of the coalition. Should this begin to materialize this year, the political landscape could become volatile.
On the corruption front, the State Asset Recovery Unit, charged with recovering assets purportedly stolen under the former PPP regime, will continue to fall short of its objectives in spite of the results of more than 50 forensic audits at a cost of $133 million in taxpayers’ money; and increased funding in 2018.
However, Guyana will continue to come under pressure to prove that it is taking action to deal with the perceived corruption under the previous regime.
One of the key elements of the government’s development program in 2018 will be its focus on its Green State Development Strategy which encompasses the building of a green economy. While green is an internationally accepted paradigm, it has never been an economically feasible option – with the exception of hydropower and probably wind.
Incidentally, Guyana will be banking its green development on natural gas and the potential development of smaller hydro electric plants in the interior.
Arguably, the country can learn some costly lessons from its green endeavours. Perhaps, it should take a leaf from Donald Trump’s book on this subject.
Evidently, green development will be part of the country’s proposed National Development Plan which will gain increased traction during the year. While a necessity, experience shows that development planning in Guyana has been ad hoc at best, even with the existence of a plan.
Over the course of the year, Guyana’s balance of payments deficit will widen, resulting from the continuing trend of greater imports, compared to exports. Its total public debt will also follow an increasing trend established since 2015.
Guyana’s festering border security issue with Venezuela will likely come to an end in 2018 with the help of the United Nations. It will also have the support of “Big Brother” and Exxon.
In spite of all its plans, few will benefit the poor. This means that, on average, Guyanese will not be better off in 2018 and will have to abandon hopes for a good life.
moving forward
ANALYSIS – First of 5 parts on
Reform of Guyana Revenue Authority
I read with some consternation, the International Monetary Fund’s (IMF) D grade rating of GRA’s administration. In June 2016, I made a presentation to GRA’s Board of Directors, entitled “How I Envision the Operations of Guyana Revenue Authority Moving Forward”. This Report was also made available to a number of senior cabinet members.
The Report dealt with the functions of GRA as laid out by Section 10 of the Revenue Authority Act. For practical purposes, I divided these functions
The success of the Guyana Revenue Authority will be judged by how well it satisfies its constitutional mandate. Its mission is to administer tax and ensure compliance so that all taxpayers contribute their fair share to the economic and social well-being of all Guyanese. It must commit itself to deliver world-class tax administration that is responsive, effective and trusted.
All its employees (executives, managers and other employees) should be familiar with and subscribe annually to a Code of Conduct and ethical principles and abide by them both in letter and spirit. The code will include the following:
- Foster a culture of trust and integrity
- Protect the privacy and confidentiality of taxpayer information
- Build and protect GRA’s reputation of impartiality, professionalism and excellent client service
- Avoid conflict of interest situations
- Promote a healthy and respectful work environment
- Stewardship to effectively and efficiently use and protect entrusted resources
Where employees have information indicating serious breach of the Code they should be able to bring this matter, in confidence without fear of reprisal, to their up-line and other dedicated authorities. If an employee does not abide by the Code, they should be subject to disciplinary actions, including termination of employment.
The Authority should embark on a Modernization program with the twin pillars:
- Automation of its business processes and information systems. Certain filings, such as VAT and PAYE can be done electronically; payments can also be done directly by implementing a My Payment system. This will be a precursor to further automation such as the taxpayer having access to viewing their account and filing Income Tax Returns electronically. With the rapid and expansive use of emails, GRA can embark on a program to issue correspondences to taxpayers by authorized and secure email rather than by paper mail. This is becoming the norm with many Revenue Authorities.
- Statistics and Analytics as a management tool to ensure that GRA is planning and conducting its activities in a risk assessment and goal-oriented manner and to track GRA’s progress. This will require effective information system to provide timely accurate data to make informed management decisions.
The effectiveness of GRA as the tax administrator can be measured by:
- Number of compliances processed
- Revenue collected
- Its operational cost as a percentage of say $100,000 collected
- Customer satisfaction
A risk analysis of the Authority’s internal administration will concentrate on such matters as:
- Its technical capacity building to cope with current and future needs. All areas, including management, audits, assessments, collection, legal action, international/cross border operations, research and statistical analysis must be considered
- Its human resource, including fair employment practices, remuneration, training, promotion and advancement, pension and retirement, job satisfaction and discipline
- Its transparent and fair purchasing and contracting practices
- Its own accounting for its income and expenses, assets and liabilities culminating in a clean audit report for its operations (internal report)
- Reporting of its mandated functions (external report).
An annual and longer-term Corporate Business Plan will be prepared at the beginning of each year with opportunities for roll forward changes to be incorporated. It will incorporate Government policies, GRA’s own research/analytics/statistics, taxpayers, tax practitioners and other stakeholders interests. It will take the form of a budget with the quantitative risks, actions, costs, expected results/indicators and actual results/indicators. It will outline GRA’s strategic priorities of the deliverables:
- Compliance and Assessments and Appeals
- Collections and Enforcement
- Taxpayers education and Advice
- Advisory – Government and Taxpayer/Business Assistance
- Internal Services – People, Modernization, Integrity and Service
Guyana Revenue Authority has a golden opportunity to take its rightful place as a world class outfit of integrity and excellence. I trust that GRA will seize the opportunity, although the IMF Report casts a long shadow over its administration.
I will address GRA’s other functions, including a Taxpayer’s Bill/Charter of Rights, in future articles.
error after error
Writing in the 'In the Diaspora' column in Monday’s Stabroek News, the trio also rapped the Working People’s Alliance (WPA), the party they have been identified with for decades, and which is part of the governing APNU+AFC coalition.
Noting that the establishment of the coalition promised changes in several major areas of national life, the three said that as foundation members of the WPA they have watched from the sidelines and with growing unease as the government “committed error after error”.
Some of these errors, they said, might have been attributable to the newness of the administration or the usual difficulties of a coalition government but that they were shocked beyond belief recently when severance notices were handed out to hundreds of sugar workers at the start of the Christmas season, without a plan regarding the future of the workers, their families, their communities, and the wider economy of the country.
“This disastrous decision cannot be explained away with reference to inexperience. It is callous, foolish, ill-advised and economically unfeasible. The economy of Guyana has revolved around sugar since 1815, when the decision was taken to create a one crop economy. In that vein, the diversity that enslaved Africans had introduced through the cultivation of provision grounds came under attack. Some normalcy was restored to the people’s economy through valiant struggles in the 1840s after the abolition of slavery when the village movement was formed. Over the long and protracted history of the second half of the 19th century, these villages supported the everyday existence of the mainly East Indian indentured sugar working communities. The wages from sugar workers resident in Indian and African villages was important to the survival of all the villages. The structure of economic and social relations in rural coastal Guyana is related to the integration of these two communities. For two hundred years, the wages paid to Indian and African workers on the sugar estates have helped in no small manner to sustain and bring vibrancy to every other industry and enterprise in Guyana, including the ice seller, the flutie producer, the hairdresser, the farmer, the haberdasher, the mechanic, the fisherman. This decision to shut down sugar is being taken as if it does not strike at the heart of the household and community economies of both those directly engaged in sugar production and those for whom there are ripple effects. This decision will affect every political constituency in the country. It will even affect the viability of the National Insurance Scheme (NIS)”, the trio contended.
They argued that the mass dismissals disrupt the micro economy of the working people, and are already affecting major sections of the country.
“We believe that Cabinet is duty bound to explain in plain language when the decision to issue severance letters was taken, when the decision to implement the decision to hand out severance letters by Guysuco became government policy, what were the consultations and deliberations and with whom, what alternatives were discussed, why Cabinet did not consider a more reasonable phased approach, why for instance proposals from citizens’ groups such as the National Farmers Organization for managed diversification were not given any attention and due consideration. Cabinet should also tell the public how much of the yearly subsidy was used to pay super salaries of Guysuco officials”, the trio asserted.
Their criticisms will be seen as even more damaging to the WPA whose co-leader Dr Clive Thomas is the current Chairman of Guysuco and is clearly backing the retrenchments.
Kwayana, Andaiye and Bhagwan said that the problems of the sugar industry are not new. They pointed out that as early as 1990 then President Desmond Hoyte had raised concerns about its future and had intimated the need for national consensus on the way forward for sugar. They said that this mostly fell on deaf ears, except for the WPA which made its position clear at the time. The WPA position then was that divestment of the industry should not mean and must not entail disposal of the sugar lands. In 1990, they noted that Booker Tate was invited by Hoyte to manage the industry on a management contract, an arrangement that came to an end in 2009. From that point a new Guysuco management board was reinstated. The trio said that the current government owes the people of the country an explanation for why it maintained the structure of a top-heavy management board, “even now as thousands of sugar workers, who have known nothing but sugar, are being sent home with no viable plan for their future”.
In light of the tragic news of two reported suicides by sugar workers since the layoffs, and to lessen despondency among sugar working families, the trio said that it is well past the time for the government to fully explain its plans for the industry going forward.
“What plans, if any, are in place to meaningfully involve people in the communities in figuring out the future of sugar, the sugar lands, and the sugar assets? The time is never too late to change course. Government is serious business”, they said.
“As a country we can do better. The certainty that we could do better was the reason for the formation of the Working Peoples Alliance in 1974, and to see a government which includes the WPA falter on the most basic of ideals, gives us cause to pause and question. We think it necessary to remind our colleagues from the WPA in the government, that for decades our slogan was “BREAD AND JUSTICE.” Further, when the Economic Recovery Program (ERP) was put in place in 1989, the WPA called for investment in the people. It was not for nothing that the people renamed the ERP the Empty Rice Pot. Today, the government is following through on the approach of its predecessor, and is investing in the top .5% of the population to the detriment of the people”, Kwayana, Andaiye and Bhagwan lamented.
They drew the attention of the government to its own Manifesto for the 2015 elections, where they noted it committed to “establish and entrench an inclusionary democracy through the appointment of a Government of National Unity which would create opportunities for the participation of citizens and their organisations in the management and decision-making processes of the state, with particular emphasis on the areas of decision-making that affect their well-being.” We ask the government, were these empty promises?” they questioned.
“We say now, and we say boldly, if this government does not recognise the wrong turns it has made, if it does not change course, if it does not embrace and lift up those most downtrodden among the population, it is doomed to failure like its predecessors”, they warned.
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