Govt can save $3B by slashing recurrent expenditure – Ali

…says misallocation is root of economic hardship

Government’s refrain that it cannot afford increases for teachers may need to be revisited; as Opposition parliamentarian and economist, Irfaan Ali, is contending that just by slashing recurrent expenditure, there can be a surplus of $3 billion for the year.
According to the former Minister, there were increases in at least six-line items since 2014 that directly contribute to a 55 per cent increase in total recurrent expenditure.

These are security services, an increase of 41.9 per cent; dietary, an increase of 44.4 per cent; national and other events, increased by 91.5 per cent. Other transport and travel, 62.5 per cent; transport and travel, 48.6 per cent and employment costs, 41.9 per cent.
“Specifically, employment cost makes up $17 billion or 39 per cent of total increases in recurrent expenditure. If excess budgetary allocation, $2 billion, is slashed from dietary and national events to 2014 levels, the Government would be able to rehire and offer a 66 per cent increase in stipend to the 1972 dismissed Amerindian CSOs; increase the (National Toshaos Council) subvention to $50 million and provide each Amerindian village with a $3.5 million cash grant.”
Ali also suggested that if excess allocations to security services and transport and travel were returned to what it was in 2014; initiatives like the ‘Because We Care’ cash grant to students could be reinstated and even increased to $15,000 per child.

Pointing to the Ministry of the Presidency, Ali noted that budgetary allocations have increased from $3.3 billion to $9.4 billion; equivalent to an increase by 56 per cent and according to Ali, Regions Five and Six budgets combined.
Ali returned to Finance Minister Winston Jordan’s speech in 2015 to show discrepancies between Government’s financial vision and what has actually been happening. One such instance was the 2015 promise to reduce the deficit in public enterprises and Central Government.
“Deficit in Central Government increased from $9.3 billion in 2015 to $34 billion by the end of 2017,” Ali pointed out. “Private enterprises moved from a surplus of $8 billion in 2015, to a deficit of $12.8 billion at the end of 2017.”
The next promise the former Minister alluded to be a promise to reform the tax system, increase investments while creating sustainable jobs and to restore Private Sector confidence in the economy. But pointing to the budget estimates and the latest Mid-Year report, Ali noted that the facts tell another story.
“From 2014 to 2018, credit to Central Government increased by 24.2 per cent, while Private Sector, by 11.3 per cent. In 2017, lending to the manufacturing sector contracted by $4.2 billion or $14.6 per cent.”
“In mid-2018, the manufacturing sector contracted by 5.7 per cent to $26 billion; credit to the beverages, food and tobacco industry and for other construction and engineering decreased by $2.6 billion or 39 per cent and $1.8 billion or 15 per cent, respectively.”

Cash pay outs
While the Government’s upkeep has gotten more expensive, so too has cost of living when taxes and other factors are considered. There have also been specific cases where Government, faced with the need to make cash pay outs to workers, have either claimed lack of cash or scrapped to find part payments.
This includes the former Guyana Sugar Corporation (GuySuCo) workers, who were placed on the breadline when Government closed several estates. Despite the sugar workers being legally entitled to their severance, Government had announced that only some of them, owed $500,000 or less, would be paid in full by January month end.
In June, the Guyana Agricultural and General Workers Union (GAWU) took Government to court. This was done on behalf of workers from Skeldon, Rose Hall and the East Demerara sugar estates.
In the legal documents, it was outlined that the redundant workers were to receive their redundancy allowance/severance payment no later than December 29, 2017. The legal team, which was led by former Attorney General Anil Nandlall, stated that the over 4000 workers were paid only a portion of their severance payments.
Then, three years of trying to secure salary increases and other benefits saw teachers proposing increases of 40 per cent under a multi-year arrangement up to 2020. However, Government has maintained that it just cannot afford this proposal, offering a 2018-2019 pay off.
After making little headway, the Guyana Teachers’ Union galvanised strike action. President David Granger said during a press conference on Friday that efforts were being made to find cash for the teachers.