2018 Mid-Year report
…projects $22.8B deficit for public entities
The 2018 Mid-Year report, which was laid in the National Assembly, is characterised by disturbing projections for important public enterprises. This is according to Opposition Member of Parliament Irfaan Ali.
According to Ali in a statement following the document’s release, a number of such enterprises have had their projected income revised downwards, thus reflecting a worsened financial status than expected.
His examples included the Guyana Sugar Corporation (GuySuCo) and the Guyana Rice Development Board (GRDB), two of the agriculture sector’s most important public enterprises.
“Failed public enterprises are the hallmark of incompetence and mismanagement,” Ali stated. “GRDB now projects to post a deficit of $279.5 million for this fiscal year, in stark contrast to the budgeted $8.5 million surplus that was projected.”
“Guyana Post Office Corporation is expected to record an overall deficit of $25.9 million for 2018, against a budgeted surplus of $0.8 million. Revenues are anticipated to decline by $41.9 million, while operating expenses and capital expenditures are expected to increase by $4.1 million and $11.1 million, respectively,” Ali also noted.
When it comes to the Guyana Power and Light Inc (GPL), Ali noted that this entity is now projected to record a deficit of $9 billion, down from $5.5 billion that was initially projected by Government.
A downward projection also holds true for the Guyana National Printers Limited (GNPL), which anticipates ending 2018 with a deficit of $77.8 million. This is a reduction from a budgeted surplus of $3 million, as total revenues are anticipated to be $3 million below budgeted and total expenditures, $81.6 million above.
“GuySuCo now anticipates closing the fiscal year with a deficit of $11.5 billion, a worsening from the budgeted deficit of $5.2 billion that was previously projected by the Honourable Minister,” Ali also noted.
“Further, in Budget Speech 2018, (Jordan) projected an overall deficit of $10 billion for all public enterprises, down from $12.9 billion that was recorded in 2017. This, however, in 2018 Mid-Year report, was revised to a whopping $22.8 billion deficit, by end 2018. To finance this deficit, $21.5 billion is anticipated to be sourced domestically, up from $7.8 billion that was originally projected.”
Interestingly, the Mid-Year report admits that “weak institutions within Government continue to hamper the quality and delivery of Government programmes. Institutional strengthening has been identified as a priority for budget agencies to accelerate across all sectors.” And the strength of these institutions is not helped by revenue loss from the sectors they oversee.
Despite the economy growing by 4.5 per cent in the first half of 2018, the report notes that traditional sectors, such as sugar and rice, have seen decline in their performances, with contractions of 30.6 and 3.8 per cent respectively.
The gold sector also suffered a decline of 9.1 per cent. This is equivalent to a decrease of 288,114 ounces in gold declaration. The report also revealed that this represented a 19.4 per cent shortfall.
However, despite these issues, the report indicated that growth in the economy was more broad-based than in 2017, with robust performances in the agriculture, fishing and forestry sectors of 3.4 per cent. Other crops, fishing, livestock and forestry industries all experienced growth over the same period, with the latter two growing by a commendable 29.1 per cent and 18.1 per cent respectively.
Growth of 8.2 per cent was also recorded in the services sector, and 13.4 per cent in the construction sector. This significant increase in the construction sector is attributed to higher building imports by 24.7 per cent.
Meanwhile, production in the bauxite industry reached its highest level since 2013, surpassing 2017 by 21.1 per cent. This has led to a revision of the forecast growth of the industry upward from 23.3 per cent to 29.9 per cent. There was also growth in other mining of 31.2 per cent, driven by the production of diamonds and other stones, which increased by 13.3 per cent and 45.5 per cent respectively.
In addition to that, the Government has also revised its growth rate for 2018 to 3.7 per cent, which is close to the initial rate of 3.8 per cent.