Treasury too broke to bail out GuySuCo – Finance Ministry

…still to get money from sale of sugar lands

The caretaker coalition Government on Wednesday confirmed that Guyana’s national treasury is presently “incapable of providing a bailout” to the Guyana Sugar Corporation (GuySuCo) and the Corporation should seek to work out its bottlenecks, since any monies due from the sale of sugar lands still would not be for the industry directly, but rather to make repayments for a bond that was secured.

This position was communicated publicly on Wednesday by the Finance Ministry after a May 15 letter by Chairman of GuySuCo’s Board, John Dow, was made public, in which the official pleaded for executive assistance.

This, since the sugar industry which still employs thousands of Guyanese, has run out

of cash to meet its basic needs and faces imminent closure.
The GuySuCo Chairman in the letter to caretaker President David Granger on May 15, appealed for his intervention “…to use your good offices to arrange for funding to prevent the impending closure of the Industry”.
Dow told President Granger that “…. GuySuCo needs funds now to be able to survive after the second week June 2020”.
The sugar industry’s union representative body, through its representative on the GuySuCo Board, on Wednesday confirmed the President did not respond to the Corporation’s request.
The President’s Director of Press and Publicity Affairs, Ariana Gordon subsequently informed that Agriculture Minister Noel Holder – within whose remit GuySuCo falls – and Finance Minister Winston Jordan met recently, in the presence of President Granger, “with the aim of resolving the issues facing the Sugar Corporation”.
She has since communicated that the “Minister of Finance has since embarked on some arrangements to resolve the ongoing crisis facing the sector”.
Later requests by members of the media for the President’s Public Affairs Officer to elaborate on the meeting or its outcome was met with a directive to “contact the Ministry of Finance and/or Agriculture for further details”.

Incapable of providing bailout
The Finance Ministry in a public missive Wednesday evening said “the prevailing national circumstances, coupled with the challenges of COVID-19 and a reduced national income, render the Treasury incapable of providing a bailout to GuySuCo”.
As such, the Finance Ministry, headed by Jordan, said a $30 billion bond backed by the National Industrial and Commercial Investments Limited (NICIL) assets and guaranteed by the Government of Guyana was secured through NICIL to retrofit and revitalise the three remaining sugar estates.
According to the Finance Ministry, during the period July 2018 to February 2020, $9.7 billion was disbursed to GuySuCo to fund its Capital and Operational Expenditure – much of which was outside the terms of the bond.
The Ministry said too that additionally, NICIL, through the Special Purpose Unit (SPU), had sold lands that were vested to it, and garnered deposits of $2.1 billion.
This money, however, was used to offset bond payments that became due in May 2020, the Ministry said, adding that the balance of $1.5 billion for the lands will be paid over to NICIL when the vesting orders are signed and gazetted.
The balance, however, is not expected to make its way to the Corporation in its entirety, since according to the Ministry, part of this sum will go towards a bond repayment, which is due on July 4, and the remainder to GuySuCo.
According to the incumbent, GuySuCo also generates its own income.
It was noted too that another disbursement is expected in the coming days; and as such, the Government has since urged “that NICIL, GuySuCo and the syndicated lenders work assiduously to resolve any bottlenecks”.

Disturbing news
News of the imminent closure of the Sugar Corporation has since been described as disturbing “for the thousands of Guyanese who, directly and indirectly, still depend on the sugar industry for their livelihoods”.
The condemnation was adumbrated on Wednesday by the sugar belt’s union representative body, the Guyana Agricultural and General Workers Union (GAWU), which lamented the state of affairs and pointed to the plea for intervention on the part of the Executive by the Corporation’s Chairman of the Board of Directors, John Dow.
The GuySuCo Chairman, in his missive to the President, informed the Executive that immediate provision for a subvention was desperately needed, acknowledging that the next annual budget for the country was still some months away given the prevailing political state of affairs.
The immediacy, Dow pointed out, is rooted in the fact that the Corporation is without cash to carry it past this week.
He informed the President that the financial situation at GuySuCo was so dire that two accountants on the Corporation’s Board have since resigned.
Outlining the Corporation’s position to Granger, Dow had noted that GuySuCo has run out of cash to meet basic expenditure such as the payment of salaries, maintenance, and bare essentials.
Dow had noted that compounding the situation was the fact that contractors who usually provide goods and services for the Corporation have now begun demanding large upfront payments before any supplies were acquired for the industry.
Dow, in his missive to the Administration, said that without an imminent cash injection into the Corporation, the effects of its now stagnant cash flow would affect the second sugar crop.
The GuySuCo official had indicated to the President that the Corporation has only ever received just about $9.7 billion of the promised $30 billion that was secured for the industry by the Government-run NICIL’s SPU.
According to Dow, recent interactions with the intermediate body – that was placed in charge of large aspects of the Corporation’s management – has revealed that “little or no further funds are likely from this source in the near future”.
On Wednesday, Opposition Leader Bharrat Jagdeo also indicated that the country’s treasury was empty.