Los conceptos vertidos en esta sección no reflejan necesariamente la línea editorial de Nodal. Consideramos importante que se conozcan porque contribuyen a tener una visión integral de la región.
The first 100 days
The PNC-led APNU/AFC coalition that is now in office made a special point of what the promised to deliver in its first 100 days in office. There were a total of 21 items enumerated.
Today being Day 2, we thought we would remind the expectant populace, fortified in the knowledge that the coalition will be governing for “all Guyana” as to what is in store for them within the next three months. This, of course, assumes that the coalition can deliver what it promised.
The first promise is a “Reduction in the Berbice Bridge toll”. This was probably inserted as an inducement for the AFC to make its own promise to APNU – to deliver 11 % of additional votes from the East Berbice Region.
Even though the AFC promise was not kept – the coalition actually received less votes that it garnered in 2011, it would be difficult for APNU to now renege on its campaign promise so early in the day.
But during the campaign, the Private Sector Commission had signalled the fly in the coalition’s ointment:
“A unilateral decrease in toll by the government or any government will not be received very well by private business, and it’s tantamount to price control and any such unilateral decision, governments need to be very careful of and I believe there are adequate mechanisms in the entire Berbice Bridge deal…that provides for information to be shared between the government and the Board and there are formulas that are in place how such decisions are to be made.”
The Berbice Bridge was financed on the Public Private Partnership (PPP) mechanism encouraged by the World Bank and the IDB for poorer countries to install vital infrastructure to facilitate economic growth.
While the investors in the Berbice Bridge are all local business, the move by the government to reduce tolls would place additional pressures on the management of the Bridge, which has been criticised by the private investors for not paying any dividends on their investment since the Bridge was opened in 2008.
The present toll structure has delivered approximately $1.5 billion annually and if the reduction is to, be meaningful, would have to be on the order of at least 50%.
The new government would therefore be opening up a can of worms that has long been locked away from the public’s sight, since the private companies are contractually bound to receive a specified return on their investment.
If the tolls cannot service this return, then the government would have to provide a subsidy to the Berbice Bridge. Which would have to come from the Consolidated Funds.
The new government would also have to find some more money to implement its second promise:
“Significant salary increases for government workers, including nurses; teachers in primary, secondary and tertiary education; security personnel; and civil servants on the traditional payroll.”
With at least 40,000 workers receiving “significant salary increases” the government will have to source at least $5 billion additional revenues every year.
Even in looking at just the first two promises, the question as to where the money will be coming from, should strike even the most fervent supporter of the new government. In the 21 promises to be delivered within the first 100 days, there is not a single revenue-generating proposal.
In fact, the third promise will actually reduce the present level of revenues from the largest contributor to the Consolidated Funds: “Immediately implement a phased reduction of VAT and the removal of VAT from food and other essential items.”
Here again, as many of the new Government’s economists have pointed out, reductions on the order of 3-5% reduction in VAT will not have an appreciable impact on income flow for the average Guyanese.
One does not need to be an economist to appreciate that if the country’s expenditure increases and its income falls, bankruptcy is not far away.