Caribbean & Central America - May 2012 (ISSN 1741-4458)

In last November’s general election, the ruling People’s Progressive Party/Civic (PPP/C) held on to the presidency but lost its parliamentary majority for the first time in 19 years. The final count was 32 seats for the PPP/C, 26 for A Partnership for National Unity (APNU), and seven for the Alliance for Change (AFC). This indecision on the part of the electorate has now fed through to the rejection by parliament of the new government’s first budget – the 20^th consecutive budget to be presented by the PPP/C.

The likely difficulties ahead were foreshadowed by Minister of Finance Dr Ashni Singh when he presented his budget on 30 March to the National Assembly. He said: “Mr Speaker, I am on public record as describing our country’s current position as uncharted waters...signal[ling] the need for us to collectively determine a clear passage through what will inevitably be situations uncontemplated by the architects of our extant Constitutional and legislative framework. I would exhort all of my colleagues in this Honourable House never to lose sight of the need for good sense and practical answers...” Clearly his pleadings did not sufficiently move the opposition, but then the finance minister had refused opposition requests to be involved in a pre-budget consultation exercise.

On 25 April, the APNU/AFC opposition used its one-seat majority to slash Gy$20.8bn/US$102m from the government’s Gy$192.8bn/US$949m budget, which was 25% above 2011 expenditure. The opposition’s targets included the Government Information Agency (GINA) and the National Communications Network (NCN), both of which had their allocations reduced to just Gy$1 each. Office of the President subsidies and contributions to local organisations were cut by nearly 25%. The Office of the President’s Presidential advisory staff budget was reduced by Gy$150m/US$738,000 along with a further Gy$80m/US$393,700 from the line item ‘others’, thereby stripping President Donald Ramotar of his advisors.

Other cuts to the Office of the President targeted its Information and Communication Technology (ICT) programme, and there was a cut of Gy$527m/US$2.6m in the budget of the Guyana Elections Commission (GECOM), which will affect plans for local government elections. A final cut of 17% was made to the proposed subsidy to the Guyana Power and Light Company.

All of the proposed cuts were passed with the National Assembly dividing along political lines by 33-32, presaging difficult political times ahead for the government. The economic outlook remains relatively buoyant, but, as the opposition points out, the good growth performance is not boosting employment, with unemployment thought to be around 11% but at least double that rate for youths aged 15-24. The government is forecasting the economy to record a seventh year of growth in 2012, with an advance of 4.1%. Within this, though, there are some areas of concern. The mining and quarrying sector, for instance, is expected to grow by just 1.8% after a surge of 19.2% in 2011. The projected growth of 3.9% in the manufacturing sector also represents a considerable slowdown from 6.8% growth in 2011.

The budget as presented to parliament envisaged an overall fiscal deficit of Gy$26bn/US$129m, the equivalent of 4.6% of GDP and up from 3.1% in 2011. Total public debt, however, was a relatively manageable 61.8% of GDP in 2011, projected to rise to 63.4% in 2012.