Minister of Finance Winston Jordan responds to SN’s Cohesion

Ministry of Finance, Letter – Tuesday, October 9, 2018

Dear Editor,

The mask is finally off, SN “Cohesion” 2018-10-07. It would appear that your editorial board is not pleased with any initiative of the government.

This editorial trotted out a tired and lazy narrative of a “bumbling” “incompetent” government that “rules over us”.  Of course, this comes from a newspaper that is owned by a wealthy family that over the years has served as the megaphone for the private sector, several of whose members became obscenely rich through corrupt schemes, massive tax evasion and other nefarious activities under the former PPP/C regime. It appears that SN didn’t actually want a change of government; rather, it wanted the PPP/C government to change its ways. Unfortunately for SN, the Coalition government is a reality, over three years old. We were elected to serve the people of this country. We have been doing so; we will continue to do so, regardless of criticisms and detractors, without fear or favour, affection or ill will.

A lot of aspersions were cast on a number of my colleagues. I believe they are capable of defending themselves. As to your criticism of my so called “less than exemplary performance in charge of the Ministry of Finance portfolio,” you must have forgotten, conveniently, the deformed and broken economy that our government inherited in 2015. Lest we forget, too, that economy thrived on rampant drug trafficking, money laundering, and a banking sector in which a few institutions recklessly lent funds for private white elephant projects.

The hangover from that lending binge has resulted in an average non-performing loan ratio of 13.2%; in the particular case of one bank, one out of every three loans are now categorized as non-performing. This was a significant factor in the immediate slowing of the economy, post-2015. Just look at the half finished, empty buildings dotting the landscape and one would understand that the construction boom, hailed by the PPP/C and their admirers, was nothing but a bubble waiting to burst. More directly, the Treasury has been forced to bear the cost of a large number of reckless investments, including Skeldon, Clico, and the Marriott Hotel. It didn’t stop there: the government has had to dole out billions to settle lawsuits as well as meet the cost to retrieve the outstanding US$5M for the sale of the government shares in GT&T.

Despite that and significant challenges in the sugar sector, that we as a country are now finally grappling with, our government has provided a bailout for Guysuco- a whopping $37 billion to date.This sum excludes the $5.7 billion severance payment for workers; the transfer to central government of expenditure previously borne by Guysuco, including D&I and community centres; and debt repayments on loans contracted for the ill-fated Sugar Modernisation Project. But not once have I seen an editorial questioning the management of Guysuco about its stewardship of taxpayers monies.

Still, the economy grew by 4.5% in the first half of this year and is projected to grow by 3.7% for all of 2018. This compares very favourably to most countries in the Caribbean and Latin America. And this growth does not come from profligate government spending: Debt to GDP ratio, a critical indicator of an economy’s health, is well within the internationally-accepted limit for countries at our level of development, at around 50% and remains the second lowest in the Caribbean. The International Monetary Fund, in its May 9, 2018 mission statement said it “supports the authorities’ prudence towards private external borrowing” and that “the central government deficit was 4.5 percent of GDP, lower than the budgeted 5.6 percent. This better than expected outturn was largely supported by higher revenue arising from improvements in tax administration.” And for this, I must commend the sterling and relentless work of Commissioner General Godfrey Statia. Let us recall that back in 2013, only one third, or 992 out of 2,618 registered and active firms, filed tax returns and that out of 75,992 active self-employed persons, only 33,740 filed taxes, paying an annual average of $98,000 per person.

Meanwhile, in a press release on June 25 2018, Tahseen Sayed, the World Bank’s Country Director for the Caribbean said “Guyana is making important strides to promote financial resilience and improve fiscal management, and has embarked on a broad-based reform program. These reforms will be key to building a strong economy that is underpinned by a strategic management of public resources for the benefit of the Guyanese people.” The statement continued that “Significant progress has been made in implementing the 2016 Financial Sector Assessment Program (FSAP) recommendations, including enhancing the supervisory power of the BoG and establishing an emergency liquidity assistance framework, a national payment system and a deposit insurance scheme. The mission welcomed the establishment of a Financial Stability Unit within the BoG to assess macro-financial vulnerabilities.”

So, who are we to believe? Stabroek News with its apparent axe to grind? Or the IMF, the World Bank and the other international lending institutions including the Inter-American Development Bank and the Islamic Development Bank that are increasingly viewing Guyana as a stable, well managed country with bright prospects that is ripe for sustainable development?

Also, the editorial claims, bizarrely, that public sector workers have not received a major increase in salaries since 2015. Again, a case of selected amnesia: only three months after taking office, our government increased the minimum basic salary of each public servant to $50,000. This translated to a 26.4% increase for those who earned the old minimum wage of $39,540 and 17.1% for over 4,000 public servants earning the then minimum wage of $42,703. Subsequent to this, public servants, including teachers, have seen further increases that amount to over 50% since the Coalition Government took office.

Further, our government has reduced the Value Added Tax (VAT), from 16% to 14%; reduced Personal Income Tax, from 30% to 28%; increased the tax threshold from $600,000 to $720,000 or 1/3rd of gross income (whichever is higher); made employees’ NIS contributions tax free; and reduced tolls on the Berbice Bridge. And yes, we have reduced Corporate Income Tax for manufacturing companies, from 30% to 27.5% and granted significant concessions to the gold and forestry sectors, among others.

All the while, we have kept inflation well in check:negative 3.3% in 2015, 1.4% in 2016 and 2% in 2017.  Despite the desperate fearmongering of the PPP/C and fellow travellers, the Guyana dollar/US dollar rate as of May 2018 stoodat G$212.48,from G$210 in May 2015. That’s a depreciation of 1.2% over 3 years. Impressive, indeed! Yet, we are conscious that more needs to be done.

As for the editorial’s claim about the “loss of all the senior officials who have resigned” from my ministry in “the last few weeks”, I refer you to a previous misguided article in which the reporter failed to seek clarity from my Ministry before publishing. In our subsequent response, we noted that “The policy of the Ministry under the stewardship of Hon. Winston Jordan is that employees who reach the age of retirement are not kept on unless they bring some special skill that is critical to the work of the Ministry, or, where suitable replacements cannot be found within the Ministry. We see this as part of giving younger civil servants the opportunities to build careers with us.” I would add that I remain extremely proud of the dedicated and highly competent team working at the Ministry of Finance. Under my leadership, this team has been able to produce, among others: two national budgets before the start of the financial year; Mid-year reports before Parliament goes into recess; two Public Debt Reports (not a requirement under any law); Public Private Partnership Framework; and more recently, a Green Paper on the Sovereign Wealth Fund.  I have taken to Parliament, and had passed, more pieces of legislation than any other Minister of Finance did in their first three years.

Of course, Stabroek News itself is not immune to an exodus of skills, including competent editors and senior reporters, which is sadly apparent in the decline of its journalism over the past decade.

Rest assured that I will continue my single-minded dedication to the task at hand.

Yours sincerely,

Winston Jordan, MP

Minister of Finance