INHERITANCE
Oct 17, 2016, , http://www.kaieteurnewsonline....6/10/17/inheritance/
Did the former government leave the present regime a bankrupt economy and high debts? This is as lopsided a viewpoint as there can ever be.
The present administration has entered into an “excuse-making” mode. It is attempting to justify its non-performance on the basis that the PPPC left it in a financial mess with multimillion dollars judgments to be honored and the bailing out of the main sugar industry. Despite this, it is the government’s contention that it was still able to increase the minimum wage by 40%.
The government is essentially setting the stage to say to public servants that it has done its best but could have done better if the PPPC did not leave the country in such a financial mess.
The government’s case needs to be dissected. The government, as the Opposition Leader pointed out did not inherit a constricted economy. It inherited an economy which has been the fastest growing economy in the Caribbean for over the last ten years.
The government had initially tried to question that growth but it has settled for the same formula in terms of calculating the growth. It has said, though, that while the economy it inherited was growing, it was growing slower than before.
Hopefully, by the end of this year we will be in a better position to know whether under the APNU+AFC, the economy has grown faster than before.
Growth of course, does not say much about the fiscal position of the country. It is now the view of the government that the fiscal position of the government is perilous since there is an eighty billion debt owed by Guysuco and the government had to find billions of dollars to bail out the corporation so far.
This is one way of looking at the situation. The government, however, is also bailing out other entities, which on a per capita basis works out to more than its support for GUYSUCO but it is not complaining about that.
The problem with the sugar corporation is not what it is costing to bail it out. It is what it is likely to be the effect, in terms of social costs, by not supporting the industry.
The government cannot claim to be unaware of the debt that is owed by the sugar corporation. The APNU and the AFC when in opposition had actually tried to veto a multi-billion dollar annual subvention that was supposed to be paid to the sugar corporation.
The debt of the sugar corporation is not an overnight occurrence. It has existed for some time and was known by all and sundry.
GUYSUCO, it should be noted has assets which can cover its debt. So it is not bankrupt. It has a cash-flow problem, a chronic cash-flow problem that will not disappear in the near future.
The government is essentially complaining that it has bailed out GUYSUCO and if it did not have to do so, it could have done much more for public servants. It is a valid argument.
The argument that the government is not making, though, is that it is not constrained from doing more because of a lack of money. Revenues have not been declining.
The revenues of the government have actually been increasing by billions of dollars since it came to power and its coffers from gold sales are overflowing. In other words, it can still afford to support the sugar corporation.
In response to what the government knows will be a demand for higher wages, the government is saying that despite the problems it inherited it has increased the public service minimum wage by 40%.
What the government did not state is that the public service minimum wage is a recent invention and is purely of academic importance only.
The government did not state just how many workers were in fact receiving this ‘ academic ‘ minimum wage and what it cost the treasury to increase this wage by 40%. The overall wage bill has not increased by 40%. In has increased by far less and this is what the government is not saying.
To be continued