| “Industry is sitting on an economic time bomb”- Economist Dr. Clive Thomas By Kiana Wilburg The more local economists continue to analyze the accounts of the Guyana Sugar Corporation (GuySuCo), the more they realize that the sugar industry is in a financially dreadful state.EconomistDr. Clive ThomasDr. Clive Thomas in an interview with Kaieteur News on Sunday related, that the industry needs to be purged and its deficiencies addressed from several areas, apart from a managerial perspective.Recently, the board members of GuySuCo and the entity’s CEO were forced to step down after years of failing to nurse the ailing industry back to “good health”.But the condition seems to have gotten worse.Dr. Thomas said the industry has now found itself “buried” in excess of $90B in debt until 2017. Based on an overview of GuySuCo’s accounts, he said that it was just less than this for the period 2012 to 2014. Dr. Thomas said in no uncertain terms that, “the sugar industry is now sitting on an economic time bomb.”The economist said that he had warned about this in a series of previous columns he had dedicated to examining and proving that the industry was at a point of no return.“But my findings were either too alarming for some to digest or were just completely ignored. People should not allow themselves to be left in bewilderment when they hear certain things coming out at this point; like the industry being unable to pay its workers. I had pointed to many of these before,” Dr. Thomas reflected.He added that he was not the least bit surprised when it was announced that the coffers of the industry hadn’t enough money to pay some of its workers.The economist said that GuySuCo has become an entity which “produces less and less and it is costing more and more”,Wholesale College Jerseys China, while its sales decline.He posited that GuySuCo’s survival now depends on direct official bailouts, while it unceasingly increases its indebtedness. He said that this quite frankly is unsustainable.In previous columns in 2011 and 2012, Dr. Thomas had addressed several important topics, in some detail, which revealed that in comparison to the rapid global growth in production and exports of sugar, stagnation and decline have been the hallmarks of Guyana’s sugar industry. These have lasted over three decades.He had also addressed a set of strategies designed by the authorities to turn around the sugar industry. These strategies are mainly the Sugar Modernization Project (SMP) and the later Turnaround Plan (Blue-print) initiated by GuySuCo’s Interim Board in 2009.The SMP includes the construction of the Skeldon Factory along with its related Berbice agricultural fields restructuring,Cheap Shoes From China Free Shipping, as well as the construction of the Enmore Packaging Plant.Dr. Thomas reminded that over the decades, sugar’s contribution to GDP, export earnings,Cheap Football Jerseys Paypal, and tax revenue has fallen well behind that of other traditional commodity sectors such as gold,Discount Nike NFL Jerseys, rice, and bauxite, as well as the services sector.He added, “I had earlier columns which also looked at the money that was given to the sugar industry by the European Union (EU).”In that series dedicated to the sugar industry he had said, “I had calculatedly treated this as conscience money paid by Britain and the EU as compensation for their unilateral revocation of the EU-African-Caribbean-Pacific countries (ACP) Sugar Protocol, from which they had previously drawn considerable benefit.”“Large sums directed to Guyana’s sugar industry by the EU have to be seen in the light of the additional massive bailouts provided by the Government of Guyana to GuySuCo in recent years.”Dr. Thomas said that as worldwide experience has shown, it is hard,Cheap Jerseys, politically, for governments to stop providing unwarranted subsidies to state industries. He said, however, that it is far worse for them to yield to those interests that are driving the need for the subsidies.He emphasized that the misallocation of national resources, implicit in this posture, is inevitably bad for everyone economically, but it will eventually also carry a devastating political cost, given the size and configuration of the sugar industry in Guyana’s political economy.Economist Rawle Lucas had also recently added his voice to the subject matter.He said that one should be concerned about the state of GuySuCo’s coffers given that the Finance Minister, Winston Jordan, disclosed that the Consolidated Fund is in overdraft by some $60B.He defined the Consolidated Fund to be a reflection of the total sum of money that is collected or received by the Government of Guyana. The official account is kept at the Bank of Guyana. The government uses the money to meet expenditures on the goods and services that it provides to the public.The financial commentator said that while the Consolidated Fund is the most important account of the government, GuySuCo is its most important enterprise especially when one considers that it employs about 16,000 persons and contributes about four per cent to domestic output.“Given what we heard about the $16 billion debt of GuySuCo,Aaron Lynch Jersey, the Consolidated Fund has probably seen no money from this entity in a long time. Instead, GuySuCo has been a perennial drag on the hard-earned money of the taxpaying public,” Lucas opined.He said that in the case of GuySuCo, the impact of this type of behaviour on the taxpayers of Guyana is hard.“In the first instance, the taxpayers gave annual subsidies to GuySuCo…What GuySuCo consciously did was transfer about three times the amount of the subsidies to consumers overseas. When Guyanese take account of the money that they get from the European Union (EU), GuySuCo still ends up transferring twice as much taxpayers’ money overseas.”Under these conditions, Lucas opined that GuySuCo is doing absolutely nothing for Guyana, since it is also taking a portion of its foreign earnings to pay the subsidies of foreign consumers.He said that without a restructured GuySuCo, it is impossible to see how the new government could reduce Value Added Tax and pay higher wages to public servants, both of which have the potential to help the economy grow faster and stronger.He said,Discount NFL Jerseys, too, that the new administration also has to take a pragmatic position on the sugar industry.Lucas said that the malpractice of holding the majority of the population to ransom needs to be discontinued. He reminded that the contribution of sugar to the economy has fallen significantly. He said that gold, other agricultural crops and rice have all surpassed sugar in importance to the Guyana economy. At the same time, gold, rice and bauxite bring in far more foreign exchange than sugar.“The sugar industry must undergo radical change if this country is to move forward, since GuySuCo can hardly qualify as a “going concern”. The taxpayers did their part on May 11 and it is now up to the government to do the rest,” he concluded. |
