Month: August 2018

30 Aug
By: Tanika Jones 0

GMSA engages GRA on VAT and other key issues affecting manufacturers

A team from the Guyana Manufacturing and Service Association (GMSA) led by it’s President Shyam Nokta and including Board Member Ramesh Dookhoo and Chair of the Forestry and Wood Processing Sub-Sector Rafeek Khan met with Commissioner General Godfrey Statia and his GRA team on Thursday, August 16 to discuss several key issues affecting the manufacturing sector.

The meeting was convened as a follow up to the GMSA registering concerns to Minister of Finance Winston Jordan in June 2018 regarding the impact of the Amendment to the VAT Act in January 2018 on some sections of the manufacturing sector whereby resulting therefrom, certain businesses involved in exports were unable to reclaim the Value-Added Tax paid on inputs on the goods exported. The GMSA contended that the amendment, contrary to what the Minister had intended and as stated in his budget speech, affected major sectors of the economy, foremost being the forestry and wood processing sector. The GMSA further contented that the VAT on such inputs serves as a dis-incentive to producers who primarily manufacture for export and comes at a time when the forestry and wood processing sector is facing several challenges including the deplorable state of interior roads and when there is strong push for more value adding to target external markets.

The Commissioner General indicated that in keeping with the Minister’s pledge of no new taxes and the fact that the Amendment was intended to improve Administrative efficiency of VAT administration that GRA is exploring ways to address the issue. He also requested that the GMSA explore other avenues and make suggestions with financial analyses rather than making broad statements since the GRA’s analysis using return submissions have revealed a negligent impact on the industry.

Notwithstanding the Commissioner General’s position, the GMSA stands by its position regarding the adverse impact on key economic sectors. The GMSA also took the opportunity to raise other issues pertaining to tax administration including the implementation of the new scanner system and processing times, and put forward for consideration a request for incentives for manufacturers in relation to energy and renewable energy technologies. A list of procedural issues relative to facilitating the smooth flow of businesses was also given to the Commissioner for his attention in the near future.

Also raised was the issue of addressing Excise Duty on Indigenous Wines in keeping with the Government stated policy of incentivizing local manufacturing. The issue of Excise taxes on Shandy was also discussed whereby the current structure is not in line with other Caribbean territories and has therefore disadvantaged Guyana’s producers.

The GMSA remains encouraged by the Commissioner General’s willingness to engage and that the GRA will give active consideration to the issues raised and make recommendations to the Minister of Finance on the way forward.

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20 Aug
10 Aug
By: Tanika Jones 0

Green Paper Summary

Summary of the Green Paper on Managing Future Petroleum Revenues and Establishment of a Fiscal Rule and a Sovereign Wealth Fund laid in Parliament on August 08, 2018, by the Hon. Minister of Finance

*Emphasis on economic stability, savings and spending

*Transparency and accountability issues prioritised  

As part of its commitment to effectively and efficiently manage and account for anticipated petroleum revenues, the Government undertook to create a public financial management tool – a sovereign wealth fund (SWF) and an accompanying fiscal rule – that would allow the country to accelerate its development responsibly. As part of the process towards the establishment of an SWF – referred to as the Natural Resource Fund in Guyana’s case – in an inclusive, transparent and thoughtful manner, the Government has laid a Green Paper in the National Assembly to elicit discussion on the related legislation, which is intended to be laid in the Assembly later this year.  

Extensive advice on the NRF was received from the Commonwealth Secretariat, the International Monetary Fund, the World Bank, and the Inter-American Development Bank, among others. The proposed legislation promises to make Guyana’s SWF one of the most robust funds in the world, able to achieve multiple objectives with a single fund structure while maintaining direct adherenceto nearly all of the Santiago Principles and indirectly achieving the remainder when the Act is operationalised. The three principle objectives of the Fund are: 1) stabilisation 2) inter-generational savings, and 3) domestic investment in keeping with the vision of the national development plan.

The Green Paper outlines many key issues and concerns related to the realisation of natural resource revenue of magnitude, particularly the resource curse with specific focus on Dutch Disease and the presource curse. In addition, historically, oil production is associated with unstable revenue streams due to price volatility which can make government spending erratic. The Natural Resource Fund would address this challenge by employing a well thought out fiscal rule which is to be enshrined in law. As it relates to presource curse, governments can be pressured by voters to embark on risky borrowing on the back of overly optimistic revenue projections – a factor of which the Government is keenly aware.

Once oil related revenues start flowing, increased government and private investment can create excess domestic demand resulting in increased inflation and currency appreciation that leads to a loss of economic competitiveness. The mechanisms set out in the NRF would ensure earnings from petroleum only enter the economy at a rate at which the economy can absorb these additional resources. Additionally the Green Paper stresses that petroleum revenues must not be used to create parallel budgets; rather spending must happen via the National Budget and preferably under the auspices of a national development plan as per good public financial management practice. The Green State Development Strategy, Guyana’s next plan,will serve to outline the developmental vision for Guyana for the next 15-20 years. All government programmes in the future should align with the goals and targets set out in this Strategy. It is important to note that the SWF is not a tool for use for specific investments but, rather, a tool to manage the intake and pace of expending of resource revenues. What these revenues are spent on are to be guided by the priorities to be outlined in the Green State Development Strategy.

Spend Now and Save for Later.

The NRF will ensure stability in economic spending, savings for future generations and the financing of critical development projects All revenues from petroleum will be deposited into the NRF – a US dollar bank account held by the Bank of Guyana from which a withdrawal will be made into the Consolidated Fund to form part of the income streams for the annual National Budget. Withdrawals, which will be based on a fiscal rule, cannot exceed the amount approved by Parliament as part of the annual budget proposal.

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10 Aug
By: Tanika Jones 0

Green Paper – Managing Future Petroleum Revenues and Establishment Of A Fiscal Rule and Sovereign Wealth Fund


  1. This Green Paper is being issued by Government to present preliminary proposals to stimulate discussion. It details specific issues, and then points out possible courses of action in terms of policy and legislation.
  2. This Green Paper on petroleum revenue management and establishment of a fiscal rule and a sovereign wealth fund (SWF) is prepared at the request of His Excellency President David Granger. It is intended to capture key issues for consideration, including the mechanisms to ensure sustainable use of petroleum revenues to achieve a diversified and green economy, with a specific predisposition to avoid mismanagement of the national patrimony (i.e. “natural resource curse”). Cabinet has offered its comments and related amendments, and authorised the laying of the Green Paper in the National Assembly. Feedback will inform the next stage of the process, which is the presentation of the sovereign wealth fund legislation to the National Assembly, before end 2018.
  3. Section I is structured to provide a background relating to petroleum exploration activities in Guyana and the genesis of the SWF, with specific mention of the technical support received from international experts. It then goes on to discuss further key considerations which elaborate the necessity and benefits of establishing a SWF. Special attention is placed on discussing the Dutch Disease, the presource curse and the resource curse as key risks associated with natural resource revenues of this magnitude. Section II will discuss the mechanics of the proposed SWF for Guyana, including the fiscal rule, and will be followed by Section III – concluding remarks – which includes issues for consideration.
Green Paper – Managing Future Petroleum Revenues and Establishment Of A Fiscal Rule and Sovereign Wealth Fund
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08 Aug