Georgetown, GY – Berbicians are already suffering from the closure of two sugar factories that resulted in thousands of layoffs, draconian increases in government fees, licenses and permits in 2016, adding VAT to some basic food items and other necessities, and slashing funding for the agriculture sector yearly since 2016. They are in for more pain and economic hardship that would likely drain the remaining economic lifeblood of their economy. The County is bracing for a severe dose of economic tranquilizer from the Berbice Bridge Company Incorporated (BCCI) unless the government takes corrective actions.
On October 16, 2018, BCCI announced across-the-board increases in tolls of about 300 percent that would become effective from November 12, 2018. The new tolls for cars and minibusses – the most common forms of passenger travel – will each be $8,040, up from the current tolls of $2,200. For small and medium-size trucks, the new tolls will be $14,600 and $27,720 up from $4,000 and $7,600 respectively. Likewise, for large trucks, the new toll will be $49,600 up from $13,600. These increases are draconian, to put it mildly.
|New Tolls||Current Tolls||Toll Change|
|Source: Berbice Bridge Company|
The tolls increase would have devastating impacts on families, businesses, the County’s economy, and the national economy. The Berbice River bridge is the most important piece of infrastructure that connects Region 6 to the country’s commercial core and is vital to the domestic supply chain. It enables intra-region trade in goods and services, tourism, and access to tertiary health care for more than 100,000 people. Three of the six municipalities which account for roughly 25-45 percent of all commercial activities in the country are in Region 6. Thus, a collapse of household livelihood and commerce in this Region puts the entire national economy at risk of a similar outcome.
Region 6 produces large volumes of sugar, rice, forestry products, and cash crops destined for other local and export markets that are transported across the bridge. Increased tolls would increase the cost of doing businesses in the Region and make its businesses, farmers, and workers less competitive. The expected fallout in demand for goods and services on both sides of the river and the associated job losses are likely to be significant and further damaging the Region’s economy.
Consumer prices on both sides of the bridge are also likely to increase markedly. The shortage of supplies from Region 6 would increase prices in major markets within and outside the County. Likewise, increased transportation costs to supply goods and services to the Region would be passed on the consumers in the form of higher prices. This is not good for Berbice or Guyana’s economy. The government’s decision to close two sugar factories is already chocking the County’s economy. Large, small, and micro businesses alike have complained about the harmful effects the factories closure is having on business activities, consumer confidence, and household spending.
The transportation service sector will also be hit hard. The cost of passenger fares will likely increase comparably as service providers pass on the increased costs to passengers. This would have an immediate impact on school children and workers with daily commute across the bridge. It would also make it impossible for individuals seeking urgent medical attention to access the care they need. Guyana has one of the highest maternal and child death rates in the Caribbean, partly the results of transportation challenges to accessing care. Poor and low-income families will have to make impossible choices like choosing whether to send their children to school, pay for food, or visiting the hospital for life-saving healthcare.
According to the Minister of Public Infrastructure, the government would not approve any increase in tolls. However, unlike GUYSUCO, in which the government was able to make unilateral decisions about its closure, BCCI is a public-private partnership company with public entities owning a minority stake in the company. Thus, it is unlikely that the government’s disapproval would be enough to prevent the new tolls from taking effect. Assuming the adopted tolls hike are financially justified, the absence of an agreement between the government and the company to prevent any tolls increase would be disastrous. The National Insurance Scheme (NIS) the country biggest health insurance provider is the single largest investor in the company. Locals banks have also invested heavily in the company. If the company is unable to meet its financial obligations or worse defaults on them, the impact would be systemic and far-reaching.
With budget 2019 around the corner, lawmakers have a real opportunity to negotiate a better way forward with the company to prevent more families from falling into poverty, and jobs losses, and the further economic collapse of the Region and national economies. They have the fiscal tools and resources necessary to resolve the issue and create a stable and predictable economic future for families and businesses. A reorientation of spending in the national budget from unproductive spending and the elimination of waste, inefficiencies, and duplications would free up enough resources to invest in the company and keep the cost of tolls affordable. It is also a perfect opportunity to earmark a portion of future oil revenues for sustainable transportation and public infrastructure development.
* Dhanraj Singh is the Founder and Executive Director of the Guyana Budget & Policy Institute.
Singh, Dhanraj (2018). More Pain and Economic Hardship Ahead for Berbicians Unless the Government Acts. Policy Blog. October 2018. Guyana Budget Policy Institute.