Instructions for public service pay hike issued - will cost additional $1.3B, govt to borrow By Gitanjali Singh Stabroek News October 9, 1999 The circular instructing payment of the 31.06% pay increase for public servants this year in keeping with the Armstrong Tribunal award was to leave the finance ministry yesterday, but it is not clear whether payment would be possible by October 15. President Bharrat Jagdeo said yesterday that he could not say whether the deadline would be met as the government had to go to the National Assembly with supplementary provisions before the pay out was effected. This, he said, would be done as soon as Parliament came out of its recess. Parliament is in recess until Sunday and as of yesterday, Clerk of the National Assembly, Frank Narain, said, he had not received any notification of a sitting for next week. The award for 1999 for public servants will cost the government an additional $1.3 billion, Mr Jagdeo told reporters at a media briefing at the Office of the President yesterday. This would be met by borrowing among other measures and will aggravate the 1999 budget deficit. "We do not propose to increase taxes to make the pay out [and] we will not cut any of our [existing budget] programmes," the President stated. He said the money will have to come from a higher budget deficit and higher borrowing. Mr Jagdeo, who is just back from his first visit overseas where he also had discussions with the International Monetary Fund (IMF) and World Bank on the implications of the pay out on the fund programme, reported that the agencies' position on the issue was "favourable". He indicated that it had been his administration's concern that it would have to breach the Enhanced Structural Adjustment Facility (ESAF) agreement with the IMF/World Bank as a result of its commitment to pay the arbitration award. This, he said, could have had some "devastating consequences" for Guyana as it would have meant a delay in debt relief, a cut back in balance of payment support and grants from multilateral and bilateral sources. He pointed out that more than 50% of the budget's resources came from these flows. "If we had a break [in that programme], it would have meant tremendous dislocation... but we had a favourable outcome," said the President. During his visit to Washington, Mr Jagdeo lobbied support from various executive directors of the World Bank and IMF including those representing Canada, the UK, Japan, Italy and the Netherlands. He also met IMF Chief, Michael Camdessus. The President said the directors have affirmed their support for Guyana's second year programme under the ESAF and Camdessus instructed that an early IMF mission visit Guyana to proceed with the programme. Mr Jagdeo said he was quite pleased with the outcome which would allow for continuity of Guyana's relations with the multilateral agencies. The arbitration award provides for a 31.06% increase for public servants on their December 31, 1998 salary as well as a 26.67% increase for 2000 based on their salary at the end of this year. The government had 45 days to honour the award and Mr Jagdeo gave a commitment to so do on September 3. The deadline expires on Friday. The tribunal was set up as one of the measures to end the 55-day public service strike earlier this year. A © page from: Guyana: Land of Six Peoples