Guyanese concerns over basis for loss of SPAM funding
01 July 2009
Press articles suggest that the government of Guyana has certain concerns over the basis for the withdrawal of €6 million in budget support under the sugar protocol accompanying measures (SPAM) programmes. According to the EC representative, the loss of funding resulted from the late delivery of the Guyana Sugar Corporation’s (GuySuCo’s) business plan (a delay of six months in formal submission). However representatives of the government of Guyana have expressed the hope that ‘the difficulties currently being experienced in securing delivery of promised budget support is not somehow connected to the critique of the EPA’. The government representative expressed understanding that the late achievement of specified results would lead to a delay in the payment of budget support, but did not accept that late achievement of a result should result in a definitive loss of funding. The government of Guyana is particularly concerned that funds were lost despite informal communication to the EC of the completion of the plan approval process by the board of GuySuCo before the deadline. The delay in the official communication of the business plan to the EC was a product of a cabinet review of the plan in the light of a broader expenditure review under way in response to the global financial and economic crisis.
In a related development, the EC head of delegation, Geert Heikens, is reported as stating, ‘I don’t think that additional aid is possible, but the (European) Commission is certainly looking at mechanisms to see how we can quickly disburse’ funds from existing programmes. This announcement came on the back of requests from ACP ministers for additional financial resources under the SPAM programme in the light of the impact of the global financial and economic crisis and an accelerating of disbursement of already committed funds.
Editorial comment
In the short term, a number of ACP sugar associations are facing financing difficulties as a direct consequence of the structuring of the EU reform process. With the final 19.3% reduction in the EU sugar price scheduled for October 1st 2009, EU importers of ACP sugar have simply halted imports until the price reduction takes effect. This is creating significant cash-flow problems for a number of ACP sugar associations, which are struggling to maintain normal cash flows to the farming sector. In this context it should be noted that on June 18th 2009 the EC announced that member states would be allowed to make direct aid payments to farmers from October 16th instead of December 1st, ‘to help farmers, notably milk producers, who face cash flow problems because of low prices’. Given that the cash-flow problems currently faced by ACP sugar exporters are a direct consequence of the EU reform process and are occurring in the context of a global financial and economic crisis, some level of short-term EU assistance to the financing needs of ACP sugar associations would appear to be appropriate. This raises the issue of what kind of assistance should be given to ACP sugar exporters in order to address these cash-flow problems.
