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Guyana demonstrates admirable financial performance for over a decade

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by Correspondent

 

 

A country’s fiscal makeup is no simple matrix. It’s an intricate embodiment of government expenditures, taxation, and debt. It must all stay firmly together with strong fiscal policies least it be destroyed by global economic conditions, among other factors.

 

 

 

The fiscal position of the country, as one would imagine, is of immense importance. It determines Government’s next political and social move.

 

 

 

In essence it’s the position of the country’s spending and borrowing power and it can determine whether the prices on the market skyrocket or plummet to the ground; whether the public servants will receive a sizeable increase or if the country will advance in its overall infrastructural portfolio over the next five years.

 

 

 

Of course there is always room for improvement but looking back some 10 years ago, one would observe that Guyana’s fiscal position has demonstrated unbelievable development all possible through the state’s prudent fiscal management abilities.

 

 

 

Statistics show that Guyana’s fiscal performance in the non-financial public sector improved in 2009, with an overall deficit of $13.5 billion or 5.3 percent of gross domestic product. This was a significant reduction from the 7.6 percent in 2008.

 

 

 

Revenues in 2009 amounted to $94.9 billion, an increase of 15 percent over 2008, as a result of improved performance of both the tax and non-tax revenue categories.

 

 

 

 

The Guyana Revenue Authority (GRA), which is also accounts for government’s spending power, contributed $89.1 billion, in 2009, representing a 93.9 percent of total revenue.

 

 

 

Government was pleased with the fact that internal revenue collections increased by 6.3 percent to $36.7 billion, underlying which was a 24 percent increase in income tax payments by self-employed person and a 19.9 percent increase in corporation tax payments by public sector companies.

 

 

 

In 2009, Corporation tax payments by private sector companies and income tax under the pay-as-you-earn system increased more moderately at 5 and 4.3 percent, respectively. Taxes on customs and trade grew by 2.8 percent to $7.7 billion, attributed primarily to increased levels of imports of consumption goods.

 

 

 

 

Excise taxes amounted to $21.4 billion, while excise taxes on motor vehicles increased by 25.4 percent to $7.3 billion reflecting higher levels of vehicle importation, returns from the computerization of the motor vehicle registration process, and increased surveillance activities. Additionally, as a result of the restoration of the excise tax on fuel and notwithstanding its subsequent lowering, additional revenues of $6.5 billion were collected.

 

 

 

This commendable performance was also notable in the following year as the fiscal deficit of the non-financial public sector was contained to $18.2 billion or 4 percent of the Gross Domestic Product notwithstanding scaled up investment in physical and social infrastructure. This was reflective of Government’s continued prudent management of the public finances.

 

 

 

 

Central Government revenue in 2010 amounted to $108 billion, 13.8 percent over 2009, as a result of enhanced collections across both tax and non-tax revenue categories. Tax revenue increased by 13.3 percent and accounted for 93.6 percent or $100.9 billion of total current revenue collections, while non-tax revenue collections increased by 19.1 percent to $6.9 billion.

 

 

 

Internal revenue collections amounted to $43.3 billion or 18 percent more than the 2009 level. This was largely on account of continued robust performance by the private sector, with corporation tax and income tax from the self employed increasing by 21.5 percent and 16.9 percent respectively to $17 billion and $2.4 billion on account of higher reported profits.

 

 

 

 

Income tax generated from the pay-as-you-earn (PAYE) system surpassed 2009 collections by 15.8 percent as all sectors of employers remitted higher levels of PAYE and as the number of employers remitting taxes also increased.

 

 

 

 

Withholding taxes increased by 16.5 percent or $470.6 million due to increased collections from gold miners. Customs and trade taxes amounted to $9.2 billion representing a 20.1 percent increase over 2009 mainly due to a 21.5 percent increase in import duties bringing collections to $8.3 billion, driven by all categories of imports.

 

 

 

 

Total value added tax (VAT) and excise tax collections increased somewhat more moderately by 8.2 percent to $48.3 billion, with increases recorded on import and domestic supply VAT along with excise tax on motor vehicles, while excise tax on fuel products declined due to the lower tax rates applied.

 

 

 

Total Central Government expenditure for 2010 amounted to $133.1 billion or 4.5 percent above 2009, with the 2010 expenditure reflecting an increase of 7.4 percent and totaling $86.4 billion mainly as a result of a 6.3 percent increase in non-interest expenditure.

 

 

 

 

Though Guyana held its General and Regional elections in 2011, the fiscal position of the country was not daunted but rather, had similar success for the next three years which followed.

 

 

 

 

Under a new government, the A Partnership for National Unity plus Alliance For Change (APNU+AFC), Guyana’s fiscal position was declared ready for multiplied advancements.

 

 

 

With regard to Guyana’s fiscal position for 2015, Minister of Finance, the Honourable, Winston Jordan said that Central Government’s current revenue has improved as net of inflows from Guyana REDD+ Investment Fund (GRIF), totaled $144.7 billion, which was 6.7 percent above the 2013 level.

 

 

 

He said that tax revenue collections amounted to $135.9 billion, representing 93.9 percent of total revenue. Internal revenue increased by $5.1 billion or 9.8 percent. Jordan asserted that this was primarily attributed to increased collections from private sector companies and a $2.7 billion increase in personal income tax from the Pay As you Earn (PAYE) category.

 

 

 

On the other hand, the Finance Minister said that there was a decrease of $581.6 million from withholding tax collections associated with the contraction in the gold mining sector. He noted however that this is not worrying as the gold prices seem to be improving for the later part of this year.

 

 

 

Meanwhile, Customs and trade tax collections totaled $13.5 billion, an improvement of 2.1 percent.

 

 

 

Jordan said that Value Added Tax collections rose by 9 percent, to $37.5 billion, largely on account of better administration that resulted in arrears of $2.7 billion being recouped. Excise tax collections increased by 3.5 percent to $28.2 billion.

 

 

 

 

He noted that total non-interest current expenditure amounted $127.5 billion, 10 percent more than in 2013, reflecting primarily increased expenditure on personal emoluments and other goods and services.

 

 

 

 

Also of significance is the fact that transfer payments increased by 12.9 percent while capital expenditure amounted to $51 billion, an increase of 1.7 percent; all of which are testimony to the fact that Guyana’s fiscal position has seen nothing but incredible growth.

 

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