Taking a closer look at Central Government revenues
Buoyed by the rebound of economic growth in the latter half of 2015, Central Government noted increased transfers from statutory and non-statutory agencies. They also embarked on the closure of several dormant government bank accounts which put the total revenue collected for 2015 at $161.7 billion. This is 11 percent more than what was collected by the previous Government in 2014.
According to Finance Minister, Winston Jordan, tax revenue amounted to $142.9 billion, an increase of 5.2 percent, which was driven primarily by increased collections of personal income taxes (11.1 percent), company income taxes (4.7 percent) and property taxes (33.6 percent).
He said that low compliance by self employed individuals continued to be the main factor why this category lags behind other areas of income tax collection.
The Finance Minister noted that Excise tax collections improved to $33.3 billion, an 18.1 percent increase. Similarly, international and trade transactions increased by $170 million, to reach $14 billion.
He said that Value Added Tax collections of $35.4 billion represented a 5.2 percent decline. One reason for this was the increase in the number of zero-rated items introduced in last year’s budget.
Notwithstanding the increased revenue, in 2015, Jordan expressed that the Guyana Revenue Authority remitted an estimated $47.1 billion. While this figure is substantially lower than the $55.6 billion remitted in 2014, he said that strenuous effort will be exerted in 2016 to monitor concessions that are granted.
As for total non-tax revenues, the Finance Minister reported that this doubled in 2015, as the Government began the phased transfer of the excess cash balances of statutory agencies to the Consolidated Fund. He said that a total of $7.9 billion was transferred from several agencies, including the Guyana Geology and Mines Commission (GGMC) and the National Frequency Management Unit (NFMU). In addition, $1 billion was transferred from the Lotto Fund.
He also revealed that total expenditure of the Central Government was severely curtailed, in 2015. In this regard, he said that non-interest current expenditure amounted to $141.2 billion, compared to $127.5 billion in 2014.
Jordan also said that increases in expenditure were recorded in the following categories: personal emoluments, 5.6 percent; other goods and services, 7.7 percent; and transfer payments, 18.3 percent. However, there was a sharp reduction in capital expenditure, from $51 billion, in 2014, to $30.7 billion, in 2015. These developments he said resulted in the overall deficit of the central government improving to 1.4 percent of GDP, in 2015, compared to 5.5 percent of GDP in 2014.
The Finance Minister also noted that the combined operations of the public enterprises resulted in a surplus of $8.1 billion, compared to a deficit of $1.5 billion, in 2014.
With regard to debt management, the Finance Minister expressed that the Government continues to prudently manage the country’s public debt, in order to reduce the debt burden.
He said, “I am happy to report that this has resulted in the total public debt to GDP ratio reducing from 51.9 percent, in 2014, to 48.6 percent, in 2015. By the end of 2015, the total stock of public debt stood at US$1.5 billion, a reduction of 3.6 percent from its 2014 level.”
The Finance Minister stated that a key component of public debt is the stock of external debt, which reduced by 6 percent, to US$1.1 billion, at the end of 2015. He said that this was due largely to repayments of the oil debt under the Guyana-Venezuela Rice Trade Arrangement.
In 2015, Jordan expressed that Guyana concluded negotiations for two Debt Compensation Agreements with Venezuela, which reduced the oil debt by a further US$88.7 million. He said that in September 2015, one debt compensation agreement was signed for the amount of US$44.9 million. Jordan said, too, that the total external debt service payments also fell by 41 percent to US$98.4 million, in 2015.
On the other hand, there was an increase of 4.2 percent in the domestic debt stock, from US$379.8 million, in 2014, to US$395.6 million. The Finance Minister said that this increase was primarily due to higher issuance of Treasury Bills.
The Finance Minister asserted that the actual domestic debt service payment totaled US$8.5 million, an increase by 10.9 percent compared.
Jordan also said, “The non-financial public sector performed creditably in 2015, recording a deficit of $1.2 billion (0.2 percent of GDP) compared to a deficit of $36.4 billion (5.7 percent of GDP) in 2014. This outturn would have been worthy of commendation, had it occurred under normal circumstances.”
He added, “But this was not the case, in 2015. The factors which contributed to this improved performance included the late presentation of the 2015 budget, the general compression of expenditure in the first eight months of the year and the low rate of implementation of the public investment programme.”
With regard to interest rates, the economist said that this remained low, in 2015. He said that the small savings rate was flat at 1.26 percent throughout the year, while the weighted average lending rate fell slightly, from 10.86 percent in December 2014 to 10.63 percent in December 2015.
He said also that Treasury bill rates edged up over the year, with the discount rate on 91-day Treasury bills rising from 1.67 percent in December 2014 to 1.92 percent in December 2015.
With the projection for global interest rates to rise in the next couple of years, Jordan said that upward pressure would be exerted on domestic interest rates.