PSC praises Budget 2021
See below full statement issued by the PSC:
The Private Sector Commission (PSC) wishes to commend the Senior Minister with responsibility for Finance for presenting the largest national budget in Guyana’s history while keeping it as close to balance as fiscally possible.
The PSC, prior to the budget consultation, would have made written submissions regarding its proposals for the national budget 2021. The PSC is pleased to see that those proposed measures were largely considered and reflected in the national budget for 2021. To this end, the budget is indeed a people-focused budget which is healthy to facilitate broad-based and inclusive growth of the economy in terms of job creation, encouraging private investments and more entrepreneurial activities. Dr. Singh should also be commended that while being pro-business, this budget is also pro-working class and factors in a number of new social programs.
It is noteworthy to mention as well that the PSC is pleased to note that the measures, policies and programmes in budget 2021 are designed to enable the diversification of the economy as well as resuscitating the major productive sectors – such as the agriculture, construction and infrastructure sectors. This is crucial given that the non-oil economy as reported by the Hon. Minister – has contracted by 7% in 2020 on account of the effects of the COVID-19 pandemic and the five months political impasse; and in more so to avoid the ‘Dutch disease’.
Hereunder mentioned are some of the key highlights in budget 2021 that are more than welcome by the PSC.
- Budget 2021 estimates totalled $383.1 billion
- Budget 2021 allocated $6 billion for housing development
- $15.3 billion for the public security sector
- $53.5 billion for the health sector
- $25.6 billion in public infrastructure (roads and bridges)
- $22.6 billion allocated for the agriculture sector
- Zero-rating of Construction and Home Ownership (building materials)
- Reduction of duty on industrial cement from 15% to 5%
- Increase in low-income mortgage ceiling from $10 million to $12 million
- Removal of VAT on data for residential and individual use
- Removal of duty from ATVs for use in hinterland
- Reinstating of the capital gains tax whereby the sale of assets that were owned for more than 25 years will not attract capital gains tax will not attract capital gains on their disposal
- Restoring VAT zero rate on basic food items and household necessities
The PSC is mindful of the construction boom in the making by the Government through its projects outlined in budget 2021 such as the resuscitating of the housing development drive – targeting 10,000 house lot distribution for 2021. To this end, the fiscal incentives outlined above for building and construction materials coupled with the increase in the mortgage ceiling will allow for the housing, construction, and banking sectors to experience significant expansion in their activities for 2021.
These will also facilitate the massive infrastructure development in other areas other than housing such as hotel projects, new roads and bridges, shore base facilities, public infrastructure, and private sector infrastructure.
Reverting basic food items back to the pre- 2015 zero-rated status such as on flour, bread, biscuits, cooking oil etc., the reduction of water tariffs to 5%; reducing the cost of construction and homeownership to achieving the 10,000 house lots target. These in turn will lead to lowering the cost of living for the people especially the working class so that they can enjoy a better standard of living and live more comfortably.
The increase of the mortgage ceiling and the mortgage increase relief, for example, will ensure more affordable homeownership by the ordinary Guyanese. In addition, the application of Zero-rate on imported stone; locally produced concrete piles and steel beams; locally manufactured PVC roofing; the reduction on industrial-grade cement from 15% to 5%; these measures will also contribute to making homeownership more affordable for the ordinary working-class Guyanese while the housing and construction boom at the same time – will create the opportunity for an increase in employment levels – owing to increase demand in the supply chain.
Reducing the cost of connectivity by removing VAT on data from residential and individual use is an example of another measure that will contribute to lower cost of living and in turn, altogether put more disposable income in the hands of Guyanese.
The $25 billion allocation for transformational infrastructure development will lead to the opening up of lands and coupled with the new road works across all the regions is another important element of the budget to be highlighted.
The accessibility and availability of new lands for commercial, industrial, housing development and agricultural purposes will be the driver of economic growth and development on a larger scale. This means opportunity for large scale investment by the manufacturing sector – both local and foreign investors as well the emergence of new business ventures.
In this regard, local and foreign direct investments are needed to build out the country and this will provide more job opportunities for our people.
The projected growth rate for 2021 is 20.9 % while the wider Caribbean is likely to experience a decline in GDP. This is important to be put in perspective whereby Guyana is on the path of major transformational development and therefore, our young people to see a bright future ahead.
There is something for everyone in the budget. The measures outlined will ultimately provide more disposable income and provide more relief to the poor and vulnerable. The government’s focus is to use the gas to shore project to light up our country at a reduced cost of energy by more than 60% is most welcoming for all Guyanese.
Taken together, budget 2021 contains sufficient fiscal measures and public investment programmes that will encourage the growth and expansion of the private sector thus creating more job opportunities for Guyanese, lowering the cost of living, homeownership becoming more affordable and more disposable income in the hands of Guyanese working class.