Even though Guyana is earning significant oil revenue, careful choices must still be made about how that money is spent, Finance Minister Dr Ashni Singh said Friday as he prepares to deliver the country’s 2023 national budget.
“I would be measured in how I would characterise (oil revenues) when I consider the magnitude of the development needs that are before us,” Dr Singh said in an interview with the News Room, adding that there must be “careful tradeoffs” and “very carefully considered fiscal choices.”
Last year alone, Guyana earned $1.1 billion from its share of oil; that’s double the amount from 2021.
Most of the money earned last year will go into the 2023 National Budget which Dr Singh will unveil on Monday. According to the law, US$500 million can be withdrawn from the country’s oil fund in any given year and then a reducing percentage of what remains, starting with 75% from the second five hundred million, can be withdrawn.
But despite this significant increase in the national budget, Dr Singh said there is still need to temper enthusiasm that there is enough to address all critical needs.
“We are at the early stages of oil production, and if you look at the trajectory of what our oil production will look like over the years and what our oil revenues will look like over the years, we are still at the early stages and our oil revenue is – and by oil revenue I am speaking about the inflows into the budget- while significant, are certainly far from what is really needed if we were to address all of the development priorities and imperatives of our time,” Dr Singh stated.
Dr Singh cited two examples to show why Guyanese should be cautious in thinking that the oil revenues thus far mean a windfall for the country and can already address the country’s development needs.
He cited the construction of the US$260 million Demerara Harbour Bridge and the construction of the US$759 million the power plant and natural gas facility. Were the government to apply the oil revenue to these two projects alone, it would leave little for anything else, Dr Singh reasoned.
“So the reality is that we are still very much living in a time where careful choices have to be made both from the policy standpoint and also from the standpoint of the fiscal choices that we make,” Dr Singh stated.
As s result, he said there is need for striking the “right” and “optimum” balance in spending on things that are needed immediately to bring relief to people but at the same time “investing in the things that are needed to secure a bright and prosperous future for their children and their grandchildren and generations that are yet to come.”