By Neil Marks
Guyana’s national budget has surpassed a trillion dollars for the first time, buoyed by oil sales from ramped up production offshore, and the country’s president says the measures announced Monday are intended to ease the cost of living, add more money to the pockets of ordinary workers, and lead the country to prosperity.
“Together, we are building a stronger, more prosperous, unified country for all of our people. This is the mission; no one will stop us in making your life better,” Dr Irfaan Ali said from his presidential home in Georgetown.
The budget, totaling $1.146 trillion with no new taxes, was presented by Finance Minister Dr Ashni Singh in the National Assembly. It’s 46% more than last year’s budget.
“This is the Guyana we are building, one in which basic needs are met for all, one where opportunities abound for wealth creation by all, and one where we are fully integrated into the global economic system in a manner that allows Guyanese nationals and Guyana businesses to participate in and benefit from the economic opportunities that are emergent in this new era of Guyanese prosperity,” Dr Singh said in presenting the budget.
It’s the fifth budget the PPP/C government has presented since it regained power in 2020. Dr. Singh stood for more than five hours, reading his 108-page speech, never taking a break – except to throw jabs at the opposition and take sips of water.
Among the measures he announced were these:
- Anyone working $100,000 or less will pay no income tax
- The student loans of UG graduates will be wiped out
- Every child in public or private school will now get $45,000
- Stable fuel prices will remain with zero tax on importation
- Shipping charges will remain below pre-pandemic levels
- More than 20,000 citizens will take home $40,000 from a part-time work programme
- Increasing the Old Age pension to $36,000 and increasing the minimum NIS pension to $45,075
The PPP/C government continues spending the way it has done over the years, saying this is focused on bridging any inequality gaps.
Public infrastructure received the largest allocation – $204 billion. A good chunk of it is focused on building roads in communities across the country and continuing massive bridge and road projects, include starting the bridge across the Corentyne River, possibly finishing the four-lane high-span bridge across the Demerara River.
The other big spending will be in these sectors:
- Education $135.2 billion
- Health $129.8
- Agriculture $97.6 billion
- Security $90.6 billion
- Housing $78 billion
- Social Services $48.3B
The budget is funded in large part by the petroleum sector. With three production platforms now in operation, there could be 202 lifts of crude oil this year. Guyana’s share of the bounty, along with royalty payments could mean over US$2.3 billion – that’s more than the total budget of the country in 2020.
From last year’s sales, $240 billion can be withdrawn from the oil fund this year and placed in the Consolidated Fund, the account in which the government deposits taxes and revenues, and can then use it to meet expenses catered for in the budget.
Realising the funding needs for the development agenda and the social services it is pushing would require a “flexible approach to financing”, the government has already made out a case for how it can access finance.
Dr Singh announced that the government plans to increase the domestic and external debt ceilings.
He said this “will provide the flexibility needed to optimise on the financing mix while at the same time safeguarding our debt sustainability.”
In addition, the government wants to revise the rules for withdrawing from the oil fund so that it can take out more than it had originally planned for when the Natural Resource Fund (NRF) law was passed.
The NRF law determines how the country’s petroleum revenues will be spent – this includes monies earned from oil sales, royalties and any signing bonuses.
The law stipulates that in any given year, US$500 million can be withdrawn. If the government wants to take out more, it can do so by taking out 75% from the second five hundred million, 50% on the third five hundred million, 25% on the fourth five hundred million, 5% on the fifth five hundred million and then 3% of any amounts in excess of US$2.5 billion.
The Finance Minister announced that the government wants to see “an upward revision to the NRF withdrawal amount” to take effect from this fiscal year.
“The revised withdrawal rule will retain the important feature that, as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance national development priorities,” Dr Singh stated.
After the budget presentation, the President immediately brushed aside any potential criticisms of the budget, saying any detractors are “those who can see no good” and “those don’t have the conscience to acknowledge what the government is doing.”
