–major focus on infrastructure, tax reductions, welfare of Guyanese

VICE-President Dr. Bharrat Jagdeo has said that Budget 2022 will be financed partly by Guyana’s oil revenues.

This will be Guyana’s first withdrawal from the Natural Resource Fund (NRF) since Guyana started collecting oil revenues in early 2020.

In a virtual interview with the National Communications Network (NCN), Dr. Jagdeo said the oil revenues will reduce Guyana’s reliance on borrowing.

“The fiscal deficit this year in this budget would be lower than the fiscal deficit in last year’s, because, from a financing perspective, that means we’d have to borrow less, because some of the oil-and-gas revenue will go to replace the high level of borrowing that we have had,” Dr. Jagdeo said.

He reminded that Guyana is spending more now on big capital projects, and as they come on stream, the fiscal deficit may widen. However, because oil revenues will help to address the deficit, financing needs will be reduced.

As some have criticised the government’s decision to make early withdrawals from the Fund, the government has emphasised that it is better to use Guyana’s own resources, instead of continuing to build up debt, unsustainably.

A significant part of the borrowing, Dr. Jagdeo said, started with the previous government; “$90 billion a year was coming from the domestic market!”
As this will not happen to such a degree, Dr. Jagdeo said that more funds will be left in the domestic market for private sector lending.

Fortunately for locals, the government expects this to have a favourable effect on interest rates. He said banks will have to be a bit more aggressive in seeking out people to lend to, because they do not have so much ease of lending to the government.

This, the Vice-President said, is part of the government’s strategy to deliver an element of sustainability in finances.
More positive impacts are to be expected from the use of Guyana’s oil revenues, as government has said it will spend from the Fund to make people’s lives easier.

Currently, US$607 million sits in the Fund. While the withdrawal rule restricts withdrawals from the Fund to deposits made in the previous fiscal year, the first schedule of the Natural Resource Fund Act 2021 allows for an exception in the first year, giving the government the latitude to withdraw the total balance in the Fund at once.

The Ministry of Finance has said that such a withdrawal is pertinent to addressing Guyana’s pressing development needs.
Budget 2022 will be read on Wednesday, January 26.

Infrastructure, tax reductions, and the overall welfare of Guyanese will take a huge portion of Budget 2022.

MANIFESTO COMMITMENTS
The Vice-President said the framework of the budget mirrors the commitment made in the PPP/C’s Manifesto to provide a better life for all Guyanese.
In the area of infrastructure, Dr. Jagdeo said the budget will focus on the future growth of the country.

“New highways, roads, investing in power grids, in ICT; the same things that make our businesses more competitive, so we can generate more jobs and more diverse jobs in agriculture, in ICT and other areas, not just oil and gas,” Dr. Jagdeo said.

The national fiscal plan, he said, will also focus heavily on creating a business-friendly environment, and ensuring there is job creation for all of Guyana’s peoples.
He said the recently passed Local Content Law will be enforced, so that Guyanese will be able to benefit from jobs.

This, he said, will be done by way of “tax reductions, making the business process easier for people and, of course, implementing the Local Content Law, which will bring big benefits to Guyanese.
He added: “You see some countries now trying to muscle in on our opportunities; we are not going to allow that to happen.”

Major focus will also be placed on welfare enhancing areas, including education and healthcare. In addition, government will be working with Guyanese to find ways of alleviating the rising cost of living.
“On cost of living, we will have to work with communities during the course of the year to see how we can mitigate some of it,” the Vice-President stated.

He said those are some of the factors that influenced the crafting of the budget, which will be more detailed when it is presented to the country.
The national budget will be presented by Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh. (DPI)