THE presentation of the 2012 National Budget sets the developmental course for which the country must travel, thereby ensuring the entire population enjoys the fruits of its achievements. Minister of Finance, Dr. Ashni Singh, presented the $192.8B 2012 Budget to the National Assembly under the theme “Remaining on Course: United in Purpose – Prosperity for All”.
This year’s budget is Guyana’s largest ever, and it is fully financed without the introduction of any new taxes.
The economy is projected to extend its six-year period of uninterrupted growth into a seventh year in 2012, with overall growth projected at 4.1 per cent. The non-sugar economy is projected to grow by 4.0 percent.

Agriculture
Dr. Singh pointed out that, at the start of 2012, the sugar industry set itself a target of 265,000 tonnes. Given developments since then, including industrial relations issues which now appear to have normalised, sugar production is currently projected at 250,000 tonnes, 5.7 per cent above the 2011 level.
“Government reaffirms its commitment to the sector, and management remains committed to fostering good industrial relations with its workers. This target is indicative of management’s commitment to achievement of the plans set out in the turnaround plan, which is premised on the expansion in acreage under cultivation, advancement in mechanisation, and the operation of Skeldon Factory at its optimum,” he said.
Meanwhile, since 2008, the rice industry has recorded higher output levels in every consecutive year; and coming off the bumper harvest of 401,904 in 2011, the industry is now projected to expand further to 412,425 tonnes, a 2.6 per cent increase in value added to the industry.
Minister Singh emphasised that this record output target places the industry in a favourable position to exploit new and emerging markets, as the industry continues to reap the benefits of investments made in research and extension services, and is aided by improvements in drainage and irrigation infrastructure.
Like the rice and sugar industries, livestock is expected to grow by a further 4.9 per cent.
“The continued expansion in these two sub-sectors positions Guyana to take advantage of regional market opportunities while ensuring domestic food security,” Minister Singh noted.
He indicated that the forestry sector is projected to decline by 8.2 per cent reflecting the implementation of programmes to improve stakeholders’ capacity in areas of forest policy and sustainable forestry management; while the fishing sector is expected to return growth of 5 per cent, supported by Government initiatives to combat piracy.

Industry
The mining and quarrying sector is expected to return 1.8 percent growth. Minister Singh explained that the bauxite industry is expected to decline slightly by 0.2 per cent to a production level of 1,716,261 tonnes, due to expectations of some contraction in overseas markets, especially for higher value grades of bauxite.
He stressed that now that gold production has recorded a double-digit expansion to more than 350,000 ounces in 2011, a more moderate growth of 2.9 per cent is projected in 2012, even as price incentives continue to lure greater investment in the sector. Additionally, diamond declarations are projected to contract by 5 per cent.
The minister noted that the manufacturing sector is projected to expand by 3.9 per cent in 2012, mainly attributed to expansion in production of rice and sugar, and consequent increases in related processing activities, coupled with some growth in light manufacturing.

Services
The minister acknowledged that the outturn in 2011 substantiated the greater role the service sector plays in contributing to the economy’s total output, as compared to agricultural and industrial activities. As such, it is expected to continue being a leading driver of growth.
The information and communication sector is expected to post a 3 per cent growth, while the construction industry is targeted to grow by 6.3 per cent, a recovery from the moderate growth in 2011.
Meanwhile, the wholesale and retail sector is projected to grow by 6.5 per cent, while the transport industry is targeted to grow by 9.5 per cent. Likewise, financial services, rental of dwellings, and other services are targeted to grow by 8 per cent, 2 per cent, and 0.5 per cent respectively.

Monetary policy and inflation
Minister Singh stated that monetary policy will continue to be geared towards expansion of private sector credit, while maintaining a stable exchange rate and low inflation.
He disclosed that the inflation rate is targeted at 4.6 percent in 2012, primarily as a result of increases in global oil prices due to continued tensions in key oil producing areas, and notwithstanding government’s commitment to intervene as necessary to mute the effects of ‘full pass through’ of global oil price movements to the domestic market.

Balance of Payments
The overall balance of payments is projected to record an overall surplus of US$136.3M, compared to a deficit of US$15M in 2011.
“This outturn is on account of a lower current account deficit attributed to expected higher export earnings and transfers, outweighing the projected increase in import commodity prices,” Minister Singh stated.
In addition, the Capital Account is projected to register a surplus of US$462M, reflecting higher capital inflows and foreign direct investment.

Targets for non-financial Public Sector
In regard to Central Government operations, the total current revenue (Net of GRIF inflows) is projected to expand by 6.2 percent to $128.5B, with the Guyana Revenue Authority garnering $116.8B.
Minister Singh pointed out that this outturn is attributed to a 6.9 percent increase in value-added and excise tax collections, due to increased VAT collections on imports, as import levels are projected to expand further in 2012.
Similarly, higher imports will also contribute to an expansion in customs and trade taxes, which are targeted at $12.9B, $1.8B over the 2011 collections. Internal revenue collections are targeted at $47.2B, and non-tax revenue collections are projected to increase by 22.5 percent to $11.6B, thereby reflecting projected higher Bank of Guyana profits.
The total expenditure is projected at $189.6B, a $38.8B increased over 2011. This achievement is attributed to a $14.5B expansion in non-interest current expenditure, due to the expansion and improvement in social services being offered to Guyanese citizens. Meanwhile, capital expenditure is projected to expand to $75.8B due to the advancement of major infrastructural projects, including those funded under the GRIF, including the modernisation of the Cheddi Jagan International Airport, continuation of the OLPF programme, and the E-government project.
“Based on these developments, the overall fiscal deficit of the Central Government is targeted at $26.5 B, equivalent to 4.6 percent of GDP, compared to 3.1 percent in 2011,” Minister Singh stated.
In regard to public enterprises, receipts are projected to increase to $146.6B, while total expenditure is projected to expand by 12.2 percent to $144.3B. This is mainly due to higher fuel prices and an expansion in the capital programme.
Based on these developments, an overall surplus of $2.3B is projected in 2012.
Additionally, the deficit of the non-financial public sector is projected at $24.2B, or 4.2 percent of the GDP, compared to 4.4 percent in 2011, reflecting government’s continuing efforts at fiscal consolidation.