Budget 2022

BUDGET 2022 will be presented on Wednesday, January 26. This will be the first budget to be partially financed from revenues accrued to the country from oil following the passage of legislation to allow for withdrawals from the Natural Resources Fund.

This is a welcome development which, according to Vice-president Bharrat Jagdeo will allow for more money to finance the massive capital programme of the government; the money will reduce Guyana’s reliance on borrowing. One immediate consequence of this development will be a lowering of the fiscal deficit compared to the previous years because of lower borrowing.

The reality is that the country has been spending more now with the coming on stream of bigger capital projects which had resulted in the widening of the fiscal deficit. The early withdrawal from the Natural Resource Fund would allow for funding of development projects without resorting to massive borrowing which could otherwise result in a heavy and unsustainable debt burden as happened under the PNC regime, when the country was saddled with one of the highest per capita debts in the entire Region. In fact, the country was at one time declared as ‘uncreditworthy’ by the International Monetary Fund (IMF), thanks to reckless borrowing and poor governance by the PNC regime.

Those who are now vocal against utilising the NRF to finance critical development funds were at one time closely associated with the PNC regime, which created a virtual millstone around the necks of the Guyanese people, when over 90% of government revenues were used to finance debt repayments and crippling interest rates. Under such a dispensation, there was hardly any fiscal space for the payment of a living wage to public servants or to meet the basic needs of the people such as access to quality education, health, housing, and water among other essential social services.

Thankfully, we have gone past that period and the country’s debts are much more sustainable today and it will only get better as more and more oil revenues begin to flow. As it currently stands, a significant amount of development financing comes from the domestic financial market, but this is likely to change as more money becomes available to government from oil-and-gas revenues. One consequence of such a development will be a larger volume of money in the local banking system for private-sector lending.

Currently, the NRF has a sum of U.S.$607 million, which will be used to finance developmental works in the 2022 Budget. This is likely to be the country’s biggest budget from a financing perspective and will be used to further enhance the standard of living of the Guyanese people. The 2022 Budget is in fact an annual work plan of the government within the framework of a specified financial envelope. The larger the financial envelope, the greater are the possibilities for additional developmental works so necessary to facilitate the country’s modernisation plans.

According to the Ministry of Finance, the main emphasis of the 2022 Budget will be on infrastructural development, tax reduction and the overall enhancement of the welfare and well-being of the Guyanese people.

As pointed out by Vice-president Dr Bharrat Jagdeo, the framework of the budget mirrors the commitments made in the PPP/C Manifesto to provide a better life for all Guyanese. ‘New highways, roads, investing in power grids, and ICTs; 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 2022 Budget was crafted after consultations with key stakeholders,  including several government agencies, members of the private sector and other civil society groupings. These consultations were led by Senior Minister in the Office of the President with Responsibility for Finance Dr Ashni Singh. It is the third budget that will be presented by the President Dr Mohamed Irfaan Ali-led PPP/C administration and will build on the already solid progress made over the past two years. It will be recalled that the first budget was an emergency one presented in August 2020. Several critical months were lost as a result of the refusal of the APNU+AFC coalition government to concede defeat at the March 2020 polls. The 2020 Budget, even though truncated, saw the reversal of several punitive taxes instituted by the previous regime and was followed in February 2021 with a focus on economic recovery, dynamism and resilience.

This year’s budget holds out much promise for further enhancing the quality of life of the Guyanese people, based on the visionary and pro-people orientation of President Irfaan Ali and his PPP/C administration.

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