WITH 2022 well underway, it is worth examining how Guyana’s oil revenues have impacted the national budget. Earlier this year, Finance Minister, Dr. Ashni Singh, opened the 2022 budget debate in parliament under the theme “Steadfast against all challenges, resolute in building our One Guyana.” The GYD$552.6 billion budget is the largest in Guyana’s history—44 per cent larger than 2021—and for the first time it includes GYD$126.7 billion from the Natural Resource Fund (NRF), which at the end of 2021 stood at GYD$127 billion, Guyana’s share of oil production and royalties.
To put this in context, that means:
1. The 2022 budget is 44 per cent larger than the 2021 budget.
2. Oil and gas revenues are funding 23 per cent of the overall 2022 budget.
3. Education and healthcare experienced 22 per cent and 36 per cent funding increases, respectively.
4. The Natural Resource Fund is projected to approach GYD$200 billion by the end of 2022.

The budget increases spending on infrastructure, including electrification, gas-to-energy, hydropower and solar energy projects. Importantly, the increase in spending isn’t a result of rising debt or new taxes, but due to increasing oil revenues. Spending on infrastructure is likely to remain a key priority in the years to come as the NRF is expected to see inflows approaching GYD$200 billion this year, an astronomical figure considering Guyana is only two years into oil production. The oil and gas subsector is also projected to grow by 96.7 per cent in 2022, offering a positive sign for future budgets.
A projected GYD$200 billion in the NRF in 2022 will provide hard currency to advance Guyana’s interests domestically and bolster sovereignty in uncertain times. For example, to meet its ambitious goal of reducing the cost of electricity by 50 per cent over the next five years, the government allocated GYD$29.4 billion to the energy sector in 2022 with GYD$20.8 billion set aside for the gas-to-energy project and GYD$1.4 billion for the 33 MWs solar farms for Berbice, Essequibo, and Linden.
Not only do increased oil revenues ensure that the government can spend more on the things that matter, like infrastructure, but that budget deficits and debts can be reduced. Unlike other Caribbean nations like Barbados that have increased borrowing during the pandemic, Guyana has closed the gap between spending and revenues, reducing its annual deficit spending, as oil production has ramped up. Additionally, in 2020, Guyana’s GDP increased an impressive 43.5 per cent, driven largely by oil and has supported an improved balance sheet.
The 2022 budget was described by many as a “transformation,” and “an investment back into Guyana [and] the Guyanese people.” According to Minister Singh the budget represented an “accelerated development agenda,” with plans to use Guyana’s new oil wealth to limit reliance on borrowing from the sovereign debt market and multilaterals and to curtail any new debt or taxes that could impact the people. Instead, Guyana has worked to demonstrate fiscal discipline with the passage of the revised NRF Act to create a buffer between oil wealth and the non-oil economy, in hopes of avoiding Dutch disease.
This year, government is set to receive 13 cargoes of approximately one million barrels each as its share of the production, up from nine last year. The lighter “Unity Gold” grade of sweet crude oil produced at the Liza Phase Two development could fetch a premium on the world market, especially if prices remain high and the demand for oil from stable and democratic countries remains elevated.
Oil revenues flowing into the economy have already drastically increased the government’s ability to finance projects crucial for development and lay a better foundation for investment in other sectors. But this is just the beginning, as Guyanese can look forward to both greater energy independence and growing investment in social programs funded by growing revenues.