Guyana’s oil revenues to fund 30% of historic 2023 budget
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FOR the second year in a row, Guyana’s oil revenues will significantly impact the national budget. Last week, Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh, presented the 2023 budget under the theme “Improving lives today, building prosperity for tomorrow.” Oil and gas revenues will fund almost 30 per cent of the proposed budget, up from 27 per cent in 2022.

The overall national budget is G$781.9 billion (US$3.75 billion) for the fiscal year 2023, Guyana’s largest ever. In 2022, it was projected in that budget that real gross domestic product (GDP) would grow by 47.5 per cent, with the non-oil economy projected to also grow by 7.7 per cent. However, as the year went on, Guyana’s economy grew by 62.3 per cent overall, with 11.5 per cent growth in the non-oil economy, surpassing expectations.

Minister Singh highlighted in his presentation that real GDP is expected to grow by 25.1 per cent this year, putting Guyana’s economy among the top five fastest growing economies in 2023.

Additionally, the oil-and-gas sector is estimated to have expanded by 124.8 per cent in 2022, with a total of 101.4 million barrels of oil produced.

Compared to the 42.7 million barrels of oil produced in 2021, the sector has had astronomical growth, which is attributed to the addition of a second floating, production, storage and offloading (FPSO) vessel – Liza Unity – last year.

For example, in 2023, G$84 billion has been earmarked for the health sector, G$94.4 billion for education, and over G$54 billion to develop new and upgrade existing housing developments. These are just a handful of the advancements coming for people this year, thanks to oil revenues.

The better-than-expected performance of the sector also allows for increased spending on infrastructure, electrification, gas-to-energy, hydropower, and solar energy projects. Importantly, the increase in spending isn’t a result of new debt or new taxes.

The US$759 million gas-to-energy (GTE) project for the construction of the integrated Natural Gas Liquids (NGL) Plant and the 300-megawatt (MW) combined-cycle gas turbine (CCGT) power plant at Wales, West Bank Demerara, Region Three, will also see critical funding.

The project will diversify Guyana’s energy mix and “significantly reduce the cost of electricity to the benefit of households and businesses, thereby catalysing rapid growth in industrial activity.” The 2023 national budget will allocate G$43.3 billion to advance construction of the plant and associated facilities.

As Guyana continues to focus on transformation and the diversification of the energy mix, Dr. Singh highlighted that the government plans to relaunch a request for proposal (RFP) for the restart of the Amaila Falls Hydropower Project.

This is one more example of how the rapid development of the oil-and-gas sector is funding critical investments in infrastructure and much more.

In 2022, the budget was described by the government as “transformative”, and “an investment back into Guyana, 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 and avoid any new debt or taxes that could impact the people.

Last year’s budget saw a G$73.2 billion allocation to healthcare—a 36 per cent increase over 2021. Education will also receive G74.4 billion, a 22 per cent increase over 2021.

Looking back, we’re able to see just how true that was, and now the catalyst for 2023 is focused on improving the lives of Guyanese and securing long-term prosperity for the people and economy.

The fiscal discipline and legislative prudence required to make these changes possible has been in the works for some time from the passing of local content legislation to the passage of the revised Natural Resource Fund Act, which allows Guyana to both invest in near-term needs and set aside additional funds for long-term growth.

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