Landmark $552.9B Budget presented to House
launches most rapid period of transformation, modernisation in Guyana’s history, says Dr. Singh
THE year 2022 is set to go down in Guyana’s history as one of the most significant periods ever, with plans in place to inject some $552.9 billion into the economy through various initiatives that would rapidly transform and modernise the nation.
This sum, which constitutes the government’s fiscal plan for this year, is some 44.3 per cent larger than Budget 2021 and 36.6 per cent above total expenditure last year, according to Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, during his presentation of Budget 2022 to the National Assembly, on Wednesday.
“Even as we confront, head on, the formidable challenges before us, our government continues to work in earnest to advance the aggressive agenda for transformation that we had previously outlined. At this moment of unprecedented opportunity for our country, we seek now to convert the bright prospects before us into realised national and individual well-being for all Guyanese.
“In this regard, Budget 2022 has historic significance. Building on the foundation laid by the previous two budgets, Budget 2022 launches what will be the most rapid period of transformation and modernisation ever witnessed in our country’s entire history,” Dr. Singh affirmed.
Supported by the robust institutional architecture that the government has established, Budget 2022 ensures that two complementary and critically important objectives are met: firstly, that the urgent development needs of the country are met in the shortest possible time, and that the long-term economic wellbeing of the country is protected and safeguarded at all times.
In his view, this fiscal plan, which follows the theme: “Steadfast against all challenges, resolute in building our one Guyana,” sets Guyana on the path to realising the “bright future” which the country has long awaited.
It launches some of the most transformative projects which are critical to resolving the bugbears and bottlenecks the nation has long faced, whether it be adequate and affordable electricity, a transport network that is responsive to both productive opportunities and changing patterns of urbanisation or improved medical services for Guyanese.
Budget 2022, according to Dr. Singh, also lays the foundation for the creation of thousands of jobs and caters for the training of Guyanese to take up those jobs.
“This budget lays the basis for thousands of rewarding jobs to be created for Guyanese nationals, including by leveraging the local content opportunities that are now being created, and it provides for relevant training to ensure that the Guyanese workforce is suitably equipped.
“This budget also lays the cornerstone for a visible leap in the coverage and quality of social services enjoyed by our Guyanese brothers and sisters, including and especially the most vulnerable,” the senior minister related.
Additionally, sums allocated in the budget also cater for massive investment in infrastructure that will change the face of Guyana forever, by opening vast new tracts of land for productive purposes, establishing entirely new communities while connecting others, and making thousands of Guyanese homeowners for the very first time.
Speaking further about the plans outlined in the budget, Dr. Singh said it dramatically scales up investments in almost all sectors.
He related: “It is important to emphasise that Budget 2022 is also cast within a framework that strikes a balance between meeting the immediate development needs of the country on the one hand, while investing for the future on the other hand.
“Looking ahead, the future will be a period of strong economic growth which will moderate into the medium term. We will continue to be vigilant in our efforts to address supply side constraints in the near term, especially given the pre-existing presence of imported inflationary pressures.”
At the same time, the senior minister said the government will remain focused on preserving and reinforcing fiscal and external sustainability for the long term; this will include prudent management of the resources earned from Guyana’s oil and gas sector.
OIL FUNDS AND NO NEW TAXES
Budget 2022 is the first budget that will benefit from financing from the proceeds of Guyana’s new and emerging oil and gas sector, following the historic passage of the Natural Resources Fund (NRF) Act, which addressed the most “offensive deficiencies” of the predecessor Act.
Pursuant to the provisions set out in the new NRF Act, Budget 2022 projects a withdrawal from the NRF and transfer to the Consolidated Fund of $126.7 billion.
“This ensures that the accelerated development agenda outlined in this budget, the critical investments proposed, as well as the measures still to be announced, can be financed without excessive borrowing or the introduction of any new taxes,” Dr. Singh said in his more than four-hour long presentation.
The people-centered budget, which has no new taxes, places heavy emphasis on ensuring that people have access to the highest standards of social services, including health care, water and sanitation, and that basic protection and support are offered to the most vulnerable in Guyana’s society, particularly the elderly and the young.
On this note, in addition to a wide range of public investment projects and initiatives which will stimulate economic activity, create jobs, and thereby generate incomes, Budget 2022 proposes specific measures aimed at providing support to both businesses and households, with the same objectives of job creation and income generation and, ultimately, improving well-being.
INCREASE IN INCOME THRESHOLD
Among those measures is a planned increase in the monthly income tax threshold from $65,000 to $75,000 monthly, thereby releasing a total of $1.3 billion into the hands of current taxpayers both in the public and private sectors.
Another significant measure which would benefit persons in the low-income bracket is the increase of the loan ceiling from $12 million to $15 million. This will make housing loans from commercial banks more affordable to borrowers within the low-income range, and help encourage persons who now have a house lot to proceed to borrow and build.
The government will also increase old-age pension to $28,000, placing an additional $2.3 billion of disposable income in the hands of 65,000 pensioners.
Added to this, there are plans to increase the monthly public assistance payment from $12,000 to $14,000, benefiting 18,000 persons and providing an additional $432 million in disposable income to those individuals.
Specifically on benefits for the youth, the government will increase the uniform voucher to $5,000 and increase the “Because We Care” cash grant to $25,000 per child.
Another “cost of living measure” is the allocation of $5 billion to address rising commodity prices. The specific use of those funds will be identified following consultations with communities.
To assist businesses, the government, among other things, plans to extend the reduction of import duties, excise taxes, and VAT charged on imported items.
This measure was initially due to expire on January 31, 2021, but it will remain reduced until December 31, 2022 and cost approximately $6 billion.
There are also plans to remove the 10 per cent excise tax and 14 per cent value added tax (VAT) from the importation of motor trucks, less than four years old, of any tonnage for the transport of goods.
Further, in relation to the importation of new haulers for pulling containers or similar vehicles for pulling, authorities will remove the 14 per cent VAT, and for new double cab pickups below 2,000 cc, the government will remove the 10 per cent excise tax altogether. Additionally, for new double cab pickups between 2000 and 3000 cc, the government will reduce the excise tax from 110 per cent to 75 per cent.