The country’s fiscal position improved as projected over the first half of the year with a surplus of $3.2 billion compared to $0.7 billion in 2006 and a 7.5% increase in takings from taxes on income.
According to the Ministry of Finance’s half-yearly report tabled last Thursday, the overall deficit, after grants, of the central government was projected to improve by 18.8% to $19.5 billion, compared with $24 billion in 2006. This, the report said, was consistent with the projection at the end of June 2007, where the overall balance reflected a surplus of $3.2 billion compared to $0.7 billion in 2006.
Debt stock
The external debt stock declined by 46% from the June 2006 position, from US$1.2 billion to US$655 million, due to World Bank relief in July 2006 under the Multilateral Debt Relief Initiative, that provided Guyana with a total relief equivalent to about US$222 million. In addition, the recently concluded debt relief initiative with the Inter-American Development Bank, which cancelled approximately US$412 million of Guyana’s debt to the bank, also contributed to this reduction the report said.
More money
from income tax
Taxes on incomes amounted to $15.4 billion at the first half of 2007, equivalent to a 7.5% increase over the first half of 2006. Corporation tax was found to be a major contributor to this increase, by 6% to $7.1 billion compared with the same period in 2006. The report said too the private sector component recorded $6.5 billion or a 10% increase due largely to improved performance in the sector. It was also noted that this offset the reduction in the taxes paid by public sector companies from $0.8 billion in the first half of 2006 to $0.6 billion in the first half of 2007.
PAYE (Pay As You Earn) accounted for $6.6 billion, a 10% increase on the previous year’s period, largely resulting from the compounded effect of the 2006 salary increase and the 2007 increase paid from January 2007 to teachers and military personnel.
On the other hand, non-tax revenue declined from $1.8 billion in the first half of 2006 to $1.6 billion in the first half of 2007, on account of non receipt of dividends from equity holdings. The total revenue is now projected at $70.7 billion as compared to the $64.9 billion projected in the 2007 Budget. Total expenditure (net of rice levy) was budgeted to decline by 4.3% to approximately $99.5 billion. In the first half of 2007 total expenditure amounted to $41.5 billion or 4.7%; higher than a similar period in 2006 owing to increases in both capital expenditure and non-interest current expenditure. Total expenditure is now projected at $104.8B.
The report concluded that the first half of the year saw the domestic economy sustaining expansion in real output recorded in the previous year. “This continued growth was based on robust performances across both the traditional sectors and in many of the new and emerging sectors,” it continued. The report also said that while the hosting of events such as Cricket World Cup contributed to increased demand and output, a number of the sectors benefited from enhanced capacity and an intense activity.
The growth in output was accompanied, in the external sector, by increases in imports of capital equipment, intermediate goods, and goods for consumption along with correspondingly streng-thened export earnings and, in the fiscal accounts, by strengthened tax revenues.
