The current balance projects a surplus of $34,291 million, an increase of $18,359 million or 115% over 2013. After capital receipts and expenditure, the plan projects an overall deficit of $37,536 million compared to a deficit of $31,551 million in 2013, 69.2% of which is financed by external borrowing.
The main elements of the 2014 Plan are:
Total current revenues are projected to increase by $31,696 million to $168,190 million or by 23%. Of this, the Guyana Revenue Authority is expected to bring in revenues of $135,255 million or 80.4%, of total revenue an increase by $8,745 million, or 7% over 2013.
Of the GRA’s collections, the Internal Revenue is projected to bring in $55,791 million compared with $51,675 million in 2013, an 8.0% increase while Value-Added and Excise Taxes are expected to earn $65,770 million compared to $61,659 million in 2013, an increase of 7%.These could be compared to 7% and 9% increases respectively in 2013. Collections by the Customs and Trade Administration are anticipated to be $13,694 million, an increase of $519 million or 4% compared to a 2.4% increase in 2013.
All amounts shown are actual except 2013 and 2014 being revised and budgeted respectively.
Total Current non-interest expenditure is projected to increase by $12,345 million from $115,948 million to $128,293 million for 2014. Personal emoluments of $42,965 million represent an increase of 11.6% or $4,476 million over the revised figures for 2013.
All amounts shown in the graph as actual except 2013 and 2014 being revised and budgeted respectively
Capital revenue and grants in 2014 are projected to increase by $6,522 million to $14,320 million of which HIPC and MDRI will contribute $2,381 million while Project and Programme funds are also projected to increase by $4,853 million.
Capital expenditure of $81,194 million represents an increase of $31,049 million or 61.2% over 2013 of $50,144 million. The big ticket items of capital expenditure include the ICT project on which a further $3,463 million will be spent in 2014; $3,850 million on upgrading and expanding the electrification system $18,564 million for LCDS projects and $6,550 million for the CJIA expansion project. China is providing the financing for the ICT, the electrification and the CJIA projects. The Estimates indicated that $8,259 million has already been advanced by the Chinese.
Interest expenditure is projected to increase by 21.5% or $991 million. Domestic interest is projected to decrease by $180 million or 10.3%, while interest on external debt is projected to increase by $1,171 million or 40.9%.
The principal element of debt repayments is projected at $4,954 million (2013:$5,138 million), made up of domestic debt repayments of a projected $35.4 million (2013:$1,010 million), while external debt repayments are projected to increase to $791 million. During 2014, domestic and external debt service as a percentage of current revenue decreased to 2.9% in comparison with 3.8% in 2013 revised.
The projected overall deficit of $37,536 million is proposed to be financed by external borrowings of $25,956 million and from domestic sources of$11,580 million.
Ram & McRae’s Comments
Once again the Minister is engaging in deficit financing even as he speaks of fiscal sustainability. As one leading Private Sector representative suggested in our Budget Survey, we should be borrowing only if the Projects to be financed will provide either savings in expenditure or increases in revenue. Guyana is increasingly becoming dependant in China for Budgetary support and must certainly consider the adverse effect of a strengthening Chinese Renminbi against the Guyana Dollar. Projects financed out of Chinese Funds are not subject to Guyana’s Procurement rules and they may therefore be considerable hidden costs including Chinese Labour and Material.
The projected growth in Internal Revenue may be difficult to achieve. The drag on the Mortgage Interest Relief in 2013 carries over to 2014 with potential credits, applying the Minister’s 2013 estimates, amounting to $1,600 million.
Both the revenue and Capital Expenditure are premised on close to $20,000 million dollars receivable from REDD Funds. A similar sum was Budgeted but not received in 2013 and hence the apparent significant increases in 2014 over 2013 latest Estimate.
Personal emoluments represent 25.5% of current revenue excluding REDD funds and 33.5% of total non-interest current expenditure.
Much of the employment cost is in respect of contract employees who are projected to receive or to account for $1,811 million over 2013.
We draw attention to the substantial sums being paid in subsidies and, further sums paid under some rather poorly defined arrangements – over $25 billion.
Financing of the deficit from domestic debt is expected to decrease by 50% to $11,580 million but the financing by external debt is expected to grow by 297% to $25,956 million.
Venezuela is now Guyana’s fastest growing foreign creditor owing to the facilities it enjoys under the Petro Caribe Agreement.
Excise tax on the import of motor vehicles fell by $601 million or 6% over the 2012 revenue. With all the vehicles being put on the road, this decline raises serious questions. We note as well that excise taxes on alcoholic beverages fell during the same period by $42 million. There was a shortfall of $119 million in tobacco collections over the Budgeted revenue.
Net property tax was 38% over the previous year and 23% over Budget 2013. This is a whopping increase in a year before the new Property tax charges take effect for most companies.
