Former Minister of Finance Winston Jordan has said the government’s proposed 2021 national budget lacks a comprehensive plan to chart Guyana’s economic recovery from COVID-19.
“You didn’t have this comprehensiveness in the budget of a medium-term strategy to bring us out of COVID-19 and return the economy to some normalcy,” Jordan said during an hour long appearance on the Facebook Live programme “In the Ring,” which was moderated by opposition parliamentarian Sherod Duncan.
In the absence of a response from the main opposition, which was absent from Friday’s presentation Sunday Stabroek contacted Jordan for comment and he said he detailed his impressions on the programme.
This newspaper has been told yesterday that Opposition Leader Joseph Harmon was crafting a response, which would be released.
In presenting the $383.1 billion budget, Minister with responsibility for Finance Ashni Singh told the House that all projections were premised on the assumption that a reopening of the economy takes place with COVID-19 restrictions being gradually lifted.
If successfully re-opened, Guyana’s economy is projected to grow by 20.9%. This is less than half of the 43.5% growth which was recorded in 2020 but according to Singh, Guyana could very well see the non-oil sector this year grow by 6.1%, a significant reversal of the 7.3% contraction recorded for the non-oil sector in 2020. However, the overall deficit of the Central Government is projected to be 8.7 % of GDP, compared with 9.4 % at the end of 2020. The actual 2020 deficit sum is $90.5 billion, primarily as a result of higher-than-anticipated expenditure requirements. The 2021 deficit would be $33.3 billion on top of last year’s figure.
Singh explained that in 2020 total current revenue recorded was $227.4 billion, with 96% or $218.3 billion being earned from taxes. Non-tax revenue was $9.1 billion.
He stated that in 2021 total current revenue is expected to be at $257.9 billion, 13.4% or $30.5 billion, above 2020 collections. With tax revenue continuing to be a significant contributor at $242.1 billion while non-tax revenues will rise to an estimated $15.8 billion.]
The overall deficit of the Central Government is projected to be 8.7 % of GDP, compared with 9.4 % at the end of 2020. The actual 2020 deficit sum is $90.5 billion, primarily as a result of higher-than-anticipated expenditure requirements. The 2021 deficit would be $33.3 billion on top of last year’s figure.
Jordan lamented the significant increase in the country’s deficit which was $91.8 billion in 2020 and is expected to top $100 billion in 2021.
“That is a massive buildup of debt….which is why you say the increase in the debt ceilings recently…it is going to come back to haunt us,” Jordan warned.
Jordan stressed that despite government’s acknowledgement of the significant impact of COVID-19 there is no plan beyond an allocation of $700 million for the procurement of vaccines.
“You had a lot of platitudes, a lot of statements but you didn’t see a comprehensive programme…You get the impression that the $700 million, which is allocated for vaccines, is meant to solve our COVID-19 problems. You didn’t hear anything other than COVID did this and COVID did that,” he indicated.
The former minister used as an example the COVID-19 cash grant programme, whose parameters remained undefined in many cases.
“Is it that you finished…with the $25,000 even though there are still a number of households which haven’t gotten the money and those which got it have long spent it and are still suffering?” he questioned.
The cash grant was a measure of budget 2020, where $7 billion was allocated for COVID-19 relief cash grants to households across Guyana. Also provided in 2020 was $2 billion of one-off grants to public sector employees, and $1 billion in year-end bonuses to front-line workers in the health sector and the disciplined services.
Jordan acknowledged that Value Added Tax has been removed from data services via a 2021 budget measure but questioned why there was no allocation for the provision of data services where it is absent.
“You don’t see $5 billion to provide internet for those who don’t have it; you don’t see $5 billion for purchase of tablets for children languishing at home and so on. You don’t see that type of programme but you see talk of six hotels being constructed,” he lamented.
He questioned how these investments will fare when there is no guarantee to the investors of when COIVD-19 will end or of what the tourism industry will look like post COVID-19.
“When are airlines going to return to full operations…? COVID-19 will continue to be an albatross but it seems that $700 million is the new panacea,” he said, before adding that he doubts government will be able to secure enough vaccines to immunise the entire population.
Singh, however, was confident that Guyana could achieve herd immunity by the end of 2021. He told the House that government has allocated some $750 million to support the rollout of COVID-19 vaccines.
This initiative, the minister mentioned, will go forward from February and continue throughout the year in a phased approach as the government’s ultimate aim is to promote vaccination and achieve herd immunity from the virus before the end of 2021.
