The Private Sector Commission (PSC) yesterday praised the government’s proposed 2021 national budget, saying it contains sufficient fiscal measures and public investment programmes to encourage the growth of the private sector while lowering the cost of living for the ordinary Guyanese.
Finance Minister Dr Ashni Singh on Friday announced a $383.1 billion budget for 2021, while saying that the economy is projected to grow by 20.9% if it reopens via a gradual lifting of COVID-19 restrictions.
In welcoming the announced plans, the PSC yesterday noted in a statement that the measures, policies and programmes announced in budget 2021 are designed to enable the diversification of the economy as well as resuscitating the major productive sectors – such as the agriculture, construction and infrastructure sectors. It said this is crucial given that the non-oil economy has contracted by 7% in 2020 on account of the effects of the COVID-19 pandemic and the five months political impasse, as well as to avoid the ‘Dutch disease’.
In addition to enabling broad-based and inclusive growth of the economy in terms of job creation, encouraging private investments and more entrepreneurial activities, it also found the budget to be people-focused. As a result, it commended Singh for producing a budget that is both “pro-business” and “pro-working class.” “There is something for everyone in the budget. The measures outlined will ultimately provide more disposable income and provide more relief to the poor and vulnerable,” it added.
Among the announced measures highlighted by the PSC were the $6 billion earmarked for housing development, the zero-rating of construction and home ownership building materials, the reduction of duty on industrial cement from 15% to 5%, the increase in the low-income mortgage ceiling from $10 million to $12 million, and the removal of VAT on data for residential and individual use.
The PSC said it is mindful of the construction boom in the making through government initiatives such as the resuscitation of the housing development drive – targeting 10,000 house lots for distribution for 2021. Against this background, it said it believes the fiscal incentives outlined for building and construction materials coupled with the increase in the mortgage ceiling will allow for the housing, construction, and banking sectors to experience significant expansion in their activities for 2021.
“These will also facilitate the massive infrastructure development in other areas other than housing such as hotel projects, new roads and bridges, shore base facilities, public infrastructure, and private sector infrastructure,” it added.
It added that the $25 billion allocation for transformational infrastructure development will lead to the opening up of lands and coupled with the new road works across all the regions is another important element of the budget.
“The accessibility and availability of new lands for commercial, industrial, housing development and agricultural purposes will be the driver of economic growth and development on a larger scale. This means opportunity for large scale investment by the manufacturing sector – both local and foreign investors as well the emergence of new business ventures,” it said.
In this regard, the PSC noted that local and foreign direct investments are needed to build out the country and this will provide more job opportunities for the people.
The PSC also pointed to the reverting of basic food items, such as on flour, bread, biscuits, and cooking oil, back to their pre-2015 zero-rated status, and the reduction of water tariffs to 5%, saying that these in turn will lead to lowering the cost of living for the people, especially the working class, so that they can enjoy a better standard of living and live more comfortably. “The increase of the mortgage ceiling and the mortgage increase relief, for example will ensure more affordable home ownership by the ordinary Guyanese,” it added.
In addition, the PSC said the zero-rating of building materials as well as the reduction of duty on industrial grade cement will also contribute to making home ownership more affordable for the ordinary working class Guyanese, while the housing and construction boom at the same time will create the opportunity for increase in employment levels owing to increase demand in the supply chain.
