Introduction
Budget Speech 2021 was presented by Dr. Ashni Singh, who recently returned to Guyana after a number of years in international employment following the 2015 elections. Except for the venue, Dr. Singh was in familiar territory, having presented the Budgets for the years 2007 – 2014 as the head of the Ministry of Finance. In portfolio allocations following the 2020 elections, President Irfaan Ali has retained responsibility for the Ministry with Dr. Singh nominally operating within the Office of the President. Once again, acknowledging the impact of the COVID – 19 pandemic, the parliamentary sitting was held at the Arthur Chung Convention Centre.
Dr. Singh was his usual articulate self. It must be acknowledged too, that Bishop Juan Edghill, the pro-tem Finance Minister, who makes no claim as an economist, did a more than creditable job while exercising some of the functions of the Finance Minister pending Dr. Singh return. Budget date was about average for the PPP/C, Dr. Singh himself having presented four Budgets (2007 and 2009-2011) earlier than on this occasion.
The circumstances and atmosphere of the 2021 Budget presentation were more normal than on the last occasion. Unlike Budget 2020 which covered a mere three months in the year, the 2021 Budget covers a full year and timely passage should see an earlier start to execution of the substantial Capital Programme announced by the Minister. And in 2020, even as the Speech was being read, there was unrest in West Coast Berbice, protesting the gruesome murders of two youths from the area. On the last occasion too, the global pandemic was accompanied by uncertainty and gloom in the international economy while the price of oil was in the doldrums. Several months on, a number of vaccines have been tested and there is cautious optimism that the world may have turned the corner.
Then too, there appeared a disagreement between the Government and Esso Exploration and Production Guyana Limited over the Payara Development Plan with the PPP/C signaling its intention to renegotiate the 2016 Petroleum Contract signed by its predecessor. Not only has Guyana given the oil giant everything it wanted, but since then, oil prices are rebounding in anticipation of widespread vaccination and herd immunity in major countries and regions of the world leading to some normalcy in the international economy.
At a territorial and sovereignty level, the border issue with neighbouring Venezuela seems also to be heading in Guyana’s favour with the International Court of Justice ruling that it has jurisdiction in the matter.
We understand that consultations were held with the smaller Opposition political parties which contested the March 2, 2020 elections and that meetings were also held with the Private Sector Commission representing the business sector and with representatives from Labour.
The private sector is reported to have asked for a reduction in Corporate Taxes, fiscal incentives for Construction and Hardware Companies/Employees, such as the application of zero-rated VAT to ready mix cement, the removal of VAT on mobile data plans, the removal of VAT on all fast foods and the granting of agricultural lands to food companies that wish to practice backward integration.
The Guyana Trades Union Congress (GTUC) on the other hand, is reported to have asked for the reduction in national borrowing, strict enforcement of the work permit rule, the reduction of concessions given to the private sector, the improvement of medical services, the erasure of the National Insurance Scheme (NIS) deficit, an increase in the national minimum wage and the immediate restoration of the constitutional right to free education.
Clearly the Private Sector Commission’s (PSC) expectations had a more favourable response.
Unlike last year when Vice President Bharrat Jagdeo disclosed all the budget measures in advance of the budget, on this occasion there were no such disclosures. Apart from a commitment to dismantle the policies of the APNU+AFC government, the Vice President announced that the Budget would allow for the expansion of the productive sector. It would be unfortunate if the pattern in Guyana is for new administrations to reverse the policies of their predecessors without some objective consideration.
In the area of Oil and Gas, the Vice president in his pre-budget press conference announced the establishment of the Wales Development Authority to include the destination point for the gas to shore project which he opined would enable the rejuvenation of a community hard-hit by the closure of the Wales Sugar Estate.
While the Vice President was very critical of the flaring in oil production now taking place, the Government appears to have taken any renegotiation of the Petroleum Agreements completely off the table with the President making the case for the oil companies’ entitlement to a “fair return on their investment.”
Once again, the Budget is touted as Guyana’s largest Budget ever”, financed not by any taxes creating the largest Budget deficit ever. Given the events of the last year and the continuing COVID – 19 Pandemic, that might seem a small price to pay.