The current balance projects a surplus of $2,609 million, a reversal of $23,046 million over revised 2020. Current revenue of $266,023 million represents an increase of $38,918 million 17.1% over the latest estimate for 2020 of $227,411 million.
Budgeted current expenditure is $256,685.3 million, an increase of $15,090 million (6.2%) while Interest Expenditure is budgeted at $6,729 million, an increase of $485 million 7.8% giving a Current Balance of $2,609 million compared with latest estimates for 2020 of ($20,437) million.
Capital Revenue and Grants are budgeted at $10,406 million compared with $7,562 million for 2020. Budgeted Capital Expenditure is $103,248 million which is some $27,133 million over 2020. After Debt Repayment of
$16,419 million, an overall deficit of $106,652 million is projected, compared with a deficit of $103,004 million in 2020, 29% of which is expected to be financed by borrowings from external sources and 71% from domestic sources. Of the current expenditure, personal emoluments account for approximately 33%. Debt service as a percentage of current revenue is projected at 8.7% in 2021, an increase from 8.5% in 2020.
The main elements of the 2021 Plan are:
Total current revenues are projected to increase by $38,918 million to $266,023 million or by 17.1%. Of this, the Guyana Revenue Authority is expected to account for revenues of $242,091 million or 91% of total revenue, an increase of $23,761 million or 10.9% when compared to 2019 however the most recent normal year the increase is 7%. Roughly half of this increase is projected to come from ‘Other’ which includes rent, royalties, dividends, transfers, etc.
2021 will see a widening of the deficit from $103,004 million to $106,652 million.
Current revenue by type
Source: National Estimates (G$ Millions)
Of the GRA’s collections, Internal Revenue is projected to account for $123,757 million compared with $113,161 million in 2020, a 9.4% increase, while Value-Added and Excise Taxes are expected to earn $93,701 million compared to $83,830 million in 2020, an increase of 11.7%. Collections by the Customs and Trade Administration are anticipated to be $24,633 million, an increase of $3,293 million or 16%.
An examination of revenue projections for full year 2021 show Companies Taxes increasing by 7.62 %, Personal Tax by 9.24 % and Self Employed by 12.17 %.
Despite the proposed changes in VAT legislation, overall VAT collections are projected to increase by 7.6%, expectedly with VAT on Imports increasing by a higher percentage than domestic supplies.
Excise Tax payable mainly on vehicles, alcohol and tobacco is projected to increase by 18% with a significant share of the increase being generated from imports. Other current revenue is expected to double across the revenue sources including miscellaneous.
Total current non-interest expenditure is projected to increase by $15,090 million from $241,595 million in 2020 to $256,685 million for 2021. Personal emoluments of $79,563 million represent an increase of 10.7% or $7,711 million over the revised figures for 2020. As a percentage of current non-interest expenditure, personnel emoluments account for 31%, Other Goods and Services 27% and Transfer Payments 41%.
Transfer payments are payments from the Government to individuals, organisations or other levels of Government made with the specific objective of furthering Government policy or programme delivery and for which the Government does not receive directly any goods or services.
Capital expenditure of $103,248 million represents a projected increase of $27,133 million or 35.6% over revised 2020 of $76,115 million. The top five ministries in terms of capital expenditure are:
1. Ministry of Public Works
2. Ministry of Finance
3. Ministry of Housing & Water
4. Ministry of Agriculture
5. Office of the Prime Minister
Interest expenditure is projected to increase by 7.8% or $485 million to $6,729 million. Domestic interest is projected to increase by $274.9 million or 20.8%, while interest on external debt is projected to increase by $789.9 million or 16%.
The principal element of debt repayments is projected at $16,419 million (2020: $13,080 million), made up of domestic debt repayments of a projected $3,800 million (2020: $2,040 million), while external debt repayments are projected to increase to $1,579 million (2020: $11,040 million).
Ram and McRae’s Comments
● When in 2010 the country recorded its first $100 billion budget there was much acclaim, yet since that year, the pattern of rising deficits has defined every budget. In 2020 and 2021, the deficits are (40.1%) and (45.4%) of current revenue.
● Prior to the Budget, the Government introduced legislation increasing the ceiling of both domestic and external debt. Hopefully with increased oil revenues the pattern will be reversed and Guyana will become a net investor of funds.
● The 2020 Estimates (Details of Capital Expenditure) 2020 Budget focus drew attention to expenditure of $267.4 million by this previous administration on a range of matters including a gas to shore study. It would be a sad and costly waste if such a study is completely ignored by a subsequent administration.
● A review of the revenue projections in the Volume 1 of the Estimates does not indicate profit oil and royalties from petroleum, perhaps because of the constraint imposed by the Natural Refund Act which has not yet been operationalised. More troublingly, Table 1 of Medium-Term Central Government itself does not show any line item for Oil Revenues. Whether this omission was due to uncertainty of how to treat the revenue is for some other reason it serves strange that we take oil proceeding in balance of payments analytics/ restricted or not.
● In announcing the budget measures, the Minister claimed that the annualised cost of the measures announced in Budget 2020 exceed $40 billion and that the additional measures for 2021 will cost an additional $10 billion, making a total of $50 billion. Despite this the Minister is projecting increased revenues of 17% which is difficult to reconcile with the $50 billion.