Analysis of expenditure
Source: Tables 6 &7 & Appendix A of National Estimates
Introduction
The priorities adopted by the Government as set out in Part 5 Targets for 2022 in the Budget Speech find their place in the Estimates of Revenue and Expenditure. This was discussed in Government of Guyana Financial Plan 2022 of this publication. In this segment of Focus, we summarise and analyse the spending choices by the Cabinet, set out in the Estimates and which are subject to a debate and approval in the National Assembly. As the pie chart above shows, spending is done by Budget Agencies including Ministries and Departments, Constitutional Bodies, Regions and via subventions and subsidies made through various Ministries. Certain spending is automatic and does not require parliamentary approval: as the Constitution states, these are direct charges although in many cases, the actual amount is often a matter of some negotiation.
In order of spending, the top five Budget Agencies are the Ministry of Finance, the Ministry of Health, the Ministry of Human Services and Social Security, Ministry of Education and the Ministry of Home Affairs. It should be noted of course that the spending may not be actually done by the Budget Agency with the Ministry of Finance itself being a good example with its subvention to the Guyana Revenue Authority.
Ministry of Finance
The two Programmes under the Ministry of Finance are Policy and Administration and Public Financial Management Polices and Services, budgeted to spend $31,402 million and $13,130 million respectively. The two largest items of expenditure of Policy and Administration are Other Employment Costs and Subsidies and Contributions to Local Organisations. The principal subvention recipient of the Ministry of Finance remains the Guyana Revenue Authority which is slated to receive $7,387 million of the Ministry’s subvention budget. By convention and practice, it is the Ministry of Finance which is responsible for the payment of pensions. The Budget provides $6,300 million for statutory pension and gratuities and a provision of $4,571 million for pension increases.
Ministry of Health
The Ministry of Health has eight programmes for which expenditure of $38,362 million is allocated. The single largest Programme is Regional and Clinical Services expected to spend $21,943 million. The two largest items of expenditure are wages and salaries of $5,086 billion and subsidies and contributions to local organisations amounting to $13,570 million, principally to the Georgetown Public Hospital Corporation.
Ministry of Human Services and Social Security
This Ministry has three Programmes and is budgeted to spend $27,579 million. Of the three Programmes, Programme 392 Social Services is allocated $27,558 million while Old Age Pensions and Social Assistance make up the single largest item of expenditure, amounting to $25,827 million or 94% of the amount allocated.
Ministry of Education
The allocation for the Ministry of Education is $25,595 million, divided across six programmes including one each for Nursery, Primary, Secondary and Post-secondary education. The three largest programmes are as follows:
Primary: $6,773 million.
Secondary: $6,897 million.
Post-secondary/Tertiary education: $5,251 million.
Ministry of Home Affairs
The Ministry of Home Affairs has six Programmes, budgeted to cost $21,969 million. Of this sum, the Guyana Police Force is allocated $15.727 million or 72% of the total of which wages and salaries account 58%. Of the balance, Overhead Expenses account for $2,555 million and Transport, Travel and Postage account for $1,383 million.
Ministry of Agriculture
The Ministry of Agriculture is allocated a total of $14,332 million across four programmes, the largest of which is Agriculture and Development and Support Services which is allocated $12,449 million or 87% of the total allocation. Out of this, the National Drainage & Irrigation Authority (NDIA) receives $7.250 billion, the National Agriculture Research Institute receives $1.250 billion and the Guyana Sugar Corporation receives $2 billion.
Ram & McRae’s Comments
Current Expenditure is budgeted to increase by 9.9%.
The Ministry of Health to have a reduced allocation compared with the preceding year and possibly signals that the Government may be hopeful that the COVID – 19 will be brought under some level of control in 2022 or that there may be significant levels of Vaccines and other items in stock.
The Ministries with the largest percentage increases are the Ministry of Education (29.7%) and the Ministry of Public Works (21.2%). The allocation for the Ministry of Education includes subventions of $3,293 million to the two campuses of the University of Guyana, an increase of 8.45%.
In 2021, the Government went back to the National Assembly on two occasions for a total of $ 26,630 million for additional expenditure, or 10.37% over the budgeted amount for 2021.
Capital Expenditure
Central Government’s capital expenditure for the year is budgeted at $217.8 billion or 39% of the total budgeted expenditure. The allocation is 109% above the latest estimate 2021 and 187% above 2020 capital expenditure. The Ministries/Departments with the most significant capital expenditure allocations are:
Source: Budget Estimates, Volume 1, Table 8.
The top five allocations from the Capital Budget are discussed below.
Ministry of Public Works
The Public Works is allocated $88.1 billion. Please refer to Policies and Targets for some of the major projects proposed for the year. The amounts allocated for the major projects are:
– New Demerara River Crossing: $21 billion.
– Miscellaneous Roads/Drainage: $1.405 billion
– Rehabilitation of Public and Main Access: $9.120 billion
– Linden – Mabura Road and Kurupukari bridge: $6.005 billion
– Provision for bridges and payment of retention: $4.460 billion
– Hinterland Roads: $3.400 billion
Office of the Prime Minister
The Office of the Prime Minister is allocated a sum of $27.3. The major projects and allocations are as follows:
– Gas to Power Project: $20.8 billion
– National Data Management Authority: $2.65 billion
– Energy Matrix Diversification Programme: $1.6 billion
Ministry of Health
The Ministry of Health is allocated $18.97 billion. The major projects and allocation are as follows:
– Health Sector Improvement Programme: $11.9 billion
– COVID-19 Response Programme: $1.85 billion
– Ministry of Health-Buildings: $1.5 billion
Ministry of Agriculture
This Ministry is allocated $14.44 billion. The major projects and allocation are as follows:
– National Drainage and Irrigation: $4.1 billion
– Contribution to Local Corporation – GUYSUCO: $4 billion
– Integrated Agriculture Development: $2.5 billion
– Flood Risk Management Project: $1.2 billion
– Flood and Economic Recovery and Resilience Programme: $1 billion
Ministry of Housing and Water
This Ministry is allocated a total of $12,706 million. The major projects and allocations are as follows:
– Provisions for access roads and infrastructure works: $10 billion
– Provisions for upgrading of water supply systems: $468 million
– Provision for improving water supply systems in hinterland regions: $394.5 million
Ministry of Finance
This Ministry is budgeted to receive $9,198 million across four Programmes. Under Programme 31 Policy and Administration, $9,074 million is allocated of which $1,500 million is allocated to the Guyana Revenue Authority (GRA) for provisions for software, buildings, furniture and equipment and $4,000 million for the low carbon development programme.
Ministry of Local Government and Development
The Ministry of Local Government and Development is budgeted to receive $8,563 million. The major projects and allocations are as follows:
– Provision for community enhancement and infrastructure projects and programmes: $6.3 billion
– Provision for City Hall Restoration and payment of retention: $400 million.
– Provision for Capital subventions for municipalities and neighbourhood democratic councils: $714 million
Ram & McRae’s Comments:
This is a truly ambitious Capital Programme in a period when lead times for the acquisition of imported items is measured in several months and where even local material is in short supply.
The year also marks a significant change in the emphasis shifting from Current to Capital Expenditure. See table in Introduction.
The Capital subvention to the Regions represent a 29.5% over 2021. Volume 3 of the Estimates which gives a profile of the Capital Projects does not provide any information on specific Regions. Article 77 of the Constitution requires the Regions to prepare and submit their development programmes and for the Government to integrate these in the national development and allocate funds for their achievement.
Concerns continue about the inadequate studies done in making capital expenditure decisions, or abrupt changes to earlier decisions. There needs to better organisational arrangements, preferably outside of the Office of the President, to evaluate Projects before they are taken to the National Assembly. That would lead to better decision-making and savings of billions of dollars.
