Boasting that it is a budget for all Guyanese and one for “now and the future”, Finance Minister Dr Ashni Singh last evening presented a whopping $781.9 billion budget – some 41.4% more than the $552.9 billion budget last year.
The second budget to benefit from the country’s growing oil and gas revenues, Singh said that with continued “interventions and policies geared at building a resilient economy” the Gross Domestic Product (GDP) will grow at a projected 25.1%, which puts Guyana among the top five fastest growing economies in 2023.
It is expected that in 2023 that monetary policy will remain centred on keeping prices and exchange rates stable while ensuring that the economy is conducive for a sustainable expansion in lending to the private sector, and economic output.
The inflation rate is expected to slow to 3.8% and this will be underlined by decelerating prices abroad, along with the maintenance of a suitable policy stance on the part of Government.
While it was projected last year that the Gross Domestic Product would have grown by 47.5% Singh announced that instead it is estimated that the economy grew by 62.3% with the non-oil sectors contributing 11.5% up from the projected 7.7%.
As has been his mantra for the last few years Singh, presenting the current Government’s fourth budget, said it is the largest budget ever even as he announced that alongside a transfer of $208.9b in oil proceeds to the Consolidated Fund this budget for the first time will benefit from the country’s carbon credits revenue.
In a more than five-hour presentation that was peppered with political jabs including a reference to the late President Forbes Burnham’s equestrian skills at the Hope Estate, Singh said that the PPP/C government is delivering on the many promises it made.
Two bottles of water, a glass and what was later revealed to be cough syrup were all part of Singh’s props as he spoke hour after hour and took time out to respond to the many heckles that came from the opposition side. He clarified at one point that the `swank’-like substance in the glass from which he sipped from regularly was not in fact water produced by the Guyana Water Inc (GWI) but an over-the-counter cough medication prescribed by a doctor. He later said he was having local honey diluted with water.
The budget, which was presented under the theme ‘Improving Lives Today, Building Prosperity for Tomorrow’, according to Singh, strikes a “balance between addressing the pressing needs of today and the critical investments needed for tomorrow, ensuring that both are attended to”.
“It is also a responsible Budget, cast within the context of a macroeconomic framework that recognises the risks we face both from the global economy as well as from the realities that confront a new and emerging resource-based economy,” Singh said of his 94-long page budget presentation.
Among the top five
With the estimated economic growth of 25.1% ,Singh said that it puts Guyana among the top five fastest growing economies in 2023, a position that can be largely attributed to the further ramping up of oil production anticipated in the Stabroek Block. He announced that growth in the non-oil economy is currently projected at 7.9% this year which is driven by continued expansion in construction, other crops, and wholesale and retail trade and repairs, alongside a rebound in gold mining.
The agriculture, forestry and fishing sector is expected to expand by 7.2% driven by growth across all subsectors. And in 2023, the sugar growing subsector, which declined last year, is projected to recover and expand by 29.3% as GuySuCo anticipates higher performance from the existing estates, combined with forecast production from the Rose Hall estate which is to be reopened later in the year. The Corporation expects output of nearly 61,000 tonnes of sugar this year.
A growth of 8.3 percent is projected for the rice growing subsector with total production of 652,103 metric tonnes. This reflects continued research and development efforts driving the adoption and cultivation of new, high-yielding varieties, as well as increased acreage under cultivation this year, Singh said.
The other-crops subsector is also expected to expand at a rate of 5.8% with livestock, forestry, and fishing projected to grow at 12.1%, 4% and 8.4% respectively.
In the extractive industries the mining and quarrying sector is forecast to grow by 34.1% with expansions projected for all four subsectors – oil and gas, gold, bauxite and other mining and quarrying.
This year, the Stabroek Block is forecast to produce crude oil at an average rate of about 374,000 barrels per day.
“Consequently, the subsector is estimated to grow by 35.6 percent in 2023. In addition, a turnaround is anticipated for the gold mining subsector, which is projected to grow by 12.7 percent in 2023, on account of higher expected declarations from one of the large operators, and the small and medium scale miners,” Singh said.
And the Senior Minister in the Office of the President with responsibility for Finance said that the bauxite subsector recovered in 2022 from the many disruptions in 2021 and this momentum is expected to continue through this year with greater output expected from both large operators. The growth expected is projected at 9.8%. Further, the other mining and quarrying subsector – comprising sand, stone, and diamonds – is also forecast to expand this year by 7.3%.
Singh also announced that the construction sector is expected to grow by 17%, the services sector by 5.6% which will be further augmented by strong growth in tourism, and robust expansion in wholesale and retail trade and repairs, transport and storage, administrative and support services, and real estate activities.
According to Singh, the overall balance of payments is expected to record a surplus of US$150 million this year supported by the current account maintaining its surplus amid continued growth in export earnings, and a lower deficit on the capital account.
The current account is anticipated to register a lower surplus of US$3,507 million as import payments are projected to increase by 52.8% to US$5,536.4 million with Guyana’s third oil production platform, Prosperity, expected to arrive this year. He said that notwithstanding, export earnings are estimated to increase by 13.8% to U$12,977.8 million, resulting from growth in oil and non-oil receipts. Specifically, crude oil exports are forecast to increase by 13.6% to US$11,332.6 million, while non-oil exports are expected to grow by 15.4%, driven by anticipated increases across major commodities.
And the Central Government current revenue is projected to increase by 11% in 2023, to reach $335.3 billion. Within this, tax collection is expected to account for $320.1 billion, or 95% as the economy continues to grow and diversify. Internal revenue collections are projected to increase to $197.9 billion, 12.4% above the 2022 mark. Customs and trade tax collections are anticipated to grow by 8.1% to reach $33.6 billion while VAT collections are projected to grow by 14.8% to $65.3 billion and excise tax collections are anticipated to fall by 17.6% to $23.4 billion. Non-tax revenues are estimated to grow by $5.4 billion to reach $15.2 billion this year, mainly on account of higher forecast collections of royalties, dividends and special transfers from the non-financial public enterprises and Bank of Guyana profits.
Performed better
Accounting for last year’s huge economic growth, Singh said that the oil and gas sector performed better than expected even at a time when Government policies focused on supporting the traditional and new and emergent non-oil pillars of the economy.
He said that the agriculture, forestry and fishing sector is estimated to have expanded by 11.9% percent in 2022, a growth that is attributed to notable performances in the other crops, rice growing, livestock, and forestry industries. Growth in these industries more than offset contractions in sugar growing and fishing.
However, sugar which received another huge injection this year, declined by 18.9% with sugar production for the year totalling 47,049 tonnes.
“This performance was largely the result of lingering effects of the 2021 floods, which caused lower yields per hectare and reduced cane quality, as well as technical challenges encountered in the first half of 2022,” Singh stated.
In contrast, he said that an expansion of 8.1% was seen for the rice growing sector with total production of 610,595 tonnes. Like sugar, there were some lingering effects of the 2021 floods that affected rice production in 2022. However, production grew to surpass 2021 levels, with yields increasing to 5.9 tonnes per hectare in 2022, compared with 5.5 tonnes per hectare in 2021.
