In Part 58 of how the Cost of Living is affecting People published in this newspaper, Timehri Base Road resident Lillowtie Hurdial detailed her tribulations. Published ironically on the day that the gigantic trillion-dollar budget was presented in Parliament, she said: “The cost of living is really high since the cost for the utility bill and grocery bill have increased. My family of three tries to manage with the rising cost of living. My husband is a pensioner and I receive my disability benefits every month from the government. Nobody works in the home. We are trying to pay our bills and buy grocery items because we are afraid the light, telephone and water would cut off.
“So, if my family and I have to eat one meal a day, we have to content with that and the next two meals, we will have to put the cost towards paying the utility bill. I’m also looking after my granddaughter. For example, the cost of a small bag Karibee rice was $1,700 a few months ago; now the same bag cost $2,040. A 5-litre bottle of oil that cost $2,000 and something; now cost $3,000. The government is already assisting my husband and I with money, so there isn’t much the government can help us with, other than what they are helping us with at the moment. We just have to content with what we have for now by coping with the rising cost of living.”
So in the context of the trillion-dollar budget and the $240b that will be withdrawn from the Natural Resource Fund (NRF) and placed in the Consolidated Fund this year, Ms Hurdial and her family cannot be sure about three square meals a day. How is Ms Hurdial’s plight to be reconciled with the fact that Guyana has pumped oil for over four years now and the government is going to spend $240b from it this year? Her dilemma is representative of the condition of a large segment of the population as evidenced by the hundreds of persons in all parts of the country who have spoken to Stabroek News on the cost of living.
Is this budget of over US$5b – a mind-boggling amount – sufficiently helping people like Ms Hurdial? Old age pensioners will be given an increase of $3,000 per month, moving them to $36,000 a month. The Finance Minister said that this accounts for an additional $2.7b. Pre-oil that definitely would have been a generous increase. Post-oil it is a mere pittance and will hardly insulate Ms Hurdial and her family. There is also public assistance in the budget and other aid such as with eye care and the student grant but taken all together there isn’t much hope for a significant rise in the standard of living of this family and others similar to it where joblessness is also a common characteristic. While there has been a significant increase in the income tax threshold from $85,000 to $100,000 which will remove 13,000 persons from the tax net and lower the tax burden for thousands of others it won’t mean anything to the Hurdial family as they are not in employment. Poverty mapping must absolutely be done by this government to ensure that those living in penury and having to decide if they can afford three meals per day are given real assistance in an economy that will absorb $240b in oil revenues.
What stands out about this budget is the planned massive infrastructural spending. It allocates $204.1b for roads and bridges alone. That figure is just $36b short of the sum that will flow in from oil this year. Roads and bridges will undoubtedly improve journeys and the quality of life for people in communities. Does the country, however, have the absorptive capacity for all of this capital? Where will the contractors, engineers, supervisors etc come from. In 2023 it was clear that key roads had encountered extended delays that should have attracted penalties and which underlined how difficult it has been to ensure delivery of projects on time. Cemetery Road, the Conversation Tree Road and the Linden to Mabura Hill project were just some of the thoroughfares that had encountered patent difficulties. In these circumstances how optimistic can one be about execution without the risk of delayed and poor work all of which will cost money?
Undoubtedly the building of schools, hospitals, trainings facilities etc will generate economic activity and hold out hope for improvement in the standard of living. Where are the instructors, doctors and staff coming from when the country continues to see an outward flow of skills because conditions and benefits overseas are deemed to be better? There isn’t sufficient evidence that the government has clearly thought through how these projects will fructify.
Nowhere is the wanton intent to spend more clear than in the expressed intention of the government to withdraw even more money from the Natural Resource Fund and deprive future generations of their share of the national patrimony. The Finance Minister was not convincing in his explanation.
“Mr. Speaker, this Government is firmly committed to safeguarding the gains we have made in achieving fiscal sustainability and in managing the public finances prudently. In this regard, in a global environment where interest rates have climbed by over 500 basis points in the last three years, it is imperative that we maintain a flexible approach to financing the accelerated transformation agenda, which includes a ramped-up PSIP [Public Sector Investment Programme] and accelerated delivery of social services and social safety nets to improve the lives of all Guyanese. These circumstances require an optimal and dynamic financing mix, taking into consideration the volume of financing mobilised with the cost of that financing.
“With this in mind, our Government will be proposing the following for consideration and approval by this Honourable House: An increase in the domestic and external debt ceilings, which will provide the flexibility needed to optimise on the financing mix while at the same time safeguarding our debt sustainability. A revision to the NRF withdrawal rule which, once approved, will result in an upward revision to the NRF withdrawal amount to take effect from this fiscal year. The revised withdrawal rule will retain the important feature that, as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance national development priorities”, he said.
The proposal for the increased extraction from the NRF must be strongly opposed. Since oil revenues are now keeping the country’s economy afloat then annual budgets must have expenditure tapered in large measure to what is received from the NRF in addition to prudent and justified borrowing. Extractions from the NRF are already too high.
This 2020 government has literally stumbled upon a jackpot of money; a bonanza that no one in the present administration can lay any claim to having had a role in its generation. This money belongs to the people of this country and its future generations. President Ali and his government are mere custodians. Their obligation is to ensure that they spend this bounty in a manner that orients the country’s economy away from oil and gas and in a way that is judicious, produces value for money and limits room for corrupt behaviour. There is much work, planning and consultation to do.
