…economists say $383.1B budget failed to address poverty
Guyana is in need of a National Development Plan, Communication Consultant Adreyanna Thomas said – a position endorsed by some of the country’s leading economists.
At the time, she was offering her perspective on the $383.1B Budget during a live panel discussion hosted by the Working People’s Alliance on Thursday. Under the theme “A Path to Recovery, Economic Dynamism and Resilience,” the multibillion dollar budget – the largest in the country’s history – was passed in the National Assembly in March, 2021 with six primary objectives, among them, cushioning the impact of the COVID-19 pandemic and minimising the spread of the deadly disease, facilitating large scale private investment in both traditional and new and emerging sectors to allow for the creation of 50,000 jobs, and establishing world class social services, particularly in the areas of Health and Education.
Thomas, while applauding the government for not instituting any new taxes and for placing emphasis on governance and institutional reform, said the budget is reflective of the People’s Progressive Party/Civic (PPP/C’s) Elections Manifesto and not a National Development Programme. “I would have liked to see the transition of the manifesto into a National Development Programme,” Thomas said while noting that there is a clear gap. She contended that it is not a People’s Budget but rather a Government Budget.
Thomas appeared alongside Professor, Dr. Clive Thomas; Professor, Dr. Tarron Khemraj; Political Scientist, Dr. David Hinds and former Minister of Foreign Affairs, and Finance, Carl Greenidge, all of whom endorsed her position.
Weighing in on the issue, Dr. Khemraj, a Professor of Economics, while acknowledging that both the 2020 and 2021 Budgets seek to roll back the effects of the COVID-19 pandemic, endorsed the view that the budgets are largely reflective of the PPP/C Manifesto. “The PPP makes it clear that the budget is an implementation of their Elections Manifesto and I am uncomfortable with that because I feel a budget ought to be a national document,” Professor Khemraj posited.
He said such a plan requires the input of all stakeholders including the main opposition – the A Partnership for National Unity + Alliance For Change (APNU+AFC). “It should reflect a long term vision,” he said while noting that though major emphasis is being placed on the country’s Oil and Gas Sector, equal emphasis ought to be placed on non-oil sectors.
In addition, Professor Khemraj said between 2008 and 2020 he has observed a worrying trend in the country with regards to its annual budget. “…About 66 percent of our total expenditure is current expenditure – which means you don’t have a lot of wiggle room for capital projects and we are not just talking about capital projects, build a road here that would break up next year, I am talking about serious infrastructural projects that can last over a long time,” he said.
Offering a comparative analysis, Professor Khemraj said during the same period, 34 percent of Jamaica’s Budget accounted for current expenditure while in Barbados it accounted for 23 percent and in Trinidad 17 percent.
“In Guyana there is a clear anomaly when it comes to the way expenditure is structure, and it is really a big problem because you don’t have a lot of space left for capital projects,” he said.
Further, he made a case for the revenues from the Oil and Gas Sector to be used, in part, for infrastructure development as well as human development. “I am talking about quality infrastructure, I am not talking about building a shabby road before the elections,” Professor Khemraj said while making a pitch for world class infrastructure and tertiary institutions such as universities and campuses in Linden and Essequibo.
Greenidge, who served as both Minister of Foreign Affairs and Minister of Finance in the past, submitted that for a budget to be effective it must form part of a plan both medium and long term.
“We need a plan, a plan that will set out priorities as regard sectors, priorities as regard resources, priorities as regard the management of financial tools, and fiscal tools,” Greenidge posited.
He submitted that the current and capital expenditures must go hand in hand and not independent to each other. “If you invest in a major capital project, you want to be sure that the arrangements for financing maintenance are in place,” he posited.
The former Minister also made a case for the capacity of the Ministry of Finance to be enhanced to improve its policy making capabilities. Greenidge submitted that the country is losing significantly in the area of Trade due to a disjunction between the country’s trade policy and fiscal policy.
“There is a tendency by the tax collection authorities to give primacy to the collection of taxes. In a country such as Guyana which prides itself as being a potential breadbasket for example, while you are not banning the importation of some items, the Trade policy requires that special taxes, sometimes punitive taxes be applied to certain types of imports where you have domestic productive capacity and where you are producing, so as to give them an advantage that is reasonable,” he explained.
He submitted that leniency on the part of tax collection authority has resulted in certain items finding their way into the local market when they ought not to have.
Meanwhile, Professor Thomas, an economist by profession, expressed the view that the budget failed to distinctively and clearly address the issue of poverty and inequality, the environment and spatial balance, even as he renewed calls for there to be a transfer of cash from revenues from the Oil and Gas Sector to the masses.
“If we don’t do that my fear is that the services that we generate or the windfall revenues would be pumped into companies like GuySuCo, which can never be turned around and made profitable…,” Professor Thomas said.
