BUDGET 2024

Introduction

This was the fifth Budget by the PPP/C Government in this Twelfth Parliament. It came against the backdrop of the unjust claim by Venezuela to two-thirds of Guyana, a threat to the country’s very existence. Internationally, 2023 was described by the London Guardian as the year in which the world reached a critical milestone with the peak of global carbon emissions from energy use. The Guardian quoted the International Energy Agency as raising hopes of an end to the fossil fuel era, when it predicted for the first time that the consumption of oil, gas and coal would peak before 2030, and begin to fall as climate policies took effect.

Following two positive developments in the Philippines and Brazil in 2022 when Trumpian type leaders – Duterte and Bolsonaro respectivelya - 2023 was not a particularly good year for peace and democracy. Russia continued its invasion of Ukraine while Israel, better known as the product of the Holocaust, itself engaged in a brutal and genocidal war to erase Hamas from the Gaza Strip. Coups had also returned to the African continent, in which at least seven countries had governments which came to power because of coups in the past three years. The age of the strongman politician appears to have returned across continents, with two of the largest countries by population led by strongmen.

Perhaps for the first time in its post-independence history, Guyana itself appears to have shed its non-aligned stance, welcoming a British military vessel and a former US Army General within days of each other. But thanks to Maduro and his wild threat, again for the first time, a PPP/C Government has embraced and celebrated the Guyana Defence Force.

The Budget Speech commenced at 2:50 PM and ended at 8:15 PM. It was a combative presentation by a visibly emotional Minister. Uncharacteristically, he allowed himself to be baited into anger by members of the Opposition, doing nothing to enhance his reputation as an outstanding speaker. The thrust of his out-of-the Speech remarks was to mistake elections for democracy. But even on that score, a one seat majority can hardly justify the winner-take-all style embraced and practised by this Government at almost every opportunity.

In our view, the Graph below tells the story of the current and recent Budgets. It shows four financial variables for the six years commencing in 2019 – the pre-oil year. The variables are Current Revenue, Current Expenditure, Capital Expenditure and finally, the Deficit for the year. That deficit is financed by internal/and or external loans, while surpluses could be used to pay back loans or to augment the Consolidated Fund. We consider 2019 is a useful benchmark year, being the year prior to the current government took office.

Let us look at the changes over the first and last year. Revenue has increased from $ 240,585.30 million to $717,810.60 million, by almost 200%; current expenditure has increased from $207,683.10 million to $ 434,809.90 or 109%; Capital Expenditure has increased from $66,262.40 million to $ 666,175.40 million, or 905%; and the Deficit has increased from $ 40,028 million to 420,649.7 million, or 951%. What does this mean?

Chart showing Key Financial Profile Source: National Estimates of the Public Sector Appendix A (G$ Millions)

The Government is clearly on a spending extravaganza, building without thinking, executing without planning and acting without analysis. That is scary. Only a couple of months ago, one of the MFI partners had cause to caution us about absorptive capacity. The media is full of reports of complaints by ministers of work not being done on time or being done very shoddily – a serious capacity and efficiency matter. If only 10% of this Budget is consumed in inefficiencies, that would be more than one hundred billion dollars.

This spending spree can very well put to jeopardy the Natural Resource Fund which is weighted in favour of current spending over savings. For example, the first 500 million is available for spending via the Consolidated Fund while US$1.250 Bn. of the first US$2 Bn. or 62.5% As a sign that the Government considers this too conservative, the Minister has notified the House that he is coming back very soon to change the NRF Act to allow for more money to be spent out of the Fund.

The most striking element of this chart is that capital expenditure can soon exceed total Government revenue - an unbelievable proposition. Roads, bridges and buildings now seem more than people. What did Sir Jock Campbell say about this model? That people are more important than ships, shops and sugar estates.

It seems that it only takes an idea from one or two men to become a priority expenditure worthy of a supplementary appropriation. Words like “urgent, unavoidable and unforeseen” provided in the country’s financial management laws to define expenditure from the Contingencies Fund have lost their meaning while the term “national development priorities” used in the Natural Resource Fund Act will be interpreted very liberally and subjectively. In both cases, at the cost of accountability and good governance.

The 11 January editorial in the Stabroek News pointed to the almost mindless construction of certain hospitals across the country, in some cases in areas where new hospitals have recently been built. The plan for high span bridge across the Berbice River is another case. The problem is that the Government has no planning capability and does not seem to want one. If it did, it would not need to return to the National Assembly for supplementary funds on multiple occasions each year.

As day follows night, we can be sure that the Government will be returning to the National Assembly on more than one occasion this year for supplementary provision. After all, the Budget makes no allowance for the Vice President’s pet project Amaila Falls or Bishop Edghill’s dream office complex to house 6,000 government employees.