Introduction
The 2021 Budget Speech was delivered by Dr. Ashni Singh, who recently returned to Guyana after many years in international employment following the 2015 elections. Singh in familiar ground, having introduced the Budgets for the years 2007 – 2014 as head of the Ministry of Finance. In portfolio allocations following the 2020 elections, President Irfaan Ali has retained responsibility for the Ministry with Dr. Singh nominally acts in the Office of the President. Again, recognizing the impact of the COVID – 19 pandemic, the parliamentary sitting was held at the Arthur Chung Convention Center.
Dr. Singh was his usual groovy self. It must also be acknowledged that Bishop Juan Edghill, the Minister of Finance pro-tem, who makes no claim as an economist, has done more than credible work in the exercise of some of the functions of the Minister of Finance until Dr. Singh returns. The budget date was about average for the PPP / C, with Dr. Singh himself presented four Budgets (2007 and 2009-2011) earlier than on this occasion.
The circumstances and atmosphere of the Budget 2021 presentation were more normal than on the last occasion. Unlike the 2020 Budget which covered only three months of the year, the 2021 Budget covers a full year and timely progress should begin earlier to implement the significant Capital Program announced by the Minister. And in 2020, even as the Speech was being read, there was unrest in the West Coast Berbice, protesting the horrific murders of two youths from the area. On the last occasion, too, uncertainty and madness in the international economy coincided with the global pandemic while the price of oil was in the doldrums. Several months later, many vaccines have been tested and there is cautious optimism that the world may have turned the corner.
Then, too, there was a disagreement between the Government and Guyana’s Esso Exploration and Production Limited over the Payara Development Plan with the PPP / C indicating its intention to renegotiate the 2016 Petroleum Contract signed by its predecessor. Not only has Guyana given the oil giant everything it wanted, but since then, oil prices have rebounded in anticipation of widespread vaccination and herd immunity in major countries and regions of the world leading to some normality in the international economy.
At the territorial and sovereignty level, the border issue with neighboring Venezuela also appears to be in Guyana’s favor with the International Court of Justice ruling that it has jurisdiction over the matter.
We understand that consultations have taken place with smaller opposition Opposition political parties in the March 2, 2020 elections and that meetings have also been held with the Private Sector Commission representing the business sector and with Labor representatives .
The private sector is reported to have requested a reduction in Corporate Taxes, fiscal incentives for Construction / Hardware Companies / Workers, such as applying zero-rate VAT to ready mix cement, removing VAT on mobile data plans, removing VAT on all food fast food and give agricultural lands to food companies wishing to practice backward integration.
The Guyana Trades Union Congress (GTUC) on the other hand is reported to have requested a reduction in national lending, strict enforcement of the work permits rule, reduced concessions given to the private sector, improved medical services, the elimination of the Insurance Scheme deficit State (NIS), an increase in the national minimum wage and immediate restoration of the constitutional right to free education.
Clearly, the expectations of the Private Sector Commission (PSC) had received a more favorable response.
Unlike last year when Vice President Bharrat Jagdeo disclosed all pre-budget budget measures, on this occasion there were no such disclosures. Apart from a commitment to dismantle APNU + AFC government policies, the Vice President announced that the Budget would allow for expansion of the productive sector. It would be unfortunate if the pattern in Guyana is for new administrations to overturn the policies of their predecessors without some objective consideration.
In the field of Oil and Gas, the Vice President announced at his pre-budget press conference that the Welsh Development Agency should be established to include the destination point of his chosen onshore gas project which would enable the renewal of a striking community for ‘ the community. by closing the Welsh Sugar Estate.
Although the Vice President is very critical of the flare-up in oil production now taking place, the Government appears to have taken any renegotiation of the Petroleum Agreements off the table with the President making the case for the oil companies to “fair returns” on their investment. ”
Again, the Budget is touted as Guyana’s biggest Budget ever ”, funded not by any taxes that create the largest Budget deficit ever. Given last year’s events and the ongoing COVID – 19 Pandemic, that might seem like a small price to pay.