The theme of this first full year budget of the PPP / C since taking up his post is “Path to Recovery, Economic Dynamics and Resilience”. The Policy Issues and Targets are set out in Chapter 4 of the Budget Speech with the subtitle Agenda for 2021 and Beyond. The Budget Focus highlights some of the key issues identified by the Minister and offers some of our own comments.
In summary, the Ministry’s plan for the near term is to “keep people safe and continue to build the economy.” In the medium term, their plan is to make Guyana an economic powerhouse where national prosperity is a reality. The Minister proposed that the delivery of these plans requires a broad resilient productive sector, creating meaningful and rewarding employment and the emergence of a dynamic entrepreneurial and small business sector.
A. Macroeconomic Forecasting
Anticipating high rates of real economic growth, the Minister recognizes the danger of Dutch Disease – a feature of economies experiencing rapid growth – and offers the country an agenda designed to make it competitive in the future. addressing stability and sustainability. The Minister expects that this will be achieved through prudent contracting of new funds, careful targeting, controlling government spending and strengthening revenue administration. In particular, the Plan hopes to achieve adequate levels of external reserves, and to ensure stability of exchange and interest rates and low inflation levels.
B. The Low Carbon Development Strategy (LCDS)
The Minister reaffirmed the Ministry’s commitment to revive the Low Carbon Development Strategy (LCDS), and focused on the forest partnership Agreement with the Norwegian Government allowing Guyana to earn US $ 250 million over a five-year period. Key to this Strategy was a major hydroelectric project at the Amaila Falls on the Kuribrong River, the failure of which was attributed squarely but incorrectly to the political opposition.
The key actions proposed under this Strategy are:
1. Unlock more than US $ 135 million receivable under Norwegian Treaty funds and its investment in renewable energy projects.
2. Assess the emerging market for forest climate services.
3. Update and expand the LCDS into a comprehensive development strategy.
C. A Diverse, Resilient and Competitive Productive Sector
The Minister announced extensive plans for Oil and Gas; the Mining Sector which it estimates employs over 27,000 people; Forestry; Agriculture and Food Safety including Sugar, Rice and Other Crops, Agro-processing, Livestock, Fisheries and Aquaculture; Savannah Intermediate Development Initiative, Drainage and Irrigation;
Sustainable Tourism; Information technology; Industrial Development and Manufacturing; and Small Business Support.
In the area of Oil and Gas, the Minister announced plans to create an enabling and regulatory environment for the oil and gas sector including reforming legislation, developing a Petroleum Sharing Agreement model, examining a revised petroleum financial regime, promoting the draft local content policy and related legislation and the Petroleum Commission Bill.
Expressing plans to work with stakeholders to ensure sugar viability, the Minister reserved his strongest language for what he describes as “hundreds of years of sugar growing being slaughtered at the altar of political convenience”. In relation to the three sugar estates closed by the previous Administration, the Minister announced that the Corporation Board was assessing the damage suffered and the cost to re-establish those estates.
The Ministry has announced that Agriculture will be one of the main anchors of the country’s non-oil economy with the aim of providing food security, improving income, creating jobs and generating foreign exchange income.
Recognizing that the Welsh Sugar Estate cannot be reopened, the Minister announced plans for the establishment of the Welsh Development Agency (WDA) which he estimates will directly employ 3,000 and a similar number indirectly. New frontier crops to promote nationwide include coconut, corn and soybeans.
In Livestock, the Government proposes to engage in partnerships to realize improvements in the quantity and quality of home-grown meats and meat products and exports. The Minister announced a modular slaughterhouse in the Garden of Eden and a modern slaughterhouse in Region 5.
In tourism the Minister announced that at least six large privately funded hotel brands will start construction in 2021, adding 1,000 hotel rooms with a further 2,000 to 3,000 added in the medium term.
In information and communications technology, the Minister highlighted the liberalization of the telecommunications sector and expects operators to contribute at least $ 360 million to a University Fund to facilitate access by poor and vulnerable communities.
D. Transformational Infrastructure
He announced the Minister as three areas that he considers to be of transformative value, namely Energy, Transport Infrastructure and Marine and River Defense.
1. Energy
The many projects designed to expand the country’s energy capacity include the Amaila Falls Hydro Project and the offshore gas power project to be the trailblazer to develop Guyana’s path to domestic energy security in the next three years. In this regard, the Minister announced geophysical, geotechnical, engineering and environmental impact assessment studies to be undertaken. It also announced plans to install 10 mini-grids and four off-grid systems in 2021, four solar farms and three hydro projects across different communities in the country.
2. Transport Infrastructure
Major road and bridge projects announced include:
– reinstatement of the Linden – Soesdyke Highway;
– Diamond to Mocha road link;
– the four lane highway from Eccles to Mandela Avenue;
– a four lane highway between Schoonord to Parika;
– development of the Parika to Goshen route; a
– the Timehri link to Bartica.
The Minister also announced plans for the construction of a high span bridge across the Demerara River and the Corentyne River Bridge Crossing, a joint project by the Guyana and Suriname Governments.
Six steels are identified for rehabilitation: Bartica, Supenaam, Parika, Kumaka, Wakenaam and Fort Island.
Attention is being given to the troubled CJIA project to add two passenger boarding bridges, the airline’s rehabilitation and the commercial center’s administrative and dressing offices.
3. Sea and River Protection
For 2021, the Minister announced plans to further strengthen the country’s sea and river defense, identifying eleven work areas, spread across the country.
E. Investing in Our People
The Minister identified nine critical focus areas: Health, Education, Housing, Water and Sanitation, Youth, Culture, Sport and the Arts, Older People, People with Disabilities, Victims of Domestic Violence, and Amerindian and Hinterland Development. Four of these are discussed below.
In health, the immediate highlight is the introduction of COVID-19 vaccines during February, while several initiatives for the development of the health sector were announced, including Port Mourant Ophthalmology Hospital, Lusignan Health Center, National Referral Hospital and construction and post- fit the maternity wing of the New Amsterdam Hospital.
Education also emphasizes pandemic preparedness including the provision of PPEs and a revamped Guyana Learning Channel Trust. The Speech also revealed plans to revamp the University of Guyana and establish an online learning institute delivering 20,000 scholarships over the next five years.
In housing and water, the plan for 2021 is to allocate 10,000 housing lots and distribute 7,000 land titles. To facilitate infrastructure and utilities work in new and existing housing areas, the Budget allocates $ 6 billion. Allocations to the Water division include funds for the acquisition of equipment and the improvement and expansion of the nationwide water supply network system, the acquisition of 20,000 water meters and for the sanitation and solid waste management practices.
For Amerindian and Hinterland Development, the Minister announced plans for granting titles to Amerindian villages, employing 2,000 CSOs, spending $ 196.6 million for boats, machinery and equipment, investing $ 1.75 billion for hinterland roads and awarding 196 scholarships.
Ram & McRae comments:
● The Plans for the onshore gas project do not include any marketing, economic and financial studies, probably because the project is considered brainless.
At the very least, the country will have to consider how much gas it intends to use, how much it will use in generating electricity and what it will do with the balance, if any.
● Transit and prestige projects are always buzzing but Guyana’s track record with such projects has been far from uniform with the PNC Mazaruni Road Project, the PPP Del Conte road project and the Skeldon Sugar projects and their cost to ‘ r economy.
● There seems to be a presumption that unlimited land is available for housing in the main population and economic centers. In fact, as seen in the squat Success saga, there is some competition for land for agriculture and other purposes and the decision will require a land use policy.
● The Minister did not show the same level of confidence in reopening the sugar estates and with only $ 2 billion allocated for GuySuCo in the Budget, one wonders if there is some hesitation.
● The speech was brief on governance, corruption, local government elections and constitutional reform.