Govt. rakes in considerably more money, spends less

Nov 16, 2009 News

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Financial mid year report…
The Finance Minister’s recently tabled 2009 mid-year report contains figures that suggest that the Government has raked in a considerably significant increase in revenue.
According to the report, during the first half of 2009, Central Government revenues amounted to $48.4B which represent a $6.1B increase to the corresponding period last year.
The total Excise Taxes collected this year moved to $10.4B from $6.7B last year.
According to the Minister’s report, the increase in Excise Tax resulted from Government reinstituting taxes on petroleum as a result of lower world market prices as compared to 2008 when these taxes were significantly reduced to assist in minimising the impact of the then steadily increasing fuel prices.
The adjustments to the Excise Tax rate on petroleum led to a net increase of some $2.9B in 2009, while the contribution of Motor Vehicle Excise amounted to $0.7 billion as a result of a 22.7 percent increase in motor vehicle imports.
On the other hand, collections from the Value Added Tax declined from $11B to $10.9B.
Internal Revenue collected for the first half of this year amounted to $20.2B, representing a $1.2B increase in collections for the same period in 2008.
With respect to personal income taxes, PAYE (Pay as You Earn), there was a five per cent increase amounting to some $300M more than what was collected in 2008.
This increase was attributed to increased income levels.
Taxes collected from the self-employed also generated an increase, namely 19.3 per cent above the 2008 level with a collection of $1.1B, while Company Taxes from the Private Sector also exceeded 2008 collections this time by 3.7 percent.
Customs and Trade Taxes earned, totalled some $3.4B, representing another increase in collection this time 9.3 percent, over 2008.
The major contributor continues to be import duties which generated $3B, an 11.1 percent increase over that of 2008.
This is a result of an increase in the value of consumption goods and selected categories of non-durables and motor vehicles.
According to the Finance Minister’s Report, collections from the non-tax category during the first half of 2009 exceeded 2008 by 46.8 percent or $3.5B, which mainly resulted from the receipt of $2.3 billion in Bank of Guyana profits as against $1.1 billion in 2008.
In light of the first half performance, total projected revenue for the year has been revised to $91.9 billion.
As it relates to total expenditure, this amounted to $45.8B, representing expenditure of 2.1 percent less than in 2008.
Current expenditure amounted to $34.6 billion, 1 percent or $300 million more than 2008.
The report documents personal emoluments increased by 10.2 percent to $12.1B and this was attributed to a combination of salary increases awarded in 2008 and annualised in 2009 and the integration of the Temporary Cost of Living Adjustment with effect from January 2009 into the salaries of all persons earning less than $50,000 during 2008.
Additionally, expenditure for transfer payments which amounted to $9.4B reflected a six percent increase during the period January to June 2009, and was accounted for mainly by increases in education grants and pension increases.
The report stated that expenditure on goods and services recorded a decrease for which the main contributor was the significant reduction in the international price of fuel as reflected in the 22.5 per cent reduction in expenditure on fuel and lubricants from $711.8M in 2008 to $551.7M during the same period in 2009.
Increases in expenditure were however recorded in the areas of materials and supplies largely as a result of the costs associated with the operationalisation of the four new diagnostic centres.
As it relates to Capital expenditure, this totalled $11.2B during the first half of 2009 representing a significant decrease of 10.5 per cent relative to 2008.
It was pointed out that while there were several areas of increased expenditure namely health, housing, water, transport and communication, there were also some delays as a result of logistical and other issues in the area of energy and other infrastructure.
As a result, total expenditure has been revised downward to $126.4B or 1.1 per cent less than the budgeted $127.8B.
Another decline recorded in the report was that of grants, which for the first half of the year totalled some $3.1 billion reflecting $7B less than what was received during the same period in 2008.
As such, the revised projection for grants is $15.2 billion.
At the end of the first half of 2009, the overall performance of public enterprises reflected a deficit of $0.7 billion as against a deficit of $3.8 billion for the same period of 2008. Guyana Power and Light Inc. recorded a surplus of $1.5B in the first half of 2009 as compared to a deficit of $91.0M recorded for the same period in 2008, while Guyana Oil Company Ltd. realised a surplus of $1.3B during the period under review in 2009 as compared to $517.2M for 2008.
The main contributor to the improved performance was attributed to the reduced cost of fuel.
Guyana Sugar Corporation Inc. (Guysuco) recorded a deficit of $2.1 billion, compared with $2 billion in 2008, as a direct result of a shortfall in its production target which impacted directly on export volumes.
Taxes paid to Central Government during the first half of 2009 reflected $168.1M more than that of 2008 as a result of higher payments by Guyana Oil Company Ltd.
According to the report, the 2009 overall deficit of the non-financial public sector was projected to improve to $16.7B as against the actual deficit of $18.5B in 2008.
Against this background of the fiscal developments reported, the overall fiscal balance is now projected at a deficit of $18.5 billion.

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