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Budget 2011
Today the Minister of Finance will deliver the budget for this year. It used to be that budgets were regarded not only to indicate how much government intended to spend on the country’s development based on the funds its could garner but also to restrict its spending within the budget’s limits. To live within one’s means, so to speak.
No more. The government has now developed the wastrel habit of spending as it will and then going to the Parliament to pass “supplementary” allocations, after the fact. Of what value, then, is the budget that we will hear about today? At the very best we can only take it as a rough (very rough) indication of things to come.
As we do annually at this time we will look briefly at the three aspects of the usual budget: where the government expects to get the money it will spend; on what it expects to spend that money and finally what policies it will initiate to hopefully spur growth in the economy. On the income side, we can forget about the government-owned GuySuCo generating any profits for the Treasury.
On the contrary, the continued bleeding of the troubled corporation is expected to continue and in fact demand additional governmental cash infusions. So we expect the Minister to exultantly announce record hauls from the 16 percent VAT it has imposed on the citizens of this country. In line with our historical pattern, since most businesses keep two books to throw the GRA off scent, most of the VAT collections come from the pockets of the ordinary citizen.
Who, we all know, can least afford it.
Do not expect the government to even contemplate reducing the onerous VAT rate: from its perspective (which is always to garner as much income as it can for its spending spree) it’s on to a good thing. The government will once again include money promised by Norway for sequestering our forests.
With elections in the offing and some evident scepticism about the government’s programs, they may once again be disappointed. But with all of that VAT revenues pouring into its coffers, do not hope that the endemic borrowing of the government (from foreign and domestic sources) will be reduced.
The President was quoted that it has sworn off printing money to fund its deficits (when expenditure overruns income – as it always does with this government) and as if it were a source of pride, it will seek loans to do that dirty work. One suspects that loans are not seen as a source of concern because future administrations will have to squeeze future generations to pay them off.
On the spending side, both the President and the Minister of Finance have claimed that this budget will not be an “election year” one, although elections are scheduled later in the year.
They are addressing the prediction of opposition figures that, following the time honoured practice in every democratic jurisdiction, the government will throw money at the electorate in populist projects to garner their vote. The benefits of incumbency and all that.
We shall see. If they can keep their promise, they will certainly be bucking an old tide. The spending will once again be concentrated on infrastructural development that will present the opportunity for the contracting fraternity and their sponsors to rake in obscene amounts of “profits”. The Minister will boast ad nauseum about “stabilising the macro-fundamentals of the economy”. So the citizenry are expected to feel good that although they will have to tighten their belts another notch or two, the “macro fundaments” are steady.
For growth in the economy, the President boasted: “We have identified several growth poles that we think, if implemented, will catapult Guyana to a new era of prosperity never seen before in this country.” We hope these will be identified today.
Even though the governments exults in its neo-liberal economic model, do not expect them to lower the tax rate and so spur the economy through increased consumer spending. That would lower its sacrosanct revenues. No stimulus package here. So what if it is contradicting itself? Happy Budget Day.
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