Govt. to borrow more to fund budget – Dr. Ashni Singh

Jan 26, 2022 News

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Kaieteur News – Ahead of today’s presentation of the 2022 national budget, Government said it will be borrowing from both domestic and international sources despite giving itself free reign to withdraw funds from the oil account.

This revelation was made by the Senior Minister in the Office of the President, with responsibility for Finance, Dr. Ashni Singh, while giving the nation a preview on the Budget. During the programme, aired on the National Communication Network (NCN) over the weekend, Dr. Singh explained that the GoG will be striking the right balance to ensure that it honours its arrangement with its international partners.
According to the minister, “As you know, we have been very careful and prudent in contracting debt but we will not, we have an ongoing engagement with our international partners so there will be an element of external financing, including external loans and there is going to be an element of domestic borrowing as well”.
This is so even though the PPP has given itself the green-light to access funds from the off-shore oil account. In fact, the Natural Resource Fund (NRF) Act which government rammed through the Parliament in December last year permits the withdrawal of as much as 100 percent of the Fund, as at the time of the enactment of the law. This therefore means that since the law was assented to on December 30, 2021 and the total revenue in the account at the time was just over US$607 million, government is free to withdraw the full amount.
Even with US$607 million on hand, the GoG will be approaching its overseas and local partners for loans to fund its “transformational development agenda” according to Dr. Singh. He said, “We are going to be striking the right balance. We are going to be striking an optimal balance between alternative sources of financing and so what you will see in Budget 2022 is a combination of financing from domestic revenue sources. This is of course the domestic revenue we collect in things like tax and non-tax revenue…the Natural Resources Fund will also be a source of financing for the 2022 Budget so that’s a second major source of financing. A third major source of financing will be external borrowing”.
The minister added, “…what that allows us to do is to be able to implement this accelerated development agenda to meet these urgent development needs and to implement this accelerated development agenda while keeping borrowing at an absolute minimum”. In 2020, Guyana collected some $230.4B in current revenues but with its total public debt figure standing at some $415.2B, it would mean the country that year earned half the amount it owes.
The country’s total public debt stood at $415.153 billion or the equivalent of US$2B at the end of 2020. This compared with the sum of $388.5B or the equivalent of US$1.8B, at the end of 2019, representing an increase of $26.7B. This is according to the Auditor General, Deodat Sharma’s 2020 Report.
Nevertheless, the Minister of Finance has said that the focus will be on addressing the most pressing developmental needs. In this regard, Dr. Singh hinted that emphasis will be made on investments into climate resilience. He pointed out that Guyana is still grappling with the COVID-19 pandemic, which has also impacted the global economy and disrupted the supply chains.
“We have seen the consequences on things like the supply chain, disruptions to the supply chain, global inflationary pressure you have seen those realities arising out of COVID-19 and Guyana has not been immune or insulated from those pressures and then of course, domestically we still have other vulnerabilities that we have to be mindful of,” he explained.
In listing one of those factors, Dr. Singh referenced climate change which has resulted in extreme weather events, high tides and even occasional floods.
As a consequence, he noted that investments will be made into building the country’s resilience. This will see government undertaking three projects resembling that of the Hope Canal. The three outfall channels will seek to mitigate the devastating effects of flooding in Regions Three, Five and Six.
Another area that will see investments is the public health sector, which according to the Finance Minister requires a lot of effort and emphasis. When it comes to the infrastructure of the country, Budget 2022 according to Dr. Singh will help to modernize the face of Guyana. While he did not elaborate much on this aspect, the Minister added that this year’s Budget also aims to create opportunities for Guyanese businesses and Guyanese nationals.
“As you know, we recently enacted the Local Content Legislation (and) that Legislation sets the framework for heightened participation by Guyanese nationals and Guyanese companies in the oil and gas sector,” he said, while explaining that Budget 2022 sets out to ensure “every person of working age has the opportunity to acquire the skills to participate in the modern Guyana”.

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