First oil budget set at $552.9B

Jan 27, 2022 News

… Guyana projected as 1 of 3 fastest growing economies this year

By Gary Eleazar

Kaieteur News – With the 2022 Budget being the first to utilise monies from proceeds of the oil sector, Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh yesterday announced that government estimates spending some $552.9 billion this year.

Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh presenting the budget

Singh, who presented the budget themed, ‘Steadfast Against All Challenges, Resolute in Building Our One Guyana’ was adamant “we must be cognisant of the vastness of the opportunities that beckon us as a nation, and we must have the vision and courage to convert those opportunities into a positive and lasting reality, remaining faithful always to the oneness of our country.”
Budget 2022, he said “does precisely this.”
Prefacing his arguments before outlining measures for the year, Dr. Singh lamented not only the international developments that would have impacted economies across the world, but the local realities including what he called the most severe flood in recent memory which decimated some sectors. To this end, he sought to explain that like all commodity-exporting nations, Guyana remains particularly susceptible to global price fluctuations as evidenced by significant swings in our export earnings across some commodities in 2021.
As such, he explained, “among our main exports, rice and logs recorded an overall drop in prices.” The prices for key exports such as rice, logs and other commodities all fell on the international market.

The average world market price of rice fell by 7.8 percent year-on-year to US$458.3 per metric tonne for 2021, on account of increased supply in large producing countries. Regarding sugar, Dr. Singh told the House, the average world price of sugar rose by 37.6 percent at the end of last year to an estimated US$0.39 per kilogramme, owing to increased demand.
With respect to precious metals, the average price of gold increased by 1.7 percent year-on-year to US$1,799.6 per troy ounce in 2021.
Similarly, there was a significant increase in aluminum prices, which grew by 45.1 percent in 2021 to US$2,472.8 per metric tonne. With respect to crude oil, prices rose by 66.5 percent to an average of US$70.4 per barrel in 2021.

This increase, he said, “resulted from supply disruptions and the global energy crunch, the latter resulting from unprecedented growth in demand combined with dwindling supplies.”
As it relates to his projections for this year, Dr. Singh said, “in 2022, prices are expected to taper for most of our exported commodities.” The price of rice, he said, is expected to decline further by 12.7 percent to US$400 per metric tonne and similarly, the world price of sugar is expected to contract by five percent to US$0.37 per kilogramme.
The price of gold is also projected to fall in 2022 by 2.8 percent to US$1,750 per troy ounce, while the prices of aluminum and logs are expected to rise to US$2,700 per metric tonne and US$280 per cubic metre, respectively.
Like aluminum, the average price of crude oil is expected to increase this year, growing by five percent, owing to continued high demand to an average of US$74 per barrel in 2022.
Real Gross Domestic Product, Dr. Singh noted, is estimated to have grown by 19.9 percent, but non-oil GDP, according to him, is estimated to have grown by 4.6 percent in 2021.
To this end, he told the House “with this rate of overall growth, Guyana is likely to be amongst the three fastest growing economies worldwide in 2021.”

According to him, “the very creditable performance of the non-oil productive sector reflects the delicate and dynamic policy balance struck between aggressive containment of COVID-19 on the one hand and phased reopening of the economy on the other hand.”
Additionally, he credited his administration’s interventions “prompt and proactive flood mitigation measures which helped limit the fallout in the agriculture sector and supported the sector in resuming activity in the shortest possible time.”