Economic Development and the 2023 Budget: Investments in Key Critical Areas for Growth

Jan 21, 2023 Letters

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Dear Editor,

The budget season is upon us with the Finance Minister Dr. Ashni Singh’s presentation of the government fiscal plans to promote growth of the economy while directly impacting the lives of Guyanese. The budget focuses on President Irfaan Mohamad Ali’s development priorities for elevating the nation and Guyanese. Clearly, allocation of resources to the critical areas including agriculture and food security, healthcare, transportation, housing, education, water and sanitation, increasing direct household income, fighting inflation and supporting those Guyanese in need, will continue to improve Guyanese lives.

The 2023 budget continues the impressive Gross Domestic Product growth (GDP) as Guyana realized significant growth, 62 percent in the past year, while the major world economies realized a modest 2.9 percent.  The minister also projects that Guyana’s GDP will grow at approximately 25 percent in 2023. The investments in the key sectors will not only support the growth, but also accomplish precisely what the government intends, which is to use windfalls from carbon to build a strong resilient economy with provision of key services that will impact lives directly.

Many economists, including myself, view GDP growth as a source to fund needed direct investments in the economy so every Guyanese can benefit from these gains.  This translates to investments in infrastructure, human resources, technology, and centrally the political, financial, and judicial systems to support the transformation.  Economic growth will continue as the Government is building a strong and resilient economy. This budget does exactly that, it channels resources to sectors of the economy that needs to improve to perpetuate and sustain GDP growth. Clearly, the Government’s fiscal plan is to drive growth directly to communities across Guyana.

In analyzing how this budget contributes to long term economic development, it is necessary to understand what are the key metrics to measure economic development and its impact on quality of life. In 2006, Development Economists, Todaro & Smith,  defined economic development is that condition that satisfies three economic tents: “the increase of the availability of basic life sustained goods such as food, shelter, health and protection; increase living standards by the provision of more jobs, better education, and attention to cultural and human values to generate more individual and national self-esteem, and expansion of the economic and social choices of individuals to free them from servitude and dependence”.  In modern day economy, this also translates to improvements to the infrastructure, in particular technological improvements, so that the economy can function efficiently and serves all segments of the population. This budget will have a direct impact on the overall economic development of the nation, especially health and welfare.  In fact, “economic historians estimate that improved health accounted for about one-third of the overall GDP-per-capita growth of developed economies in the past century”.

When examining the planned investments in the key critical areas, the budget clearly addresses both domestic and global economic conditions. For example, inflation still continues to be a major concern for every nation. The increase in disposable income to pensioners will bring relief and ease from the global inflationary pressures. The economic impact of zero excise taxes will also provide a relief to all households cost of living. The salary adjustments for healthcare workers, first responders, will also provide an economic relief in addition to incentivizing this sector to provide better quality of care and retention of key personnel. The increase of low-income mortgage will allow for the accumulation and building of wealth for entire family and can be transferred from generation to generation. Investments in water and sanitation will also reduce healthcare costs as households will now benefit from a source of healthy source of drinking water. And finally, Investments in education and transportation infrastructure, is necessary as there is a dire need of skilled resources to fuel Guyana’s transforming new economy.

This budget supports economic growth beyond the direct impact it has on household. The very definition of economic growth is to increase the size of the workforce as well as the productivity and output per hour worked. Economists have concluded that better healthcare, education, infrastructure, are investments in an economy that will yield an increasing productive workforce and quality of life. In sum, this budget will have a direct impact on quality of life, economic development and growth of the nation. Certainly, a master stroke both on the policy front with impact on lives of Guyanese by the Government. It’s time for speedy approval of the budget and begin the implementation.

Sincerely,

Dr. Tilokie Arnold Depoo, Economist

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• Dr. Tilokie Arnold Depoo, Economist, Gross Domestic Product, inance Minister Dr. Ashni Singh, President Irfaan Mohamad Ali

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