BUDGET 2024 set at $1.146 Trillion

Jan 16, 2024 ExxonMobil, News, Oil & Gas

By Kiana Wilburg

– Reveals plans to increase debt ceiling, revise rules for withdrawals from oil account

– Economy projected to grow 34.3 percent this year

Kaieteur News – Senior Finance Minister, Dr. Ashni Singh on Monday unveiled a $1.146 Trillion budget for 2024 under the theme, “Staying the Course: Building Prosperity for All.” This is the first time Guyana has passed the trillion dollar mark for its budget which will utilise a portion of the oil revenues saved in the Natural Resource Fund (NRF). Notably, this year’s budget represents a 46.6 percent increase over 2023’s budget which was $789.1B.

To meet this astronomical spending plan, Minister Singh revealed that government will be approaching the National Assembly for an increase in the domestic and external debt ceilings. He said this will provide the flexibility needed to optimise on the financing mix while at the same time safeguarding debt sustainability.

Minister Singh also revealed that there will be a revision to the NRF withdrawal rule which, once approved, will result in an upward revision to the NRF withdrawal amount to take effect from this fiscal year. He said the revised withdrawal rule will retain the important feature that, as production and revenue ramp up further, an increasing share of the inflows into the NRF will be saved relative to the share transferred to the Consolidated Fund to finance national development priorities.

Speaking to the nation’s economic performance, Minister Singh who presented for exactly five hours and 20 minutes, revealed that the real Gross Domestic Product (GDP) was projected to grow by 25.1 percent for 2023, with non-oil GDP expected to expand by 7.9 percent. “I am now pleased to report that Guyana’s real GDP is estimated to have grown by 33 percent overall in 2023, with stronger-than-expected expansion of 11.7 percent in the non-oil real GDP,” the minister said.

He further noted that the expansion of the overall real economy in 2023 can be largely attributed to continued growth in oil and gas activity. In this regard, the minister recalled that there was the notable achievement of first oil at the new floating, production, storage, and offloading (FPSO) vessel, called Prosperity, in November at the ExxonMobil-operated Stabroek Block.

Additionally, while growth in the non-oil economy was mainly driven by expansions in the construction and services sectors, he said notable increases were also observed in all subsectors within agriculture, forestry, and fishing and manufacturing, as well as in the other mining and quarrying subsector.

With respect to 2024 growth rates, Minister Singh said Real GDP is projected at 34.3 percent. Once realised the minister said this will represent the fifth consecutive year in which the Guyanese economy will be growing at more than 20 percent, and will result in Guyana growing at an annual average of 38.8 percent over that five year period. Minister Singh said the projected expansion this year can be primarily attributed to further increases in oil production as the Prosperity FPSO ramps up its operations.

Importantly, Minister Singh said the non-oil economy is projected to grow by 11.9 percent this year, driven by consistent expansion in all subsectors in the agriculture, forestry and fishing sector, continued expansion in construction and services, as well as a recovery in bauxite and gold mining. Should this be achieved, he said this will mean the non-oil economy would have recorded four years of consecutive growth, and an average growth rate of 9.9 percent annually since its 7.3 percent contraction in 2020.

Turning to measures aimed at improving the lives of Guyanese, Minister Singh noted that government has maintained zero percent Excise Tax on petroleum products since March 2022. “As world market fuel prices remain volatile, we remain responsive to absorbing the impact of elevated fuel prices as a means of mitigating the transfer of higher fuel cost to the Guyanese people,” the minister said. He noted that this measure will be kept in place while fuel prices remain elevated. At current prices, Minister Singh said this measure results in Government foregoing an estimated $40 billion annually.

Minister Singh recalled that in August 2021, government had adjusted freight charges to the pre-pandemic levels for the purposes of computing import taxes and in order to combat the increase in shipping costs which were passed on to consumers by importers. He said this measure will be extended for a further 12-month period from January 1, 2024 to December 31, 2024, at a cost of over $6 billion.

It would be recalled that Government had launched the part-time job programme in 2022, in which one person per household was able to earn $40,000 by working 10 days per month in public offices in proximity to their homes. In 2023, Minister Singh said over 15,000 persons were employed through the programme in several regions, placing over $6 billion in disposable income into these households. In 2024, Minister Singh said this programme will continue and be expanded, with over $10 billion allocated.To address other cost of living pressures, Minister Singh said $7 billion is allocated for measures to be determined after consultations with stakeholders.

In support of the development and expansion of small and medium enterprises as it relates to the cost of financing, Minister Singh said government will partner with the commercial banks to lower the interest rates on loans up to $5 million, thereby reducing the cost of financing for small businesses.

In recognition of the importance of sports and technology to human and economic development, and in particular to young people, Minister Singh announced the removal of Value Added Tax (VAT) and duty on sports equipment. He also announced the removal of VAT on essential cell phone accessories, such as chargers, charging cables, and headphones, along with phone components for repairs.

With respect to Old Age Pension (OAP), Minister Singh said this will be increased from $33,000 to $36,000 per month. He said this reflects a 75 percent increase in pension since resuming office in 2020, and will benefit 76,000 persons, placing an additional $2.7 billion of disposable income in their hands.

Regarding public assistance, he said this will increase from $16,000 monthly to $19,000 with effect from January 1, 2024. Minister Singh said this represents a more than doubling of the public assistance since the PPP/C Government resumed office. He said this will place $1.2 billion in additional disposable income in the hands of over 35,000 persons.

To promote eye care for school children and pensioners, Minister Singh said government will provide a $3,000 voucher towards the cost of an eye test for over 205,000 school children and 76,000 pensioners at a cost of over $840 million, to determine whether the person tested requires spectacles to aid their vision. For those who require spectacles, a $15,000 voucher would be provided towards the cost of the spectacles for the above category. This measure is estimated to cost $955 million.

In the case of school children and pensioners living in the hinterland where testing facilities might not be readily accessible, an alternative arrangement will be put in place. The total cost of this intervention aggregates to $1.8 billion.

While noting that the early detection of cervical cancer is important to reducing illness and death from the disease, Minister Singh was pleased to announce that government will provide a voucher of $8,000 for women between the ages of 21 to 65 years of age, to meet the cost of Cervical Cancer Testing. This intervention will cost an estimated $2.8 billion.

In order to promote household fire prevention capabilities, the minister announced the removal of VAT and Duty on fire extinguishers and smoke alarms.

Noting that the Current Minimum Pension paid by the National Insurance Scheme is $35,000 monthly, the minister said this will now move to $43,075. He said this will result in $2.6 billion in additional disposable income to the benefit of over 27,000 persons.

With respect to Survivor’s Benefit which is payable to the Dependants of a deceased insured person, the minister said this will move from $17,500 monthly to $21,537. Minister Singh said this will make an additional $600 million of disposable income available to over 12,000 persons.

Regarding the Invalidity Benefit which is paid by NIS, Minister Singh said this will move from $35,000 monthly $43,075. This will make an additional $24 million of disposable income available to over 200 persons.

Minister Singh also announced that government will offer eligible persons with contributions ranging from 700 to 749, the option to accept as full and final settlement, a one-off grant depending on the year in which the last contribution was made. This intervention can benefit over 3,800 persons at a cost of $550 million.

Turning to the ‘Because We Care’ Student Grant, Minister Singh said this increased from $35,000 last year to $40,000. It will benefit of over 205,000 school children in the public and private schools, placing an additional $1 billion in the hands of the parents of school children.

Together with the ‘Because We Care’ Student Grant, the uniform voucher allowance of $5,000 will result in parents of over 205,000 school children receiving a total of $45,000 per child, with the two grants aggregating to a transfer of $9.2 billion to these parents.

Minister Singh also revealed that the government will commence the first phase of eliminating outstanding loans owed by graduates of the University of Guyana, on the condition that these graduates can demonstrate proof of being employed or self-employed in Guyana after their graduation, for a minimum period to be specified.

With respect to life insurance measures, Minister Singh recalled that in 2022, several initiatives were introduced to encourage citizens to obtain life and medical insurance policies. He said these measures allowed taxpayers a deduction from their chargeable income for premiums paid for life and medical insurance up to a maximum of 10 percent of their income or $30,000 monthly, whichever is lower. To further incentivise citizens to insure themselves with life and medical insurance, Minister Singh announced an increase in the deductible ceiling from $30,000 to $50,000 monthly or 10 percent of income whichever is lower. This intervention will reduce the taxable income and consequently the tax payable by the tax payer and will facilitate greater access to coverage for medical cost.

Minister Singh also announced the increase of the Income Tax Threshold from $85,000 last year to $100,000 monthly, with effect from year of income 2024. As a result of this adjustment 13,000 persons will be removed from paying income taxes and will result in $4.8 billion increase in disposable income of workers.

Overall, Minister Singh said these measures will provide over $70 billion to businesses and individuals, as government continues to provide relief to the most vulnerable, and promote the expansion of productive activity and job creation.

$1.146 Trillion, ceiling, Dr. Ashni Singh, revise, Senior Finance Minister

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