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Jagdeo blames volatile oil prices for not increasing public servants’ wages by 50% but disregards concept while racking up debt
Kaieteur News – Vice President, Bharrat Jagdeo has blamed the volatile oil prices for government’s decision not to increase the wages and salaries of public servants by 50 percent; however, this concept seems distant from government’s thoughts as the country’s debt continue to climb.
Vice President, Bharrat Jagdeo
This year, public debt is set to increase by another US$2.2B, up from US$4.5B at the end of 2023. This means that by year-end, the country will be saddled with a debt of about US$6.7B. It was Jagdeo at a press conference earlier this year that told reporter’s some 40% of this year’s $1.146 trillion Budget will be backed by loans.
The politician had defended the loans being taken by government, given the revenues to come in from the sector, ignoring the volatility of oil prices.
At his press engagement on Thursday however, the VP presented a case against increasing public servants’ wages by 50 percent, arguing that the Opposition’s call for workers to be paid more was merely a political gimmick.
The former Head-of- State pointed out that such a move could even bankrupt the economy. He said, “…they did in the past and they want to do it again by making these outrageous claims hoping that people would hear 50% under APNU, I will vote for them. Because its political season I’ll vote for them and when they get into office you get nothing or they just will bankrupt the economy.”
Jagdeo underscored the need to be careful in the fiscal planning process, as he noted, “You can’t speak about and lament the economy is getting more and more concentrated around oil revenue and that the future of oil revenue can be uncertain right because oil prices could collapse like they did in 2015 to under $30 a barrel.”
He continued, “Suddenly it collapsed from $120 to $30 a barrel and then (you) built out a recurrent expenditure that you cannot cut in such a situation because you are stuck with it and you build it out on this perception that you’d always have this money in the future. So and you can’t borrow for that purpose, for the purpose of paying wages and salaries because if you borrow for that after a time you will go back to what we had in the past.”
The Vice President argued that expanding recurrent expenditure cannot be done without considering the volatility of oil prices.
The Opposition has been clamouring for workers to be paid more due to the increase in revenue flows to the Natural Resource Fund (NRF), but Jagdeo believes the political group should inform the nation how this can be sustained. The VP said increases to the capital budget can easily manage such shocks, since a project can be slowed, stopped and even completed overtime, pointing out that this cannot be the same for recurrent expenses. He was also keen to note that public servants are now benefitting from $30B more than they did in 2020.
While the VP has factored in the likelihood of a fall in oil prices to avoid paying more to the public servants in this country, government has seemingly turned a blind eye to the impacts such shocks can have on the economy as it continues to increase public debt.
Last year, government’s borrowing plunged the country 23% deeper into debt. Jagdeo at his January 18 press engagement this year at the Office of the President, while responding to a Kaieteur News article on the increasing debt pointed to the revenues expected to come in from the oil sector.
He reasoned, “Our future revenue, if we forecast based on oil production, even for the approved projects, and Whiptail which will be approved, if we only factor in production at those levels, at say current oil prices at the volumes that we expect to produce from those projects, the revenue for the state in the outer years- that is by maybe 2028/ 2030 we could be (receiving) US$5.7 to US$6B.”
Jagdeo also pointed out that revenues for 2025 from the sector is forecast to be about US$2.6B, above the existing external debt of US$1.8B.
- Bharrat Jagdeo, clamouring, Debt, given the revenues, Government, increase, oil, prices, public servants, Vice President, volatility
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