Latest update February 5th, 2025 6:40 AM
Govt to take out $512.4B from oil account to fund $1.3 trillion budget
Kaieteur News- The Government of Guyana will be withdrawing $512.4 billion or US $2.5 billion, this year, from the Natural Resources Fund to support its 2025 National Budget.
Minister of Finance, Dr. Ashni Singh, told the National Assembly that deposits into the fund for last year totalled some US $2.6 billion. He explained that “The Fund received US$2.2 billion in profit oil, US$557.5 million from Liza Destiny, US$869.2 million from Liza Unity and US$796.3 million from Prosperity. With respect to royalty payments, US$348 million was received from the Stabroek Block operator.”
Dr. Singh also said that in keeping with the amount approved by the Parliament in 2024, almost US $1.6 billion was withdrawn to finance national development priorities in that Budget and, at the end of last year, the fund stood at US $3.1B, which included interest income and net of withdrawals.
“Further, based on the 2024 petroleum deposits, an estimated US$2.5 billion can be withdrawn from the NRF and transferred to the Consolidated Fund to support national development priorities in this year’s Budget,” he said.
Finance Minister, Dr. Ashni Singh (Govt to take out)
It is important to note that this withdrawal will represent the largest ever taken out of the Fund since the country first started producing oil in 2019. In addition to the oil funds, the government also plans to finance the Budget using $350 billion in loans as was disclosed by Vice President Bharrat Jagdeo on Thursday. This publication reported on Friday that the $1.382 trillion 2025 National Budget will be funded by over $350 billion in loans. The VP made these comments during his weekly press conference at Freedom House.
When asked what percentage of the Budget would be funded by loans, the Vice President said that if one takes a look at the oil and non-oil revenue, there is a table in the estimates under the heading ‘Public Sector Financial Operations’ which will give a breakdown of how the funds are accumulated.
The VP said, “basically, if non-oil revenue is about 500 billion, billion dollars, and non-oil revenue, if you include inflows from GRIF and the LCDs, would be another 500 million. So that means about three, 300-odd billion would be funded through loans. So just read, read it there.”
“You would see it here: public sector financial operations, and you can see how much of the revenue, or the exact figures would be $454B in revenue plus $16 billion of GRIF inflows; about $41 billion from carbon credit inflows, which will give about $511B and then $512B is from NRF withdrawal. So, that is a trillion dollars…”
Looking at the estimates it shows that $349.98B will be accumulated from financing, which represents roughly 25.25% of the Budget. Giving a breakdown of the financing, external financing represents $322.44b while $27.5B will be domestic financing.
Despite commencing oil production in 2020, the Government of Guyana (GoG) has grown the country’s debt by a significant US$4.2B as at the end of December 2024.
In 2019, the country’s debt was US$1.8B. According to Annual Reports from the Bank of Guyana (BoG), the nation’s debt grew by 46.7% in 2020 to US$2.6B.
In 2021, the debt surged to US$3.1B, and in 2022 this trend continued with the total stock of debt climbing to US$3.7B.
In 2023, debt increased further by 23.4% to US$4.5B while this grew to a massive US$6B at the end of 2024, as indicated by the Finance Minister last week. The Irfaan Ali-led administration has often touted the low GDP to debt service ratio, meaning that the country’s Gross Domestic Product (GDP) far outweighs the country’s annual payment repayment on loans.
For instance, Dr. Singh pointed out the country’s progress over the past four years in this regard. He said, “Importantly, over the last four years, the ratio of total PPG [Public and Publicly Guaranteed Debt] debt-to-GDP plummeted by more than 20 percentage points, from 47.4 per cent at the end of 2020 to 24.3 per cent at the end of 2024. This provides clear indication of a marked improvement in Guyana’s capacity to maintain public debt into the future, without the need for fiscal adjustments, and places Guyana in the position of having one of the lowest debt-to-GDP ratios worldwide. Indeed, the latest available statistics rank Guyana as having the second lowest debt-to-GDP ratio within the Western Hemisphere in 2024.”
(Govt to take out $512.4B from oil account to fund $1.3 trillion budget)
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