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The PNCR’s Updated Social Policy Proposal – Is It Sustainable?
Talking Dollars & Making Sense
Kaieteur News- Welcome back to Talking Dollars & Making Sense. Today, we’re diving into the updated social policy proposal from the People’s National Congress Reform (PNCR). If you recall, the party initially proposed giving every adult Guyanese an average of $125,000 per month, which totaled a jaw-dropping $900+ billion a year. But in February 2025, the party scaled back that plan and introduced a more affordable programme costing $607 billion a year. Let’s breakdown what this new plan means and whether Guyana can afford it.
The New Social Programme: What’s Included?
Here’s a snapshot of what the PNCR is proposing:
The party’s economist, Elson Low, claims the programme will pay for itself and not add any spending to the 2025 national budget, which is $1.382 trillion. But how? The plan involves saving money by cutting wasteful spending and using higher tax revenues from increased consumer spending. Let’s see if this holds up.
Can We Save $300 Billion by Cutting Waste?
The PNCR points to a report from the International Monetary Fund (IMF) that says Guyana wastes 41% of its infrastructure spending due to inefficiency. Mr. Low argues that by fixing this problem, the government could save $300 billion and redirect it toward the social programme.
Let’s assume they succeed. If the government saves $300 billion, it would reduce spending from the current $1.382 trillion budget to $1.082 trillion without cutting important services.
Increased VAT Revenue from More Spending
The PNCR is also banking on increased tax revenue. With people getting more money through cash grants and higher pensions, consumer taxable spending is expected to rise by $525 billion. Since essentials like rent, electricity, and water are VAT-exempt, only $525 billion will be taxed. Applying a 14% VAT to the taxable portion would generate $74 billion in additional government revenue.
Let’s Do the Math
Here’s how the numbers stack up:
- Starting budget: $1.382 trillion.
- Savings from cutting waste: Subtract $300 billion, leaving $1.082 trillion.
- Add $55 billion for higher old-age pensions because $37 billion is already allocated in the current budget.
- Subtract $34 billion from total revenue (increase tax thresholds)
- Add $74 billion in new VAT to the total revenue.
This leaves the government with total spending of $1.618 trillion and projected revenue of $1.74 trillion. Clearly, this social program proposal will add $236 billion in additional spending and will leave only$122 billion in the Natural Resource Fund (NRF) by the end of the year.
What If Oil Prices Drop?
This plan assumes oil prices will average $72 per barrel in 2025. But if prices drop to $50 per barrel? That would slash Guyana’s oil revenue by $190 billion, completely wiping out all funds remaining in the NRF and leaving the government with a $68 billion deficit. In this case, Guyana would either make deep spending cuts or borrow more money–putting the country in a worse position.
Draining the Natural Resource Fund
Even under the current plan, the PNCR would need to withdraw nearly all the remaining money in the NRF. To do this, they’d have to change the law that limits withdrawals, which raises concerns about long-term sustainability.
A More Balanced Approach
The PNCR’s updated policy is more realistic, but it still carries significant risks and does not achieve its goal of not adding any spending to the budget. Saving $300 billion by cutting waste and relying on increased VAT collections assumes everything will go smoothly – which is rarely the case.
The revised social programme policy proposal, though slightly better than the last, could still completely wipe out the NRF and result in a deficit. We need to balance spending with fiscal discipline to ensure Guyana’s long-term financial stability.
Let me know what you think. Is this new policy a good move, or does it still need work? I’d love to hear your thoughts as we continue to explore Guyana’s economic future.
(The PNCR’s Updated Social Policy Proposal – Is It Sustainable?)
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