$330B Budget to be presented today

By Jarryl Bryan

Today marks the first budget Guyana will be getting in almost two years. With a sum of $330 billion expected to be presented by Public Works Minister Juan Edghill, it promises to be a budget that caters to some of the immediate needs of Guyanese amid the COVID-19 pandemic.

The Arthur Chung Conference Centre, where the budget will be presented today

During a press conference on Tuesday, President Dr Irfaan Ali had announced that the budget contains a number of measures that will put money into the hands of persons, from frontline workers directly involved in the COVID-19 fight to the Joint Services to the average Guyanese.
Vice President Bharrat Jagdeo has, in fact, quantified the money persons will save or receive, in the region of $20 billion. For one, Edghill, a former Minister within the Finance Ministry, will be announcing a sum of $150 million being set aside for frontline workers.

Joint Services
Members of the Joint Services will also be receiving a two-week tax-free bonus. This, therefore, means that the Guyana Police Force (GPF), the Guyana Fire Service and the Guyana Prison Service will benefit.
The Joint Services previously received a one-month tax-free bonus implemented by the former People’s Progressive Party (PPP) Government, until the measure was discontinued by the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government back in 2015.
Another measure that President Ali reiterated would be implemented, is a $25,000 cash per household distribution drive. It was explained on Tuesday that the Government favours teams of workers going into communities and distributing vouchers, for which a representative of the household would sign.

Pensioners & VAT
In addition, the old-age pension will be increased to $25,000 per month. In addition, pensioners will receive free water, with the overall removal of Value Added Tax (VAT) on electricity and water also slated to be announced.
It was announced that VAT would also be removed from all medical supplies, not just those related to treating COVID-19 and its symptoms, or even for Personal Protective Equipment (PPE).
VAT will also be removed from hinterland travel and cell phones, as well as building and construction materials. The Government will also be removing corporate tax on private education and healthcare, a measure likely to bring the service costs down.

September is Indigenous Heritage month. President Ali had announced that $800 million had been set aside for the Amerindian Development Fund. This will provide funding to support the socio-economic development of Indigenous communities and villages, through the implementation of Community Development Plans (CDPs) the Indigenous communities themselves picked.
When it comes to school children, the Government will also be implementing, effective from January 1, 2020, a $15,000 cash grant for children and a further $4000 uniform voucher allowance.

Productive sectors
There are also measures for the productive sectors. VAT has been removed from all exports, as well as machines and equipment. Additionally, duties have been reversed on machines and equipment.
President Ali had also announced that tax concessions will be granted for persons operating in the mining, agriculture and forestry sectors, one of several campaign promises the President made in the run-up to the elections.
Persons looking to purchase a used vehicle are also catered for, since the Government will be reversing the ban on importation of vehicles older than eight years that was introduced by the former APNU/AFC Government back in 2016.
Land leases is another issue that will be addressed by the Government. According to President Ali during his press conference, all increases in land lease fees dating from 2015 will be reversed.
Back in 2017, the former Government had increased land rentals for rice farmers from $1000 to $7000 and drainage and irrigation fees from $2500 to $8000. In addition, rent for cattle pastures went from $487 to $2500 and fees for other pastures to $1400.
The situation led rice farmers to protest the increase and the then PPP Opposition had moved a motion calling for the reversal of the fees back in 2017, although it was ultimately defeated.

Sourcing the funds
Questions have been raised about how the PPP Government is sourcing the money for such a large budget, considering the fact that the country has been in a prolonged political standoff since 2018, after the passage of a No-Confidence Motion against the former Government.
In addition, the last time a budget was passed was in November 2018. But Vice President Jagdeo had explained during Tuesday’s press conference that the monies comprise funds the Government borrowed, as well as rollover sums.
“We’d have to borrow. Because we have to continue borrowing, given the revenue shortfall and given that a lot of the expenditure is a rollover expenditure. We’d have to continue accessing the domestic market for financing the budget.”
“We’re hoping in a year or two, to not only correct this, but also to retire all the domestic debt or a significant part of the domestic debt… which are reflected in treasury bills issued for fiscal purposes and the overdraft at the central bank,” Jagdeo had said, adding that the Government is careful about borrowing from the domestic market to avoid crowding out Private Sector investment. (G3)