Budget 2021 will stimulate economic growth, restore investors’ confidence – GCCI

The local Private Sector continues to express confidence in the People’s Progressive Party/Civic’s (PPP/C’s) vision for Guyana with the Georgetown Chamber of Commerce and Industry (GCCI) being the latest body to laud the Administration’s $383.1 billion National Budget which it said will stimulate economic growth.
“The Georgetown Chamber of Commerce & Industry is positive that Budget 2021 has the potential to stimulate economic growth, restore investor’s confidence, sends the right signals to enterprise and has the potential to chart Guyana’s development, guided by the vision of the leadership of our nation,” the Private Sector body said in a statement on Sunday.

GCCI President Nicholas Boyer

While Guyana’s economy grew by 43.5 per cent due to the commencement of oil production, the non-oil economy contracted by 7.3 per cent during 2020, which the GCCI recognised is the largest contraction in economic growth for Guyana and was as a result of the COVID-19 pandemic coupled with the political impasse from the March 2020 General and Regional Elections.
“…The signals of the dictatorship through the subversion of the will of the people, resulted in slowed investment, halted expansion and thwarted confidence in the Guyanese economy. It is with this in mind that the GCCI recognises and commends the [PPP/C] Government for its effort, through its fiscal programme, in ensuring that the much-needed restart to the economy is provided by way of the largest national budget in the history of Guyana,” the missive added.
The Chamber further commended Government for injecting approximately $172.4 billion or 45 per cent of the budget on education, public infrastructure and healthcare. These sectoral priorities, the GCCI posited, are extremely important for ensuring the broad-based economic development of Guyana. It specifically commended the expenditure of $60.7 billion or 15.8 per cent of the national budget – the largest allocation – on education, which it noted ensures that the Guyanese people, the country’s most precious resource, are further developed, trained, retrained and upskilled for an evolving labour market.
“This sectoral priority, the largest of the three, can be seen as the backbone of a Government’s programme for economic development,” the GCCI posited.
The Private Sector further noted that the $58.2 billion allocation for public infrastructure provides the financial grounding for the buildout of the country’s infrastructure and the basis for restarting economic growth.
“Construction, the sector with one of the highest multiplier effects in the economy, is anticipated to provide employment and spinoff effects to catalyse economic growth. The GCCI anticipates full utilisation of this sum by way of efficient management of the Public Sector Investment Programme (PSIP) as this will go a long way to spurring Private Sector activity and re-starting a virtuous cycle of growth during this year,” it added.
Further, the GCCI pointed out that the zero-rating of construction and homeownership materials, the reduction of duty on industrial cement, the increase in low-income mortgage ceiling and the restoration of zero-rated value-added tax (VAT) on basic food items and household necessities can be seen as measures which directly support the development of the construction sector, reduce the cost of homeownership and places money back directly into the hands of households.
The Chamber added that these measures not only directly support President Irfaan Ali’s 50,000 homes initiative but also represent another marker in the realisation of the President’s vision for Guyana.
“The construction sector has the potential to restart the economy, create jobs, provide an impetus to other sectors and drive economic growth. The measures which have been taken in Budget 2021 must be recognised as targeting the sector with the greatest potential to restart the economy and benefit Guyanese households. Recognition of this by the leadership of the Government and enacting of this in the national budget will ensure that economic recovery ensues this year,” the Private Sector body noted.
It added that this is compounded by the budgeted sum of $10 billion for revision of wages and salaries for 2021 which will support the cycle of growth once economic activity is restarted in the economic sectors.
Moreover, the GCCI said the $53.5 billion allocation to the healthcare sector – 14 per cent of the budget – needs no gloss as to why this is important, particularly in this year when such expenditure will help to keep the population safe and provide the resources for navigation of the challenges on the health sector which COVID-19 has inflicted.
Additionally, the Chamber commended the injection of $22.6 billion into agriculture.
“With the production of oil and gas and continued discourse on the threat of the Dutch Disease, this programme to support the development of the agriculture sector is a laudable initiative. This is particularly in light of the reduced support for the sector through shrinking sums of sectoral allocation in previous budgets,” it outlined.
The expenditure of $13.2 billion in housing, water and sanitation and another $6.2 billion toward the justice system, provides the resources for further development of the local social sector and the right direction for ensuring welfare improvements for Guyanese, GCCI added.
The Chamber was among the local stakeholder bodies that were consulted by the PPP/C Government in the preparation of its second budget within six months. It had provided input to the consultation which broadly aligned with Private Sector development and improvement of the business environment.
Nevertheless, the GCCI extended its continuous support to Government to chart a higher growth trajectory for Guyana.