…even as revenue collections increase
The Guyana Government this year announced its largest budget ever, valued at $230 billion, but it has been unable to effectively spend its allocations on the various programmes for which they have been budgeted.
This information was divulged in the recently released financial mid-year report for 2016, which documents that while government has had a dismal time implementing its public sector spending, it has seen healthy returns on its revenue collections which has increased by almost 10 per cent for the first half of the year.
According to the document seen by Guyana Times, central Government’s capital expenditure reached $13.2 billion during the first half of 2016.
It was noted that while this represents an increase of 89.4 per cent, compared to expenditure during the same period in 2015 – when expenditure was constrained—the expenditure in fact reflects only 25.3 per cent of the budgeted sum for 2016.
According to the finance minister in his report, “the pace of implementation of projects continued to pose challenges.”
He said locally-funded projects were beset by a number of problems including delays in the tender and award process.
As a result, only 31 per cent of the budgeted sum of $30.6 billion was expended at half year while on foreign-funded projects, a mere 18 per cent of the $21.5 billion was spent in the first half of the year.
The finance minister has since blamed a major factor of the dismal performance as being challenges posed by a number of projects inherited from the previous Administration, including the Cheddi Jagan International Airport Modernisation Project, the East Bank and West Demerara Road Projects, the Power Utility Upgrade Programme, the Sheriff Street/Mandela Avenue Road Project and the Water Supply and Sanitation Infrastructure Improvement Programme. He further blamed the poor performance in the implementation of government spending on weak project execution units, delays in fulfilling conditions precedent to disbursement, and contractors’ capacity and capability constraints.
The finance minister has since had to revise its spending programme for 2016 downwards. According to the finance minister, while revenues for 2016 have been revised up to $180 billion, from a budgeted $173 billion, capital expenditure for the year has been revised down to $49.1 billion from $52.2 billion.
Government’s spending is divided into (re)current and capital expenditure. Current expenditure refers to recurring spending such as monthly payments on utilities, salaries and maintenance while capital expenditure relates to new projects such as the construction of a new road, school, hospital or similar pieces of infrastructure.
The finance minister in his report said there was a significant reduction in disbursements of loans to the non-financial public sector, from $11 billion in the first half of 2015 to $2.7 billion in the first half of 2016, reflecting the slow pace of implementation of foreign-funded projects.
Revenue collections up
The finance minister did however report that revenue collection for government at the half year was 10 per cent higher than the same period in 2015.
According to the information provided, revenue collected from the payment of taxes increased by 6.1 per cent, reaching $75 billion during the first half of 2016, compared with $71 billion during the same period in 2015. The finance ministry has since reported that internal revenue collection increased by $5 billion reaching $36.5 billion in the first half of 2016, compared to the same period in 2015. “This half year achievement reflected 57 per cent of the annual target.” It was noted that of this increase, almost $3 billion was related to arrears and advance payments while the remainder was primarily attributed to increased collections from the telecommunications, manufacturing, and construction sectors, and significant payments made by a new company from the architectural and engineering sector.
According to the mid-year report, Company tax collections grew by $2.6 billion of which $675 million related to a significant increase by one major company in the oil industry and $921 million attributed to arrears collections.
As of June 2016, a total of 292 companies made payments compared with 276 during the same period in 2015, representing a 5.8 per cent increase.
It was observed too that similarly, a total of 925 individuals, including self-employed, made payments during the first half of 2016 compared with 887 during the same period in 2015.
Personal income taxes paid grew by $922.3 million during the first half of2016 compared to the same period in 2015.
According to the finance minister, the main drivers of this growth is as a result of a $553 million increase in personal income tax often referred to as PAYE – Pay As You Earn—and a $340 million increase in income tax from the self-employed.
The ministry has since credited the growth in PAYE as mainly due to increases in wages and salaries awarded to public servants in the second half of 2015, while the increase in self-employed taxes was due to increased compliance, from 8,167 to 10,488 individuals, as a result of measures undertaken by the Guyana Revenue Authority (GRA).
Meanwhile, it was reported that Customs and trade tax collections rose to $6.5 billion in the first half of 2016, $0.6 billion more than for the same period in 2015.
Of note is the fact that while the value of imports declined, import duties grew by $928.6 million or 17.3 per cent above the first half of 2015. This was due in part to a decrease in tax exemptions and a change in the composition of imports.