One Year Review and Comparative Analysis of President Ali’s Administration in Office

Today is exactly one year since President Irfaan Ali’s Administration was sworn in to form the Government of Guyana. Hence, on this occasion, this author thought it fitting to conduct a one-year assessment of the Administration’s accomplishments in comparison to the previous Administration’s first year in office. Though space precludes a more granular comparative assessment, the author attempts to provide a very condensed summary of the two Administrations’ first year in office (see highlights and commentary below).
Current Administration’s One Year Performance/Achievements (August 2, 2020 – August 2, 2021) (Key highlights)
Budget 2020/2021 Measures:
• $150 million allocated to support front line workers amid the COVID-19 pandemic, provision of $25,000 relief per household (COVID); Reversal of VAT on electricity and water; Increase Mortgage Interest Relief threshold from $15 million to $30 million (100% increase); Increase in low-income loan limit from $8 million to $10 million; Removal of VAT on building and construction materials; Reduction of licence fee by 50% on all licence fees that were increased in 2015; Removal of 25% corporate tax on education; Removal of 25% corporate tax and VAT on health and medical supplies; Removal of VAT on machinery and equipment; Removal of VAT on All-Terrain Vehicles for mining, forestry, agriculture and manufacturing; Reversal of VAT on exports; Change of log export policy to allow saw millers to export logs; $15,000 cash grant for school children; Old age pension increased from $20,500 to $25,000; Reversal of land lease fees across all sectors and water charges back to 2014 rates and reversal of the land taxes and drainage and irrigation charges back to 2014; Removal of VAT on fertilisers, agrochemicals, pesticides, and key inputs in the poultry industry, and zero rating of the poultry industry; Tax concessions on investment in agro-processing facilities, cold storage and packaging; Special incentives to be made available for planting corn and soybean.
• Restoring the VAT Zero-Rate on basic food items and household necessities; reducing water tariffs; zero-rating certain construction materials; reducing duty on industrial grade cement; increase in low-income loan ceiling further from $10 million to $12 million; reducing the cost of connectivity; reducing the cost of transportation in the hinterland; reinstating capital gains tax whereby the sale of assets owned for more than 25 years will not attract capital gains tax on their disposal.
• Govt Deposit Account Balance at the Central Bank, $68.4 billion (Surplus balance), as at the end of June 2021.
• Close to $8 billion in direct cash transfer to farmers and households who were affected in the recent flood crisis.
Previous Administration’s One Year Performance/Achievements (May 18, 2015 – May 18, 2016) (Key Highlights)
Budget 2015/2016
• VAT reduced from 16% to 14% but the list of items that attract VAT increased, for example, VAT was added to electricity and water; a plethora of items were moved from VAT Zero -Rate status to VAT exempt status (For a “zero-rated good,” the Government doesn’t tax its sale, but allows credits for the value-added tax paid on inputs. If a good or business is “exempt”, the Government doesn’t tax the sale of the good, but producers cannot claim a credit for the VAT they pay on inputs to produce it.); reduction on excise tax on vehicle imports); reduction on excise tax on vehicle import under four years old; ban on used tyres; ban on Styrofoam boxes; withdrawal of NIS subsidy; increase in income tax threshold from $600,000 to $660,000; introduction of SLED, introduction of Linden Enterprise Network ($155 million allocated); 50% increase in fees for all types of licences.
• Govt Deposit Account Balance at the Central Bank, $3.8 billion (deficit), as at the end of June 2016.

Source: National Budget Speeches

The President Ali-led Government is visibly working to reverse these outcomes where the traditional productive sectors were underperforming by pursuing an ambitious transformative developmental agenda, which will result in an upward trajectory in economic activities and unprecedented expansion of the economy that will be reflective of inclusive and broad-based growth.
The infrastructure projects as highlighted on many occasions by His Excellency, will no doubt translate into significant growth in the construction and mining and quarrying sectors, for example – surpassing the growth rates achieved over the last five years of less than 3% and is likely to account for more than 8% and 16% of GDP respectively, by the end of 2021.
The agriculture sector, which is another critical productive sector, is projected to become one of the largest contributors to GDP. Approximately 6% of the 2021 national budget was allocated towards the agriculture sector. Guyana is well positioned to become the regional breadbasket for the Caribbean by potentially tapping into the US$4 billion–US$10 billion Caricom market.
The previous Administration, as argued in many previous writings by this column, significantly misdirected financial resources away from productive activities to non-productive spending. The current Administration, on the other hand, has corrected this by allocating more resources on capital projects that will drive major infrastructural development.

Collectively, Government spending amounts to an injection of more than $200 billion or more than 50% of the national budget, towards capital projects, revamping the traditional sectors, and creating new and emerging opportunities through a transformational development agenda. For example, through infrastructure development; massive housing programmes, new road networks, investing heavily in the agriculture and food security sectors and agro-processing on a mega scale; hydro and gas-to-energy projects are on the table among others. Moreover, the Government has also demonstrated its zest for economic diversification. These developments, in turn, will create many new investment and job creation opportunities to be led by the Private Sector and foreign investors as well.

In a nutshell, the Government’s first year’s performance amid a global pandemic and a flood crisis is beyond commendable. The fiscal numbers as presented in this article summarily, substantiate this view.

About the Author:
JC Bhagwandin is a financial and economic analyst; and an Adjunct Instructor at Texila American University, Business College. The views expressed are exclusively his own and do not necessarily represent those of this newspaper and the institutions he represents. For comments, send to [email protected].