Opposition’s Budget Debate: incoherent & contradictory (pt 2)

Dear Editor,
Poverty reduction, investing for the future through a balanced budget
The notion that the budget is void of a poverty reduction strategy and is not sufficiently balanced on the social side was not compellingly articulated by the critics. One of the key counter proposals by the Opposition, for example, in response to cost of living and poverty reduction is to distribute the oil revenues in the sum of $300,000 per household.
The Opposition also argued that the cost-of-living phenomenon may persist for the next three years (citing international agencies’ analyses). Hence, this is suggestive that the Opposition proposal is to be maintained for the next three years.
As illustrated earlier, the COL measures implemented by the Government translate to about $400,000 per household, albeit indirectly; which is more than the Opposition’s proposal of $300,000 per household through direct cash transfers. Assuming that the Opposition is proposing an additional $300,000 per household through direct cash transfers in addition to the COL measures implemented already, this will translate to an another $66 billion per household on the current expenditure side of the budget. This amount represents 8.4% of the budget, 32% of the NRF inflow to the budget, and 21% of the current revenue. To make this possible, it means that the Government would have to cut the capital expenditure side of the budget. The question is, which project should the Government cut and/ or delay to accommodate such a proposal?
For demonstration purposes, two major projects are the new bridge across the demerara river and the gas-to-energy project. The budgetary allocation for both projects in budget 2023 amounts to $45 billion, giving rise to a shortfall of $21 billion. This means that the Government would have to slash some of the road infrastructure projects in the budget to reach the $66 billion for this proposal. With these adjustments, the configuration of the budget will move from a 50:50 ratio to 59% (current expenditure) and 41% (capital expenditure). Apart from such proposal having the potential to engender uncontained inflationary pressures driven by consumption spending, it would effectively delay the development of the projects that are actually designed to mitigate the impact of inflationary pressures attributed to external factors. Consequently, not only Guyana, but the entire region will be subject to prolonged risks of externalities on the regional and domestic economies. As such, the gas-to-energy project, together with the infrastructure development, is absolutely critical to achieve the objectives of the regional energy and food security agenda that the Government has positioned Guyana to lead.

Social services sector
The budgetary allocations in the social services sector, which include allocations towards employment cost for public sector employees; health; education; social welfare programmes; housing and water; culture and youth amounts to $255.2 billion, reflecting a 36% increase over the previous year, and accounting for 33% of budget 2023 and 79.73% of current revenues. In view of this, there are substantial budgetary allocations towards the social services sector, while it must be noted that the approximate sum of $255.2 billion is exclusive of allocations towards the public safety and security sector.

Determining whether the Budget is a balanced budget
With respect to the argument that the budget is not a balanced budget, and is not people-centric, the proponents of this view failed to state and justify what are the determinants of a balanced budget, and how is it that the budget is not people-focused? In this regard, the author attempts to put context to this notion and demonstrate evidently how the budget is a people-focused budget, and to further contextualise the term “investment for the future”, or drawing the theme of the budget, “Improving lives today, building prosperity for tomorrow.”
In doing so, the author examined the composition of the population age groups using the 2012 population census data (which is 11 years ago), whereby, for the purpose of this analysis, the age groups were adjusted upwards by 11 years, since the study was done 11 years ago.
In examining the age groups of the population from the above illustration, 71% of the population are in the age group of 11–40; 17% of the population are in the age group 41–65; 7% of the population are in the age group 66–75; and the remaining 5% of the population are 76 and over. Putting this into context, investing for the future and creating prosperity for tomorrow essentially means investing in the economy that will create sustainable prosperity for the 71% of the population comprising of the present and future generations, who in turn have their entire working life ahead of them – and in the process building and developing the economy. Another 24% of the population in the age group which is made of 17%, in the age group of 41-65 and 7% in the age group of 66–75, these age groups are also in the working population, all of whom ought to have the framework for improved standard of living and quality of life today, and securing their future as well.

Aligning this with the configuration of the budget, whereby 33% of the budgetary allocations are towards the social services sector and the remaining 67% allocated towards investing in the infrastructure to enable the future growth trajectory and prosperity, this ratio configuration virtually mirrors the composition of the population in terms of age group where the future is for the 71% of the population (11-40 years old).
While this segment of the population needs social services, more importantly, they also need the opportunity to build profitable enterprises for those who have entrepreneurial ambitions, and job opportunities which can only be created through investing in the economy and creating a conducive business and investment climate to so facilitate.

Conclusion
It is within these contexts, therefore, that it can be safely concluded that the budget is people-focused. It is a balanced budget, catering adequately for the present and future generations of professionals and entrepreneurs – while improving the present-day conditions upon which their livelihoods hinge. The budget also sufficiently caters for the elderly, who account for about 5% of the population, within the limitations of the financial resources available.

Yours sincerely,
Joel Bhagwandin