This first full-year budget of the PPP/C since resuming office, is themed “A Path to Recovery, Economic Dynamism and Resilience”. The Policy Issues and Targets are set out in Chapter 4 of the Budget Speech with the sub-title the Agenda for 2021 and Beyond. Budget Focus highlights some of the principal issues identified by the Minister and offers some of our own comments.
In summary, the Administration’s plan for the near-term is “to keep people safe and continue to nurture the economy.” For the medium term, their plan is to make Guyana an economic powerhouse in which national prosperity is a reality. The Minister offered that the achievement of these plans requires a broad-based resilient productive sector, creating meaningful and rewarding employment and the emergence of a dynamic entrepreneurial and small business sector.
A. Macroeconomic Outlook
Anticipating high rates of real economic growth, the Minister recognises the danger of the Dutch Disease – a characteristic of economies experiencing rapid growth – and proposes an agenda for the country designed to make it competitive while addressing both stability and sustainability. The Minister expects that this will be achieved by prudent contracting of new financing, careful targeting, management of government expenditure and strengthened revenue administration. Specifically, the Plan hopes to achieve adequate levels of external reserves, and ensure exchange and interest rate stability and low levels of inflation.
B. The Low Carbon Development Strategy (LCDS)
The Minister reaffirmed the Administration’s commitment to restore the Low Carbon Development Strategy (LCDS), a centerpiece of which was the forest partnership Agreement with the Government of Norway allowing Guyana to earn US$250 million over a five-year period. Key to this Strategy was a significant hydroelectricity project at the Amaila Falls on the Kuribrong River, the failure for which was attributed squarely but incorrectly on the political opposition.
The key actions proposed under this Strategy are:
1. The unblocking of more than US$135 million receivable under the Agreement Norway funds and its investment in renewable energy projects.
2. Assessing the emerging market for forest climate services.
3. Updating and expanding the LCDS into a comprehensive development strategy.
C. A Diversified, Resilient and Competitive Productive Sector
The Minister announced extensive plans for Oil and Gas; the Mining Sector which he estimates employs over 27,000 persons; Forestry; Agriculture and Food Security including Sugar, Rice and Other Crops, Agro-processing, Livestock, Fisheries and Aquaculture; Intermediate Savannah Development Initiative, Drainage and Irrigation;
Sustainable Tourism; Information Technology; Industrial Development and Manufacturing; and Small Business Support.
In Oil and Gas, the Minister announced plans to create an enabling and regulatory environment for the oil and gas sector including amending legislation, the development of a model Petroleum Sharing Agreement, exploring a revised petroleum fiscal regime, advancing the draft local content policy and associated legislation and the Petroleum Commission Bill.
Expressing plans to work with stakeholders to ensure the viability of sugar, the Minister reserved his strongest language for what he describes as “hundreds of years of sugar cultivation being slaughtered at the altar of political expediency”. In relation to the three sugar estates which were closed by the previous Administration, the Minister announced that the Board of the Corporation was assessing the damage suffered and the cost to rehabilitate those estates.
The Administration has announced that Agriculture will be one of the major anchors of the country’s non-oil economy with a view to providing food security, improve incomes, create jobs and generate foreign exchange income.
Acknowledging that Wales Sugar Estate cannot be re-opened, the Minister announced plans for the establishment of a Wales Development Authority (WDA) which he estimates will employ 3,000 directly and a similar number indirectly. Among the new frontier crops to be promoted across the country are coconut, corn and soya bean.
In Livestock, the Government proposes engagement in partnerships to realise improvements in the volume and quality of meats and meat products for both domestic consumption and exports. The Minister announced a modular abattoir at Garden of Eden and a modern abattoir in Region 5.
In tourism the Minister announced that at least six privately financed major hotel brands will commence construction in 2021, adding 1,000 hotel rooms with another 2,000 to 3,000 being added in the medium term.
In information and communication technology, the Minister drew attention to the liberalisation of the telecommunication sector and expects a minimum of $360 million being contributed by operators to a University Fund to facilitate access by poor and vulnerable communities.
D. Transformational Infrastructure
The Minister announced as three areas he considers of transformational value, viz Energy, Transport Infrastructure and Sea and River Defence.
1. Energy
The several projects designed to expand the country’s energy capacity include the Amaila Falls Hydro Project and the gas to shore power project to be the trailblazer to advance Guyana’s path to domestic energy security in the next three years. In this regard, the Minister announced geophysical, geotechnical, engineering and environmental impact assessment studies to be undertaken. He also announced plans to install 10 mini-grids and four off-grid systems in 2021, four solar farms and three hydro-projects across various communities in the country.
2. Transport Infrastructure
Among the major roads and bridges projects announced are:
– the rehabilitation of the Linden – Soesdyke Highway;
– a road link between Diamond to Mocha;
– the four-lane highway from Eccles to Mandela Avenue;
– a four-lane superhighway between Schoonord to Parika;
– developing the Parika to Goshen route; and
– the Timehri to Bartica link.
The Minister also announced plans for the construction of a high-span bridge across the Demerara River and the Corentyne River Bridge Crossing, a joint project of the Governments of Guyana and Suriname.
Six stellings are identified for rehabilitation: Bartica, Supenaam, Parika, Kumaka, Wakenaam and Fort Island.
The troubled CJIA project will be addressed to add two passenger boarding bridges, the rehabilitation of the airline and administration offices and outfitting the commercial complex.
3. Sea and River Defence
For 2021, the Minister announced plans to further strengthen the country’s sea and river defence, identifying eleven areas for work, spread across the country.
E. Investing in Our People
The Minister identified nine critical areas of focus: Health, Education, Housing, Water and Sanitation, Youth, Culture, Sports and the Arts, Senior Citizens, Persons with Disabilities, Victims of Domestic Violence, and Amerindian and Hinterland Development. Four of these are discussed below.
In health, the immediate highpoint is the rolling out of COVID-19 vaccines during February, while several initiatives were announced for the development of the health sector, including the Port Mourant Ophthalmology Hospital, the Lusignan Health Centre, the National Referral Hospital and construction and retrofitting of the maternity wing of the New Amsterdam Hospital.
Education too emphasises the pandemic preparedness including the provision of PPEs and a revamped Guyana Learning Channel Trust. The Speech also disclosed plans to refashion of the University of Guyana and the establishment of an online learning institute delivering 20,000 scholarships over the next five years.
In housing and water, the plan for 2021 is to allocate 10,000 house lots and to distribute 7,000 land titles. To facilitate the infrastructure and utility works in new and existing housing areas, the Budget allocates $6 billion. Allocations to the Water subsector include funds to procure equipment and improve and expand the water supply network system across the country, to procure 20,000 water meters and for the sanitation practices and solid waste management.
For Amerindian and Hinterland Development, the Minister announced plans for the granting of titles to Amerindian villages, employing 2,000 CSOs, expenditure of $196.6 million for boats, engines and equipment, investing $1.75 billion for hinterland roads and awarding 196 scholarships.
Ram & McRae’s comments:
● The Plans for the gas to shore project do not include any marketing, economic and financial studies, apparently because the project is considered a no brainer.
At a minimum, the country will have to consider the quantity of gas it proposes to take up, how much it will use in the generation of electricity and what it will do with the balance, if any.
● Transformational and prestige projects always excite but Guyana’s record with such projects has been far from uniformly Mazaruni Road Project of the PNC, the Del Conte road project of the PPP and the Skeldon Sugar projects and their cost to the economy.
● There seems to be an assumption that there is unlimited land available for housing in the main population and economic centers. In fact, as seen in the Success squatting saga, there is some competition for land for agriculture and for other purposes and the resolution will require a land use policy.
● The Minister did not exude the same level of confidence in the re-opening of the sugar estates and with only $2 billion allocated for GuySuCo in the Budget, one wonders whether there is some hesitation.
● The speech was short on governance, on corruption, local government elections and on constitutional reform.
