Dear Editor,
Budget 2018, like other budgets presented by the APNU/AFC Government, lacks economic perspicacity and wit. The main findings are:
* Low economic growth: Had our key sectors performed similar to 2014, the economy would have grown by 6.1%, rather than a mere 2.8%.
* Erroneous forecast: a year ago, the Hon. Minister stated that a balance of payment surplus of US$20 million would be materialized by the end of 2017. Now, in Budget Speech 2018, that figure has mutated into a US$53.1 million deficit.
* Loss of revenues: Export has shrunk by more than US$76.6 million, or Gy$15.4 billion, since 2015. This loss gets even bigger at US$146 million, or Gy$30 billion, when compared to 2014. Even more worrisome, using the conservative estimates of the Hon. Minister for 2018, projected foreign exchange from the export of sugar and rice is expected to further decline by US$5.8 million and US$17.5 million respectively. Had the APNU/AFC not tried to reinvent the wheel, public servants could today have enjoyed a 173% increase in salary with the amount of lost revenue.
* Nothing for rice farmers: Rice is expected to contract by some US$18 million, or Gy$3.7 billion in 2018. The question now is: should rice farmers expect less for a bag of paddy in 2018, or is it that the rice deal with Cuba is only for a selected few?
* More tax in 2018: The newly proposed countrywide valuation exercise of properties will rake in billions. The last valuation was done some 20 years ago. Given the massive infrastructural development under the PPP, property value since then has skyrocketed.
* Less money for the people: From 2014 to 2017, overall tax has increased by more than 5%. The increase has slashed private consumption from $522 billion in 2014 to $490 billion in 2017. What this tells us is that purchasing power of the people has plummeted by more than 6.1%, or $32 billion. Evidence of this can be seen in the reduction in import of vehicles by $1.5 billion when compared to 2016.
* Wastage of taxpayers’ money: On average, it cost the PPP/C Government $1.3 million in recurrent expenditure to execute $1 million in capital projects. Now, in 2017, this Government is spending $3.3 million, or 66% more, to execute the same $1 million in capital projects.
* More job loss: Investment in agriculture, mining and quarrying, and manufacturing have all plummeted by more than $4.4 billion. Overall, private investment fell from $185 billion in 2015 to $163 billion in 2017.
* Less money for private investment: Starting from 2015, total budget deficit increased from $9.3 billion to $34.5 billion in 2017, and is expected to increase even further by another $8.7 billion to $43 billion in 2018. And in 2018, this figure is expected to increase to $34 billion. This means there is less money for private investment.
* Higher exchange rates: In 2012, some 22% of domestic credit was used to finance investments in Guyana. Fast forward to 2017, under this new administration, that percentage skyrocketed to 78%. Clearly, FDI is in a tailspin. Shortage of foreign resource inflows will put downward pressure on our exchange rate.
* High food prices: Prices for food, medical and personal cares, and education, recreation and cultural services will increase by 4.5%, 3.4% and 3.6% respectively by end 2017.
When assessed, Budget 2018 is nothing but a chimera that fails to address fundamental issues of wealth generation and expansion. This budget is again out of touch with reality, and certainly will continue to weaken the macroeconomic foundation, and undermine all social gains that the PPP/C Government took 23 years to build and amass.
Sincerely,
Cecil Williams
