Guyana Post Covid-19 and Considerations for Development: A Critique of National Budget 2024
Budgetary allocations in Guyana over the past years, have failed to improve the living standards, and working conditions of the working poor. The poverty rate, shows the population living below the U.S. equivalent of $5.5 a day, is about 38.8 percent, among the highest in the Caribbean and Latin America, according to the United Nations Development Programme. Adolescent pregnancy is a major issue in Guyana, with more than 20 percent of all pregnancies occurring among adolescent girls aged 15–19 years. In a recent release by the United Nations (UN) report on Regional Overview of Food Security and Nutrition, as published in Kaieteur News dated November 13, 2023, underscores the persistence of ‘wasting,’ a severe form of child malnutrition, with Guyana and Suriname at the forefront.
Unemployment in Guyana stands at a staggering 14.83 percent or approximately 118,640 persons; while 39% of all Guyanese citizens currently are residing abroad.
During the Covid-19 pandemic, Budget 2021 was presented with a central focus of establishing ‘A Path to Recovery, Economic Dynamism, and Resilience.’ Yet, public servants, including nurses, teachers, and men in uniform who are excluded from this economic dynamism, are leaving the country in the hundreds. In fact, the UNDP reported that roughly half of all Guyanese with a tertiary education will migrate to places such as Europe, United States, Canada, Trinidad and other Caribbean Islands.
The second Budget enacted in the year 2022 promised the people that the nation will remain “Steadfast Against All Challenges, Resolute in Building Our One Guyana.” At the conclusion of that fiscal year, the nation remained in oneness on only one matter; that is, that all the budgets in 2022 failed to improve the lives of the people, and address their daily needs and alleviate their challenges. Last year (2023), the government presented a Budget of G$782 billion (US$3.75 billion) with the aim of ‘improving lives today, building prosperity for tomorrow’, and also claimed that it was people centered the citizens were their first priority. Sadly, the hefty provisions that were made with a view of improving the business portfolios of those individuals closest to the government. Public Servants, who are among the working poor, had no improvements in their living conditions, and absolutely no hope for a better future in which they could raise and educated their children.
Similarly, budget 2024, the largest in the country’s history of G$1.146 Trillion dollars, is not a projection of good financial planning for development. It is rather a recipe for ‘Staying the course’ which is currently defined by an increasing gap between the very rich, and the working poor. This could be seen massive tax breaks for large corporations, and the sustaining of onerous (burdensome) tax rates such as PAYE, and VAT which are sustained on the backs of mainly public servants who are among the working poor.
The most pressing concern facing Guyanese, are
1. The recovery from the Coronavirus Disease 2019 (Covid-19) Pandemic,
2. The discovery, monetization, and regulation of Oil and Gas,
3. Overcoming the political, and ethnically charged position adopted by leaders and their followers post National Elections in 2020,
4. The existential threat presented to our sovereignty by Venezuela,
5. Poverty reduction, and the regression on sustainable development.
These daily trends continue to set a challenging context for Governance, Defense, Socio-cultural balanced Economic Development that emphasize diversification and sustainability.
It was against this backdrop that the GPSU examined Budget 2024 and do make the following comments aimed at the Government reviewing Budget 2024 and ensuring allocations are made as recommended, and which hopefully, will impact subsequent budget proposals.
Statement of GPSU’s Position
First, given the turbulence of the trends stated above, (both positive and negative) battering Guyana, it seems self-evident that there would have been a search for consensual problem definitions, solutions and plans on the part of government to engage key stakeholder. Secondly, any economic, social, human recovery and development planning are decades overdue, and must take steps to genuinely achieve the Motto of One People, One Nation, One Destiny - even as we are in the middle of the battle.
The plan should be multi-sectoral, and must include all stakeholders (private-sector, public-sector, Unions, youth, women, indigenous communities, and all other vulnerable populations in Caribbean Society and Guyana, in particular).
Despite Guyana has been experiencing significant economic growth due to the discovery of vast oil reserves, and the resulting positive economic impact on other sectors in the traditional economy, this growth has not been evenly distributed, and poverty and income inequality remain persistent, and are affecting the majority of people. The rising cost of living has also been a concern for many, especially retirees, the poor and vulnerable, as inflation and the increasing prices of essential goods and services have outpaced income (pension), wage growth, and benefits. Guyana’s per capita GDP now stands at USD$ 20,960 more than three times what it was in the year 2020 and even surpasses the per capita GDP of Barbados, Trinidad and Tobago, and Jamaica. The per capita GDP is a measure of the average economic output per person in a country. It is calculated by dividing the country’s total GDP by its population. It is often used to assess the standard of living and economic well-being of a nation’s residents. In accordance with the aforementioned one can safely conclude that income inequality remains a sore issue since the nation’s wealth continues to be unevenly distributed. The national minimum wage is amongst the lowest in CARICOM amid Guyana’s expanding landscape and its growing regional influence. In the 2024 budget, to tackle poverty and the rising cost of living the Government of Guyana has outlined certain areas of focus, including infrastructure development, education, healthcare, and social protection. The budget proposes the following measures:
1. Social Protection: The budget aims to expand social protection programs, such as cash transfers and subsidies, to reach more vulnerable populations. This includes increasing the coverage of the Social Protection Network (SPN) and providing targeted support to lower income households, the elderly, and persons living with disability.
2. Education and Human Capital Development: The government plans to invest in education by increasing the allocation for the Ministry of Education. This is supposed to include improving access to quality education, particularly in underserved rural areas, and enhancing vocational and technical training programs to equip citizens with the skills needed for the evolving job market.
3. Healthcare Improvement: The budget proposes to enhance the healthcare system by increasing funding for the Ministry of Health. This is supposed to include expanding access to primary healthcare services, upgrading healthcare facilities, and improving the overall quality of care.
4. Infrastructure Development: Investments in infrastructure, such as roads, bridges, and ports, are expected to create job opportunities and stimulate economic growth. This in turn, is expected to contribute to reducing poverty and improving the overall standard of living.
5. Energy Sector Development: The budget highlights the importance of the energy sector, particularly the expansion of renewable energy sources, to support the country’s economic growth and reduce energy costs for citizens. While Infrastructure Development, Energy Sector Development, Improvement of Health Care, Education and Human Development, could be considered as transformational, these measures are not aimed to seriously address poverty and the rising cost of living in Guyana, the 2024 budget falls short in several aspects:
6. Insufficient Allocation for Social Protection: the proposed budget does not allocate enough resources to effectively tackle poverty and the rising cost of living. The government should have increased the allocation for social protection programs to ensure that the more vulnerable populations can benefit from these initiatives, realistically in the prevailing economic environment. The minute one off cash grants and the ‘because we care cash grant’, are used for consumption purposes and does not address the issue of the rising cost of living. Inequality and poverty are among other concerns of the glaring and other deficiencies in determining the scientific methods of ascertaining implementation. Perhaps measures that could have better assist the working poor and vulnerable population includes:
I. An increase in the income tax threshold of more than 100,000
II. A reduction in PAYE. The income tax rate should be reduced to 10% on the first taxable $200,000 and 20% on the balance of taxable income, instead of the current methodology of 28% and 40%.
III. A reduction in excise taxes on essential items, in extension to the reduction of excise taxes on oil.
IV. Increase in public assistance and old age pension should be adequate enough to lift this vulnerable population out of poverty
V. A reduction of the Value Added Tax (VAT) to ten percent (10%).
VI. Significantly improving conditions of service and paying the working class commencing at a livable wage
VII. Reviewing and improving the existing Pension Plans
VIII. Cease Politicizing the Public Service. Significantly moving the allocation for contracting employment to recruiting and establishing of the Public Service and filling vacancies on the Permanent and Pensionable Establishment
7. Weak Emphasis on Job Creation: While infrastructure development is expected to create job opportunities, the budget should have placed more emphasis on job creation through targeted initiatives, such as support for small and medium-sized enterprises (SMEs) and entrepreneurship programs.
8. Retention of professional and skilled human resources (Brain-drain): In addition, as a priority emphasis should be placed on the retention of skilled human capital ensuring enhanced and modernized job conditions, adequate and competitive remuneration and conditions of service in the prevailing job market for such skills.
9. Inadequate Attention to Environmental Sustainability: With the rapid growth of the oil sector, concerns have been raised about the potential negative environmental impacts on Guyana’s fragile ecosystems, provisions for attaining 'pre first oil climate goals', and attaining net-zero. The budget should have allocated more resources to environmental protection and sustainable development. After, the preparation and reading of the budget, the Republic of Trinidad and Tobago is currently experiencing the negative effects of an oil spill and has declared a ‘state of national emergency’ which according to the Prime Minister, Dr. Keith Rowley, is not under control (CNN report of February 12, 2024). Therefore, the enabling
10. Education and Human Capital Development: Ensuring that access to quality education, vocational and technical training programs is feasible and conducive to equip citizens with the skills needed for the evolving job market. Further, the allocations to the University of Guyana are inadequate and fail to provide accessible and a modern class room systems. The GPSU reiterates its call for free education across all University of Guyana Campuses.
Once again, there is no scientific research or data to guide development of policies intended under budget 2024 to improve the education system.
Conclusion
In conclusion, Guyana’s 2024 Budget will not address poverty nor the rising cost of living through increased social protection, educational needs of the people and teachers, healthcare, infrastructure development, and the energy development, and professional and skilled human resources needed for national development.
The budget falls short in several areas, including insufficient allocation for social protection, lack of focus on rural development, weak emphasis on job creation, and inadequate attention to environmental sustainability.
To effectively tackle poverty, the rising cost of living, and address a living wage, the Government needs to reconsider its budgetary priorities and allocate more resources to these critical areas.
Having regard to these challenges facing public servants daily, the GPSU proposes the following:
1. Towards A Recovery and Development Forum and Plan
1. Any plan for recovery and sustainable development of the Guyanese Society must go beyond the polarized exclusionary politics by which we operate presently.
2. We must collectively develop visions and phased Strategic Plans for the various Sectors that move us towards a more diverse economy, and beyond just looking towards oil and gas.
3. We must also move towards an INCLUSIVE, modern, and enlighten, planning process that includes the Unions, Private sector, opposition political formations, civil society and the Masses. There is a Planning Institute of Jamaica (PIOJ) that all stakeholders are signed onto. This approach also exists in some other Commonwealth Countries and have impacted the populations.
4. We are proposing that a joint Private-Sector, Public-Sector, Unions and other Stakeholders, be organized into an Official Planning Task Force, using scenario planning and broad consultative methods after the putting in place of the appropriate Information and Communications Technology (ICT) platforms, to allow for immediate face to face and virtual meetings and outputs.
5. We foresee, at least 12 critical sectors for consensual recovery and development. All underpinned by a robust Information Communications Technology (ICT) platform.
2. Sectors to be Considered for a Recovery and Development Forum and Plan
These sectors are:
- Visioning/ Planning Sector
- Sovereign Wealth/ Finance Sector
- Energy Sector
- The Mining Sector
- Business/ Labour/ Diversification Sector (Tourism and Emerging Markets)
- Forestry Sector
- Drainage/Irrigation/
Agricultural Sector - National Security Sector
- Infrastructural /Communication/ICT Sector
- Land Sector
- Environmental Sector
- Government Machinery (Education, Health, Labor etc.,)
At the political level it is unavoidable that national unity is secured through sincere meaning to our National Motto of One People, One Nation One Destiny and put our collective energy in one direction. There must also be meaningful, inclusive and enlightened development taking all concerns into consideration for the benefit of all.
160 Regent & Shiv Chanderpaul Drive
Bourda,
GEORGETOWN.
February 13, 2024