Finance Minister Dr Ashni Singh yesterday unveiled a $192.8B budget that included gigantic allocations totalling $10B to support the cash-strapped GuySuCo, GPL along with a hike in the income tax threshold to $50,000 and modest rises in public assistance and old age pensions.
Delivering his presentation in the National Assembly under the theme ‘Remaining on Course, United in Purpose, Prosperity for All,’ Singh noted that for 2012, projected inflation outstrips projected growth. The budget projects that inflation for 2012 will be 4.6 percent and real Gross Domestic Product (GDP) growth 4.1 percent, with non-sugar GDP projected to be 4 percent. The Minister explained that the projected inflation is a result of the increases in global oil prices, due to continued tension in oil-producing areas.
The budget in 2011 was $161 billion.
Singh said that with the income tax threshold moving from $40,000 to $50,000, some 21,000 persons will be removed from the tax net. He also disclosed an increase of $400 per month for Public Assistance and $600 per month for Old Age Pension. The new rates are $5,900 and $8,100 for Public Assistance and Old Age Pensions, respectively.
He announced that the government has allocated the sum of $4 billion for the Guyana Sugar Corporation, which once again delivered poorly last year. As a result of the low production last year, the government has given a less extravagant projection of 250,000 tonnes of sugar for 2012, revised downward from 265,000 tonnes at the beginning of 2012 and drastically down from last year’s initial target of almost 300,000 tonnes.
“I now wish to announce that Budget 2012 provides for a transfer of $4 billion from the central government to GuySuCo, in order to ensure that the sugar industry is financially able to meet its operating and investment requirements,” the Minister said. He added that the injection is expected to redound to the benefit of the industry’s 18,000 workers, their families, and the industry’s suppliers of goods and services.
In addition to the funds for GuySuCo, the government allocated a sum of $6 billion for the Guyana Power and Light to help that utility company cope with the increasing fuel prices, mentioning that the company has not had a tariff adjustment since the end of 2007, when fuel prices were lower.
“Recognising the importance of cushioning as far as possible the impact of imported oil price movements on domestic consumers, Budget 2012 includes a transfer of $6 billion from the central government to GPL. This will benefit all of GPL’s 164,000 subscribers and by extension every member of all the households connected to GPL’s grid,” the Minister said.
The Minister delivered bad news for the people of Linden, saying that the subsidy that government provides for electricity supply there will be gradually phased out beginning this year. He said government for 2011 paid subsidies in the amount of $2.9 billion.
Government is also to bring legislation to remove the taxes on equipment used for power generation through renewable energy sources. “These include solar panels, solar lamps, solar batteries, solar generators, solar water heaters, wind turbines, water turbines, power inverters, compact fluorescent lamps and light emitting diode (LED) lamps,” Singh said.
A sum of $3.1 billion will go towards the government’s fibre-optic cable project and a further $3.7 billion for the continuation of the One Laptop Per Family project.
He said too that government will bring legislation meant to effect tariff adjustment related to “originating goods” as envisaged by the Economic Partnership Agreement (EPA) between Europe and members of Cariforum. “Mr. Speaker, just as Guyana moved promptly to introduce the EPA tariff in January 2011, so do we now announce our intention to bring to this Honourable House legislation to give effect to this undertaking,” he said.
In addition, government will be bringing to the Tenth Parliament legislation addressing the liberalising of the telecommunications sector, since legislation which had been previously brought to the National Assembly was never passed.
The Minister also announced that Russia is to write off 100 percent of Guyana’s debt while Venezuela will write off debt to the value of rice shipments made from Guyana to that country. Singh noted that public debt stood at US$1.2 million and debt servicing payments to the tune of US$40 million were made in 2011.
Total current revenue is expected to expand by 6.2 percent to $128.5 billion, with the GRA garnering $116.8 billion. This, the Minister said, is due to a 6.9 percent increase in value-added and excise tax collections, which brought in $53 billion last year. Customs and trade taxes are expected to be $12.9 billion in 2012, $1.8 billion over 2011 collections. Internal revenues are expected to be $47.2 billion.