Budget projects revenue at $149.6B

- worker remittances fell by US$141M

Finance Minister Dr Ashni Singh is projecting current revenue of $149.6 billion this year compared to $135.7B last year.

In his budget presentation yesterday, he said that both of these figures were net of inflows from the Norwegian forest protection GRIF fund.

Singh said that the Guyana Revenue Authority (GRA) is expected to account for $135.3 billion of this year’s projected current revenue. This is to be fuelled by an 8% rise in internal revenue collections to $55.8 billion from anticipated strong private sector performance at both the company and self-employed levels.

Value added and excise taxes are targeted to rise by 6.7% to $65.8 billion as a result of higher import levels.  Non-tax revenue collections are expected to expand to $14.4 billion.

In 2013, tax revenue collections accounted for 93.3% of total current revenue collections or $126.5 billion and this was 6.9% above the 2012 figure. In 2013, internal revenue collection totalled $51.7 billion – 6.3% over the 2012 figure.

Personal income tax collection under Pay As You Earn fell in 2013 by $955.8 million or 5.9% as a result of the reduction in the personal income tax rate from 33.3% to 30% with effect from January, 2013. Customs and trade tax collections in 2013 were $13.2 billion – 2.4% higher.

The Value Added Tax collection amounted to $34.4 billion in 2013, 0.8% above the 2012 figure.

Total expenditure this year is projected to rise by 25.4% to $215.9 billion. This, Singh said, was mainly attributed to a $31 billion increase in capital expenditure as a result of the acceleration in key infrastructural projects such as the Cheddi Jagan International Airport, Timehri expansion project. The opposition is likely to seek to pare some of this expenditure over continuing concerns about transparency and the feasibility of some of these endeavours.

Singh said that the deficit of the central government is targeted at 4.9% of Gross Domestic Product in 2014 or $32.4 billion.

This year, the overall balance of payments is estimated to record a deficit of US$21.9 million compared to a deficit of US$119.5 million in 2013.

Merchandise imports declined last year by 7.5% to US$1.8 billion. Capital goods fell by 9.7% to US$415.2 million, non-fuel goods dropped by 3.3% to US$410.1 million, fuel and lubricants declined by 9.9% to US$547.7 million and consumption goods decreased by 6.1% to US$437.7 million.

Singh said that net current transfers fell by 15.7% in 2013 to US$353.2 million “due to lower receipts of worker remittances which declined by US$141.1 million to US$328.2 million”. This has puzzled analysts in light of the economic recovery in remitting countries and the family-type remittances which generally don’t reflect much change.

Net payment of services for 2013 amounted to US$307.1 million ranged against US$204.6 million in 2012 as a result of a US$107.1 million rise in non-factor services primarily due to higher royalties and licence fees.

The capital account for 2013 reflected a lower surplus of US$314.8 million compared to US$418.3 million mainly as a result of a drop in Foreign Direct Investment (FDI). Singh said that FDI in 2013 totalled US$214 million compared to US$293.7 million in 2012.

Gross international reserves at the Bank of Guyana totalled US$776.9 million at the end of 2013 or 3.9 months of imports.

In 2013, the weighted average lending rate of commercial banks rose by 8 basis points to 11.16%, a marginal rise from 11.08%. Nevertheless, Singh said that private sector credit continued to rise. The small savings rate dropped by 36 basis points to 1.33% while the 91-day Treasury Bill rate remained stable at 1.45%.

In terms of the exchange rate, Singh said that transactions on the market reduced by 5.8% to US$6.4 billion He said that “Key exchange rates remained stable throughout the year and, at the end of the year, the Guyana Dollar was being traded against the US Dollar at $206.25 compared to $204.5 a year ago”. Analysts say in recent months there has been a noticeable decline in this rate and the selling rates have hovered around $209.

Debt

At end of last year, Singh said that Guyana’s external debt stood at US$1.2 billion, a decline of 8.3% from 2012. He said that the drop was mainly as a result of government concluding two additional compensation agreements under the Venezuelan PetroCaribe rice barter deal which saw US$281.1 million of oil debt extinguished.  Total external debt service in 2013 amounted to US$45.9 million or 7.9% over the 2012 figure. This comprised principal repayments of US$31.6 million and interest payments of US$14.3 million.

Singh revealed that earlier this month government concluded a deal for a 100% write-off of debt to the Caricom Multilateral Clearing Facility from the 1980s totalling US$35.9 million. There was also another debt compensation agreement this month under the PetroCaribe deal worth US$55.4 million.

 

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