Guyana’s economy is declining. The growth rate fell this year and the projection for next year is modest. This means that the income of the government has declined significantly and so has its ability to spend. Public expenditure is one of the two main props that keeps the economy ticking over and sustains employment, income and services. The other is private investment.
In making decisions on the budget, the government found itself between a rock and a hard place. It had to decide whether to reduce spending in proportion to its reduced income or sustain the same or a similar level of public spending as previously by raising funds by way of taxation and borrowing. It chose the latter course by imposing or increasing taxes on individuals and businesses. It has also increased the amount that it will borrow next year, eliminating any prospect of a decline in interest rates.
