$75.6B no-tax budget
--- projects 2.5% economic growth
by Mark Ramotar
Guyana Chronicle
March 30, 2004
FINANCE Minister Sasenarine Kowlessar presented a $75.6 billion no-tax budget to the National Assembly yesterday, saying it aimed at reforming and strengthening the Guyanese economy and advancing the well-being of the country's inhabitants.
Minister Kowlessar believed the measures, the largest ever in Guyana's history, would propel Real Gross Domestic Product (GDP) by 2.5% in 2004.
The budget, which is 5.3% bigger than last year's, was presented under the theme, 'Investing for Sustained Growth and Enhanced Social Development.'
This in itself is testimony to the Government's continued commitment to progressively improve the quality of life of all Guyanese, the Finance Minister asserted during his two-and-a-half-hour 'budget speech' in the House.
"More important, however, to be able to do so in the context of projected low inflation and without increasing taxes is a tribute to, and a belief in, our management capability," he posited.
Facing empty opposition benches, due to the conspicuous absence of members of the main Opposition PNC/Reform from the National Assembly, Minister Kowlessar proudly announced that the exchange rate is expected to remain stable this year; inflation rate is projected at 4.5%; hundreds of jobs are to be created through new and expanded investments; merchandise exports are expected to increase by 6.9%; overall balance of payments is expected to improve; investment in infrastructure is expected to increase, along with spending in the social sector.
He said, too, that current Central Government revenue is projected to grow by 5.5% to $47.9 billion, with the Guyana Revenue Authority accounting for 92.8% of the total. The Internal Revenue Department is also expected to increase its collections by 7.1% to $24 billion, largely reflecting a substantial growth in company income tax and the impact of the tax reform and administrative measures.
Revenue from the Customs and Trade Administration Department is budgeted to increase by 7.1% to $20.5 billion, while the contribution of other current revenue is programmed to decline to $3.4 billion, from $3.9 billion, partly in response to lower royalties, dividends and Bank of Guyana profits.
Mr. Kowlessar also indicated that interest payments are programmed to fall to $7.2 billion, from $8.9 billion in 2003, reflecting a mix of external debt relief and slightly higher domestic interest cost.
"The substantial growth in capital expenditure to 23.8 billion, from $17.3 billion last year, is partly due to a $3.5 billion increase in capital transfers to GUYSUCO for Skeldon Estate and Drainage and Irrigation projects (and) grants are projected to rise by 23.2% to $10.3 billion (equivalent to 10.1% of GDP) compared to $13.2 billion, or 9.1% of GDP in 2003," he said.
According to him, the deficit will be financed by net external borrowing of $11.7 billion and net domestic borrowing of $4 billion.
He also said total receipts of the public enterprises is projected at $74.2 billion, an increase of 11.6% while total expenditure is estimated to grow by 11.4% to 71.6 billion. The current surplus of the enterprises is expected to rise by 58.2% to $7.6 billion, while the overall surplus should improve to $2.6 billion, from $2.2 billion in 2003.
"I also wish to announce an increase in the NIS contribution rate from 12% to 13%, effective April 1, 2004," Kowlessar told the House. According to him, the employee would now be required to pay 5.2% and the employer 7.8%, while the self-employed contribution rate will increase from 10.5% to 11.5%, effective from the same date.
Noting that tourism is emerging as one of the new areas with the biggest potential to contribute to foreign exchange earnings, employment and growth, Minister Kowlessar said that Government/Private Sector collaboration will be enhanced and training to equip tourism-based workers will be increased.
In the area of crime fighting and security, he said Government will continue to provide the necessary legislative, financial and technical support to the Guyana Police Force and other law enforcement bodies in the fight against crime. Funds have been budgeted to rehabilitate buildings; purchase equipment and vehicles; and recruit additional police officers, among other things.
He also announced that nearly $1.4 billion has been budgeted to accelerate the housing programme this year.
Minister Kowlessar pointed out too, that from the beginning of this renewed mandate, the Government has sought to chart a course and pursue an agenda to meet the goals and objectives that it set in its manifesto, and subsequently developed in the Poverty Reduction Strategy Paper.
"There have been challenges, not least of which have been emerging threats in the international economy, and domestic political instability and crime (and) these have led to some setbacks..." he asserted.
The Finance Minister, however, alluded to the fact that the 2004 budget is another building block in the PPP/Civic administration's effort to lift the country from the status of a highly indebted poor country to a medium-income, semi industrial one - capable of withstanding shocks - where growth is sustained and where citizens enjoy high social development.
"With the continued implementation of sound policies and reforms, such as those in this budget, and with the collective will of all of our people, such a vision is increasingly achievable in the not too distant future," Kowlessar said with some amount of conviction.
"Let us, therefore, rise above whatever differences we may have and unite in the common cause of building this great nation that has been bequeathed to us by our fore-parents so that we may leave a rich legacy for future generations," he posited.
The Finance Minister also indicated that the Government is conscious of the need to build strategic alliances and partnerships, while offering stakeholders opportunities for their full involvement and meaningful participation in the planning and execution of its policies and programmes.
Meanwhile, the PNC/R said its non-participation in yesterday's sitting of the National Assembly is reflective of its already stated position that "unless the serious issue of state sponsored death squad(s) was addressed, there would not be business as usual."
The PNC/R, since January 15, 2004 called for an independent and impartial inquiry into allegations of state-sponsored death squad(s) and the alleged involvement of Home Affairs Minister Mr. Ronald Gajraj in directing its operations.
The three other members of the Parliamentary Opposition - Mr. Ravi Dev of ROAR and Ms. Sheila Holder and Ms. Shirley Melville of Guyana Action Party/Working People's Alliance - were present throughout the budget presentation. (More budget stories in tomorrow's issue. See also Budget at a Glance on centre).