SphereX 2023 GOG Budget Anaylsis.pdf

SphereX Analytics | January 23, 2023
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Business Intelligence, Financial and Economic Analysis
________________________________________________________________
Budget 2023 Review and
Analysis: “Improving Lives
Today, Building Prosperity for
Tomorrow”
- a Patriot’s Perspective

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Table of Contents
EXECUTIVE SUMMARY........................................................................................................... 3
1.1 Introduction........................................................................................................................ 6
2.1 Targets for 2023................................................................................................................. 6
2.2 Targets for the Non-Financial Public Sector..................................................................... 7
3.1 Fiscal Measures ............................................................................................................. 7
4.1 Analysis and Discussion .................................................................................................. 9
4.2 Revenue Analysis ............................................................................................................ 9
4.3 Expenditure Analysis...................................................................................................... 10
4.4 Fiscal Deficit ............................................................................................................... 12
4.5 Statutory and Appropriation Expenditure by Sector.................................................... 13
4.6 Summary of Capital Expenditure by Sector................................................................ 15
4.7 Key Sectorial Capital Budget Allocations:................................................................... 15
4.8 Budget Allocation for Social Sector and Programs..................................................... 17
5.1 Key Criticisms of the Budget.......................................................................................... 19
6.1 SphereX Analytics Commentary .................................................................................... 19
6.2 Poverty Reduction, Investing for the Future through a Balanced Budget....................... 24
7.1 Conclusion....................................................................................................................... 26

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EXECUTIVE SUMMARY
Budget 2023 is 41.4 percent larger over budget 2022, amounting to $781.9 billion, fully financed
with no new taxes.
Prior to the Government tapping into the NRF, central government revenue typically composed
of 96% tax revenue and 4% non-tax revenue. In FY 2022, organic tax revenue accounted for
68% of total revenue, non-tax revenue accounted for 2%, and the NRF withdrawal accounted
for 29% of total revenue. In FY 2023, organic tax revenue is estimated to account for 55%,
organic non-tax revenue is estimated to account for 3% of total revenue, NRF withdrawal is
estimated to account for 36% of total revenue, GRIF inflows estimated to account for 1% of total
revenue, and carbon credit inflows is estimated to account for 5% of total revenue.
The budget is premised on a national development framework which began three decades ago
under the incumbent government, viz-á-viz, the National Development Strategy (NDS) (1996).
The NDS is a seven-volume document with over 3,000 pages. If one were to peruse this
document one would recognize that all of the infrastructure and physical development program,
in particular, the tourism development strategy among other things that the Government is
advancing, were all identified in that NDS framework. The need to revisit the feasibility of
reintroducing railway networks with respect to the development of the transportation sector–
aimed at reducing the logistical cost in transporting goods in bulk across the country and of
course connecting the country through rail networks once again to enable cost effective and
efficient movement of goods and people, is also articulated in the NDS.
It is worth noting at this point that in respect of reintroducing railways, beyond connecting the
country through rail networks, Guyana is now in a position where over the long term,
policymakers may need to consider integrating Guyana in South America through rail networks
which will open up new opportunities and access to a larger market within the South American
continent.
The NDS, over the years was subsequently complemented by the National Competitiveness
Strategy (NCS), the Low Carbon Development Strategy (LCDS) which has been recently
updated and expanded to include the blue economy, and the manifesto commitments of the
Government upon which it was elected.
The budget contains several measures to combat the cost-of-living issue which is largely
impacted by external factors within the global economy. To this end, the inflationary pressure is
driven by two forces: (1) imported inflation attributable to the fact that Guyana imports more than
80% of consumption goods, intermediate and capital goods. This aspect of inflation is impacted
by events in the global economy such as supply chain disruptions leading to cost push inflation
and demand-pull inflation. (2) Secondly, the inflationary impact within the domestic economy is
also driven by strong domestic demand across all sectors as demonstrated by the vibrant
double-digit growth in the overall economy and in the non-oil sectors.

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The total estimated cost of the COL measures implemented by the government in terms of direct
cost to the treasury and foregone revenue to the treasury–is approximately $89 billion. This
represents 11.3% of the total budget, 28% of current revenue, and 43% of the NRF withdrawal
to finance budget 2023.
The budgetary allocations in the social services sector, which include allocations towards
employment cost for public sector employees, health, education, social welfare programmes,
housing and water, culture and youth amounts to $226.2 billion, reflecting a 42% increase over
the previous year and accounting for 29% of budget 2023, and 71% of current revenues. In view
of this, these are substantial budgetary allocations towards the social services sector–while
noting that the approximate sum of $226.2 billion is exclusive of allocations towards public safety
and security.
Indeed, the government is pursuing an expansionary fiscal and monetary policy framework to
facilitate the accelerated development trajectory of the economy. In theory, it is true that
expansionary policies are inflationary. From all indications, however, the Government is mindful
of this and has managed to contain inflation while preventing the economy from overheating. It
is precisely for this reason why the government has been careful to NOT increase significantly
the current expenditure side of the budget.
In this regard, the current expenditure of the budget since the Government assumed office in
2020 only increased cumulatively by 51% or an average Y-o-Y increase of 12.76 %. In theory,
substantial increases in the current expenditure side of the budget would drive inflationary
pressures on consumption, and which would be difficult to scale back because this would
include, for example, larger increases, as the Opposition is advocating for, in wages and salaries
and social welfare programmes.
Conversely, to accelerate the development trajectory, there have been substantial increases in
the capital expenditure by over 400% cumulatively since FY 2020 with an average Y-o-Y
increase of 102%. Notwithstanding, capital expenditure and capital projects can easily be scaled
back to contain any inflationary impact or overheating of the economy. So far there are no
indications of the economy overheating and this can be explained by another inherent constraint,
that is a default mechanism anchoring the overheating risk of the economy. To this end, one of
the major challenges that the Government has to confront is absorptive capacity, wherein, this
speaks to the rate of implementation of projects coupled with the bureaucracy in the system.
While this is a constraint to the fast-paced development, it is also naturally working as an anchor
by staving off any strong inflationary impact that would lead to overheating.
With respect to the argument that the budget is not a balanced budget and not people centric,
the proponents of this view failed to state and justify what are the determinants of a balanced
budget and how is it that the budget is not people focused?

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In order to so do, SphereX Analytics examined the composition of the population age groups
using the 2012 population census data (which is 11 years ago), whereby for the purpose of this
analysis, the age groups were adjusted upwards by 11 years, since the study was done 11 years
ago.
In examining the age groups of the population from the above illustration, 71% of the population
are in the age group of 11 – 40, 17% of the population are in the age group 41 – 65, 7% of the
population are in the age group 66 – 75, and the remaining 5% of the population are 76 and
over. Putting this into context, investing for the future and creating prosperity for the tomorrow
essentially means investing in the economy that will create sustainable prosperity for the 71%
of the population comprising of the present and future generation, who in turn have their entire
working life ahead of them–and in the process building and developing the economy. Another
24% of the population in the age group which is made of 17% in the age group of 41-65 and 7%
in the age group of 66–75, these age groups are also in the working population all of whom
ought to have the framework for improved standard of living and quality of life today and securing
their future as well.
Aligning this with the configuration of the budget whereby 29% of the budgetary allocations are
towards the social services sector and the remaining 71% allocated towards investing in the
infrastructure to enable the future growth trajectory and prosperity, this ratio configuration mirrors
the composition of the population in terms of age group where the future is for the 71% of the
population (11-40 years old). While this segment of the population needs social services as well,
more importantly, they also need the opportunity to build profitable enterprises for those who
have entrepreneurial ambitions, and job opportunities which can only be created through
investing in the economy and creating a conducive business and investment climate to so
facilitate.
It is within these contexts, therefore, that it can be safely concluded that the budget is people
focused. It is a balanced budget catering adequately for the future generation of professionals
and entrepreneurs while improving the present-day conditions upon which their livelihoods
hinged. The budget also sufficiently caters for the elderly who account for 5% of the population
within the limitations of the financial resources available.

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1.1 Introduction
Budget 2023 was presented to the National Assembly by the Hon. Dr. Ashni K. Singh, Senior
Minister in the Office of the President with responsibility for Finance, on January 16th, 2023,
under the theme “improving lives today, building prosperity for tomorrow”. This Budget is the
fourth budget of the incumbent government and the second budget to be funded, in part, by the
oil revenues from the Natural Resource Fund (NRF).
The Minister reported that the domestic economy grew by an estimated 62.3% in real terms,
while the non-oil economy experienced buoyant growth of 11.5%.
Globally, economic growth in 2022 is estimated at 2.9%, down from the 5.9% stronger growth
achieved in 2021. Moreover, global growth is estimated at lower levels in 2023. On the other
hand, global inflation rate is estimated at 8.8% in 2023, rising above the 4.7% achieved in 2021.
2.1 Targets for 2023
➢ Real GDP is projected to grow by 25.1 percent in 2023 while non-oil GDP is projected to
grow by 7.9 percent by the end of 2023,
➢ The agriculture, forestry and fishery sector is expected to grow by 7.2 percent in 2023,
driven by growth across all subsectors,
➢ The mining and quarrying sector is forecasted to grow by 34.1 percent in 2023, with
expansions projected for all four subsectors,
➢ The manufacturing sector is projected to grow by 5.7 percent,
➢ Construction is estimated to grow by 17 percent,
➢ The services sector is forecasted to grow by 5.6 percent,
➢ Inflation is projected to slow to 3.8 percent, on account of decelerating prices abroad, and
with the maintenance of suitable policy stance on the part of the Government, and
➢ The balance of payment account is projected to record a surplus of US$150 million this
year supported by the current account maintaining its surplus amid continued growth in
export earnings, and a lower deficit on the capital account.

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2.2 Targets for the Non-Financial Public Sector
➢ Central Government revenue net of GRIF and carbon credit inflows and NRF withdrawal
is projected to increase by 11 percent in 2023, to reach $335.3 billion, of which tax
collections will account for 95 percent, as the economy continues to grow and diversify.
➢ Total expenditure in 2023 is projected to grow by 27.5 percent in 2023, to reach $756
billion.
➢ Budget 2023 is 41.4 percent larger over budget 2022, amounting to $781.9 billion, fully
financed with no new taxes.
➢ Total receipts of the public enterprises are projected to grow by $3 billion in 2023 to
$180.2 billion. Total expenditure for the enterprises is anticipated to grow by 5.8 percent
to $184.4 billion.
➢ A deficit of $171.7 billion, or 4.7 percent of GDP, is projected for the non-financial public
sector in 2023.
➢ It is anticipated that there will be 136 lifts of profit oil from the Stabroek Block in 2023. Of
this, the Government is projected to have 17 lifts in profit oil from the producing FPSOs,
earning an estimated US$1.4 billion and US$225.2 million in royalties in 2023.
3.1 Fiscal Measures
➢ The Government continues to work to resolve anomalies and disparities across
comparable positions in the public service. The first phase of salary adjustments took
effect from January 2023, benefiting over 5,000 healthcare workers and almost 9,000
members of the Disciplined Services, resulting in an additional $3 billion in disposable
income in the hands of workers.
➢ The income tax threshold increased from $75,000 monthly to $85,000 monthly. This
measure will result in over 12,000 people being removed from paying income taxes and
would translate into an additional $3.3 billion in disposable income.
➢ The Because We Care School Grant increased from $25,000 to $35,000, representing
an increase of 133% since its reintroduction in budget 2021. This program will benefit
over 214,000 students in both public and private schools amounting to $2.1 billion.

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➢ Additionally, the aforementioned grant together with the uniform allowance of $5,000 per
child will see parents receiving $40,000 per child in total, and the two grants together
amounts to $8.6 billion.
➢ The excise tax on fuel imports was reduced from 50% to 0% through the previous years’
budgets under the incumbent Administration. Budget 2023 proposes to maintain the 0%
excise tax which represents annual forgone revenue to the treasury of an estimated $20
billion.
➢ The government adjusted the freight charges to pre-pandemic levels to combat the
escalation in shipping costs which were passed onto consumers by importers. This
measure will be extended in 2023 and will cost the treasury an estimated $6 billion in
foregone revenue.
➢ The part time job programme that the government started will continue to expand across
all regions in 2023 with the sum of $10 billion allocated towards this initiative.
➢ The sum of $5 billion is allocated for additional cost of living interventions which will be
determined from the Government’s ongoing community engagements.
➢ The old age pension (OAP) will be increased to $33,000 per month from $20,500 in 2020
to $28,000 in 2022. With this increase, the total OAP bill now amounts to $28.9 billion
which will benefit some 73,000 pensioners.
➢ Public assistance, which is a special program for persons with disabilities will increase
from $14,000 to $16,000–amounting to over $700 million and benefiting over 29,000
persons.
➢ The Low-income mortgage ceiling increased to $20 million, up from $15 million, thus
reducing the cost of borrowing up to this range and further incentivizing home ownership.
➢ Removal of VAT on the sale of residential properties.
➢ Removal of currently applicable 14% VAT on new electric motor vehicles of any power
rating.
➢ Duty on new motor vehicles below 1500 cc will be reduced from 45% to 35%. In relation
to used vehicles below 1500 cc, the current tax rate will be replaced with a flat rate of
taxes of $800,000, thereby reducing the cost to import such vehicles by $300,000.

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4.1 Analysis and Discussion
4.2 Revenue Analysis
Table 1.1 Actual Actual Revised Budget
Revenue 2020 2021 2022 2023
Cumulative
Increase
Increase
%
Av. Y-o-Y
Increase
%
Grand Total 227,739 267,032 429,458 578,529 350,790 154.03 38.51
Tax Revenue 218,330 255,085 292,336 320,110 101,780 46.62 11.65
Non-Tax Revenue 9,409 11,541 9,774 15,200 5,791 61.55 15.39
NRF Withdrawal - - 126,482 208,944 82,462 65.20 16.30
GRIF Inflows - 406 866 3,000 2,594 638.92 159.73
Carbon Credit
Inflows
- - - 31,275 - - -
G$ Millions: Source: Budget Estimates (Various)/Author’s Calculations
➢ Central Government Revenue has increased from a position of $227.7 billion in FY 2020
to an estimated $578.8 billion in FY 2023, representing a cumulative increase of $351
billion or 154% over this period with an average Y-o-Y increase of 38.51%.
➢ Organic tax revenue increased by $102 billion or 46% over the four-years period
representing an average Y-o-Y increase of 11.65%. The organic non-tax revenue
increased by 61.55% or by $5.8 billion over the four-years period with an average Y-o-Y
increase of 15.39%.
➢ GRIF inflows increased from a position of $406 million in FY 2021 to $3 billion in FY 2023
representing an increase of 638% or $2.6 billion.
➢ NRF withdrawal increased from $126.5 billion in FY 2021 to $209 billion in FY 2023
representing an increase of $82.5 billion or 65%.
Figure 1 below illustrates the composition of Central Government Revenue over the four years
period FY 2020 – FY 2023. Prior to the Government tapping into the NRF, central government
revenue typically composed of 96% tax revenue and 4% non-tax revenue. In FY 2022, organic
tax revenue accounted for 68% of total revenue, non-tax revenue accounted for 2%, and the
NRF withdrawal accounted for 29% of total revenue. In FY 2023, organic tax revenue is
estimated to account for 55%, organic non-tax revenue is estimated to account for 3% of total
revenue, NRF withdrawal is estimated to account for 36% of total revenue, GRIF inflows
estimated to account for 1% of total revenue, and carbon credit inflows is estimated to account
for 5% of total revenue.

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Fig: 1.1
4.3 Expenditure Analysis
Actual Actual Budget Budget
Table 1.2 2020 2021 2022 2023
Cumulative
Increase
Increase
%
Av. Y-o-Y
Increase
%
TOTAL
EXPENDITURE 337,035 404,851 552,933 781,882 444,847 131.99 33.00
Current Expenditure 260,920 300,465 335,095 394,082 133,162 51.04 12.76
Other Charges 169,743 197,159 212,287 248,448 78,705 46.37 11.59
Employment Cost 71,853 77,812 89,911 105,718 33,865 47.13 11.78
Public Debt 19,324 25,494 32,897 39,916 20,592 106.56 26.64
Capital Expenditure 76,115 104,386 217,838 387,800 311,685 409.49 102.37
G$: Millions Source: Budget Estimates (Various)/Author’s Calculations
➢ Total expenditure has increased from a position of $337 billion in FY 2020 to an estimated
$782 billion in FY 2023, representing a cumulative increase of $444.8 billion or 132% over
this period with an average Y-o-Y increase of 33%.
➢ Current expenditure increased by $133.2 billion or 51% over the four-years period,
representing an average Y-o-Y increase of 12.76%. Other charges increased by 46.37%
or by $78.7 billion over the four-years period with an average Y-o-Y increase of 11.59%.
-
20
40
60
80
100
Tax Revenue
Non-Tax Revenue
NRF Withdrawal
GRIF Inflows
Carbon Credit Inflows
Composition of Central Gov't Revenue
2020 2021 2022 2023

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➢ Employment costs increased from a position of $71.8 billion in FY 2020 to an estimated
$105.7 billion in FY 2023 representing an increase of 47.13% or $33.8 billion with an
average Y-o-Y increase of 11.78%.
➢ Public debt (service/repayment) increased from $19.3 billion in FY 2020 to an estimated
$39.9 billion in FY 2023 representing an increase of $20.6 billion or 106.56% over this
period with an average Y-o-Y increase of 26.64%.
➢ Capital expenditure increased from a position of $76.1 billion in FY 2020 to an estimated
$387.8 billion in FY 2023 or by $311.7 billion, representing an increase of 409.49% with
an average Y-o-Y increase of 102.37%.
Fig: 2.1
Figure 2 above illustrates the composition of the expenditure items relative to total expenditure
over the four years period FY 2020 – FY 2023. In FY 2020, current expenditure accounted for
77% of total expenditure, and capital expenditure accounted 23% of total expenditure. In FY
2021 and 2022, current expenditure accounted for 74% and 61% of total expenditure
respectively, while current expenditure accounted for 26% and 39% respectively. In FY 2023,
the ratio of current and capital expenditure relative to total expenditure is 50:50. This ratio
reflects the accelerated pace of development by the Government to invest heavily in
infrastructure development as one of the key pillars to economic transformation.
77
74
61
50
50 49
38
32
21 19
16
14
6 6 6 5
23
26
39
50
-
10
20
30
40
50
60
70
80
90
2020 2021 2022 2023
Percentage
(%)
Expenditure Items % of Total Expenditure
Current Expenditure Other Charges Employment Cost Public Debt Capital Expenditure

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Fig: 2.2
Figure 2.2 above illustrates the composition of current expenditure relative to current revenue
for the period FY 2020 to FY 2023:
➢ Employment costs account for 32% of current revenue in FY 2020, 29% in FY 2021, 30%
in FY 2022 and 32% in FY 2023.
➢ Other charges/current expenditure account for 75% of current revenue in FY 2020, 74%
in FY 2021, 70% in FY 2022 and 74% in FY 2023.
➢ Public debt repayment accounts for 8% of current revenue in FY 2020, 10% in FY 2021,
11% in FY 2022 and 12% in FY 2023.
➢ Overall, current expenditure represents 115 of current revenue in FY 2020, 113% in FY
2021, 111% in FY 2022 and 118% in FY 2023.
4.4 Fiscal Deficit
As illustrated in figure 2.3 hereunder, the fiscal deficit during the period 2012 – 2019 averaged
2.64% of GDP, while in FY 2020 and FY 2021 the fiscal deficit represented 6% of GDP. In FY
2022 and FY 2023 the fiscal deficit descended 4.52% of GDP and an estimated 2.52% of GDP
in FY 2023. This is outturn is due to the budget being financed, in part, from the NRF and Carbon
Credit inflows to the treasury.
-
20
40
60
80
100
120
2020 2021 2022 2023
115 113 111
118
75 74
70
74
32 29 30 32
8 10 11 12
Percentage
(%)
Current Expenditure Items % of Current Revenue
Current Expenditure Other Charges Employment Cost Public Debt

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Fig: 2.3
4.5 Statutory and Appropriation Expenditure by Sector
Table 2.1 2020 2021 2022 R 2023 F
Change
($)
Change
(%)
Av. Y-o-Y
Growth
%
General Administration
Sector 75,284 86,341 146,958 177,852 102,568 136 34.06
Economic Services Sector 22,926 28,729 44,924 41,987 19,061 83 20.79
Infrastructure Sector 47,748 65,908 147,111 199,850 152,102 319 79.64
Social Services Sector 79,783 98,714 130,878 192,293 112,510 141 35.26
Public Order & Safety Sector 43,393 45,515 53,940 61,458 18,065 42 10.41
Regional Development
Sector
48,574 54,150 60,323 68,525 19,951 41 10.27
Public Debt 19,324 25,494 31,064 39,916 20,592 107 26.64
Overall Total 337,032 404,851 615,198 781,881 444,849 132 33.00
Source: Budget Estimates (Various)/Author’s Calculations
➢ As shown in the table above, allocation towards the economic services sector grew from
a position of $22.9 billion in FY 2020 to $41.9 billion or by $19 billion in FY 2023,
representing 83% cumulative growth or an average of 21% Y-o-Y growth for the period.
➢ Budgetary allocation towards the infrastructure sector grew from $47.8 billion in FY 2020
to $192.3 billion in FY 2023 or by $152 billion, representing cumulative increase of 319%
or an average of 79.64% Y-o-Y growth.
➢ Budgetary allocation towards the social services sector grew from a position of $79.8
billion in FY 2020 to $192.3 billion in FY 2023 reflecting an increase of $112.5 billion and
representing a cumulative increase of 141% for the period or an average Y-o-Y increase
of 35%.
3.33 3.14
3.99
1.06
3.45 3.45
2.71 2.87
6.04 6.12
4.52
2.52
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F
Percentage
%
Fiscal Year
FISCAL DEFICIT % GDP

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➢ Budgetary allocation towards the public order and safety sector $43.4 billion in FY 2020
to $61.5 billion in FY 2023 reflecting an increase of $18 billion and representing a
cumulative increase of 42% for the period or an average Y-o-Y increase of 10%.
➢ The budgetary allocation towards the regional development sector moved from $48.6
billion in FY 2020 to $68.5 billion in FY 2023, representing an increase of $19.9 billion or
41% cumulatively, with an average Y-o-Y increase of 10.27%.
Fig: 2.4
➢ The allocation towards the economic services sector averaged 5% - 7% of the total budget
for the period FY 2020 to FY 2023.
➢ The allocation towards the infrastructure sector in FY 2020 accounted for 14% of the total
budget and in FY 2023 accounted for 26% of the total budget.
➢ The social services sector allocation accounted for 23.67% of the total budget in FY 2020
and 24.59% of the total budget in FY 2023.
➢ The allocation towards the public order and safety sector averaged 8% - 12% during the
period.
➢ The allocation towards the regional development sector 9% - 14% of the total budget for
the period.
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2020 2021 2022 2023
Percentage
(%)
Statutory & Appropriation Expenditure % of the Total
Budget
General Administration Sector Economic Services Sector Infrastructure Sector
Social Services Sector Public Order & Safety Sector Regional Development Sector

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4.6 Summary of Capital Expenditure by Sector
Table 2.3 2020 2021 2022R 2023B
Change
($)
Change
(%)
Av. Y-o-
Y %
Agriculture 5,704 10,546 16,245 15,668 9,964 175 43.67
Fishing 42 56 55 35 (7) (17) (4.17)
Power Generation 13,618 3,070 26,261 50,559 36,941 271 67.82
Manufacturing 128 288 2,724 1,782 1,654 1,292 323.05
Construction 19,379 31,402 104,312 123,408 104,029 537 134.20
Transport &
Communication
5,137 6,725 17,688 51,200 46,063 897 224.17
Housing 2,323 17,440 26,870 53,246 50,923 2,192 548.03
Environment & Pure
Water
2,498 4,499 7,608 17,143 14,645 586 146.57
Education 4,444 6,166 7,929 17,641 13,197 297 74.24
Health 7,825 6,189 20,167 25,029 17,204 220 54.96
Culture & Youth 325 1,088 2,640 3,722 3,397 1,045 261.31
National Security &
Defence
4,427 2,015 3,094 3,547 (880) (20) (4.97)
Public Safety 3,830 4,742 6,636 7,435 3,605 94 23.53
Tourist Development 2 7 51 506 504 25,200 6,300.00
Administration 3,039 4,216 7,615 11,703 8,664 285 71.27
Financial Transfers 828 748 1,610 1,435 607 73 18.33
Social Welfare 1,458 5,189 6,580 3,740 2,282 157 39.13
Overall Total 75,007 104,386 258,085 387,799 312,792 417 104.25
4.7 Key Sectorial Capital Budget Allocations:
➢ Capital budget allocation towards the agriculture sector increased from $5.7 billion in FY
2020 to $15.7 billion in FY 2023, representing an increase of 175% or $9.9 billion
cumulatively for the period.
➢ Capital allocation to the energy sector moved from $13.6 billion in FY 2020 to $50.56
billion in FY 2023, representing an increase of $37 billion or 271% cumulatively for the
period.
➢ Capital budget allocation towards the manufacturing sector moved from $128 million in
FY 2020 to $1.8 billion in FY 2023, representing an increase of $1.6 billion or almost
1300% cumulatively for the period.
➢ Capital budget allocation towards the construction sector moved from $19.4 billion in FY
2020 to $123.4 billion in FY 2023, representing an increase of $104 billion or 537%
cumulative for the period.

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➢ The transportation and communications sector were allocated $5.1 billion in FY 2020
which moved to $51.2 billion in FY 2023, representing an increase of $46 billion or 897%
cumulatively for the period.
➢ The housing sector capital allocation in FY 2020 stood at $2.3 billion which moved to
$53.2 billion in FY 2023, representing an increase of $50.9 billion or over 2000%,
cumulatively.
➢ The capital allocation towards the environment and water sectors stood at $2.5 billion
which increased to $17.1 billion representing a cumulative increase of $14.6 billion or
586% for the period.
➢ The health sector’s capital budget stood at $7.8 billion in FY 2020 which grew by $17.2
billion to reach $25 billion in FY 2023, representing a cumulative increase of 220%.
➢ The capital allocations to the social welfare sector stood at $1.4 billion in FY 2020 which
increased by $2.3 billion to reach $3.7 billion in FY 2023, representing an increase of
157% cumulatively.
Fig: 2.5
As illustrated in figure 2.5 above, in FY 2023, the allocations to the agricultural sector accounts
for 4% of the total capital budget, power generation 13%, manufacturing 0.46%, construction
32%, transport and communication 13.2%, housing 13.73%, environment and water 4.42%,
education 4.55%, health 6.45%, tourist development 0.13%, culture and sports 0.96%, and
social welfare accounts for 0.96% of the total capital budget.
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
Percentage
(%)
Capital Expenditure Allocation by Sector % of Capital Budget
2020 2021 2022 2023

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17
4.8 Budget Allocation for Social Sector and Programs
Table 3.1 2022 2023 Increase
% Change
CURRENT REVENUE 429458 578529 149,071 35
TOTAL BUDGET 615,198 781,881 166,683 27
Employment Costs 87,760 105,718 17,958 20
Health 20,167 25,029 4,862 24
Education 7,929 17,640 9,711 122
Housing 26,870 53,246 26,376 98
Social Welfare 6,579 3,740 (2,839) (43)
Environment & Water 7,608 17,143 9,535 125
Culture & Youth 2,640 3,722 1,082 41
Social Services Sector 159,553 226,238 66,685 42
The allocation of public financial resources towards the social services sector includes
allocations towards the employment cost for public sector employees, health, education,
housing, social welfare, environment and water, and culture, youth and sports. To this end, the
total allocation for these social services sectors amounted to $226.2 billion in FY 2023
representing an increase of 42% or $66.7 billion over the previous fiscal year of 2022.
Fig: 3.1
159,553
226,238
-
50,000
100,000
150,000
200,000
250,000
Social Services Sector
G$:
Million
Budget Allocation to the Social Services Sector
2022 2023

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18
Fig: 3.2
The allocation to the social services sector accounted for 26% of the total budgetary allocations
in FY 2022 and 29% of the total budget in FY 2023.
Fig: 3.3
Moreover, the total allocation in the social services sector accounted for 54.58% of current
revenue in FY 2022 and moved upwards to 70.68% of the estimated current revenue in FY 2023.
-
5
10
15
20
25
30
35
Percentage
(%)
Social Services Sector Allocation % of Total Budget
2022 2023
54.58
70.68
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2022 2023
Percentage
(%)
Social Services Sector % of Current Revenue

__________________________________________________________________________________________
19
5.1 Key Criticisms of the Budget
There are several criticisms of the budget by sections of civil society individuals and groups and
the Parliamentary Opposition. These criticisms are summarized hereunder as follows:
i) The budget is not premised on any national development framework.
ii) The budget does not sufficiently address the cost-of-living (COL), for example, the
Opposition argued that less than 1% of the budget is allocated for COL intervention
(s).
iii) The Opposition argued that the budget does not contain any poverty reduction
mechanism or strategy.
iv) The expansionary monetary policy stance of the Administration is inflationary.
v) The Opposition also contend that the budget is heavily focused on infrastructure and
as such it is not a balanced budget in terms of providing adequate allocations for the
social services sector and increase in public sector wages and salaries.
vi) The low-income housing programme increased ceiling was criticized to the extent that
low-income earners may not be able to afford the installment of a $20 million loan.
6.1 SphereX Analytics Commentary
The budget is premised on a national development framework which began three decades ago
under the incumbent government, viz-á-viz, the National Development Strategy (NDS) (1996).
The NDS is a seven-volume document with over 3,000 pages. If one were to peruse this
document one would recognize that all of the infrastructure and physical development program,
in particular, the tourism development strategy among other things that the Government is
advancing, were all identified in that NDS framework. The need to revisit the feasibility of
reintroducing railway networks with respect to the development of the transportation sector–
aimed at reducing the logistical cost in transporting goods in bulk across the country and of
course connecting the country through rail networks once again to enable cost effective and
efficient movement of goods and people, is also articulated in the NDS.
The NDS, over the years was subsequently complemented by the National Competitiveness
Strategy (NCS), the Low Carbon Development Strategy (LCDS) which has been recently
updated and expanded to include the blue economy, and the manifesto commitments of the
Government upon which it was elected.

__________________________________________________________________________________________
20
To further validate this argument, if one were to peruse each national budget from 1997–2014
and from 2020 to present, one would observe that the implementation of the NDS commenced
incrementally since 1997 through every budget that was laid in the National Assembly by the
incumbent Administration.
It is worth noting at this point that in respect of reintroducing railways, beyond connecting the
country through rail networks, Guyana is now in a position where over the long term,
policymakers may need to consider integrating Guyana in South America through rail networks
which will open up new opportunities and access to a larger market within the South American
continent.
The Impact of Cost-of-Living Measures in the Budget
The budget contains several measures to combat the cost-of-living issue which is largely
impacted by external factors within the global economy. To this end, the inflationary pressure is
driven by two forces: (1) imported inflation attributable to the fact that Guyana imports more than
80% of consumption goods, intermediate and capital goods. This aspect of inflation is impacted
by events in the global economy such as supply chain disruptions leading to cost push inflation
and demand-pull inflation. (2) Secondly, the inflationary impact within the domestic economy is
also driven by strong domestic demand across all sectors as demonstrated by the vibrant
double-digit growth in the overall economy and in the non-oil sectors.
The quantitative impact of the COL measures is estimated as follows:
Measure G$ Millions Comment
Cost of Living Intervention 5,000 To Be Determined At Community Outreaches
Extending the 0% Excise Tax on Fuel Imports 20,000 Foregone Revenue To The Treasury
GPL Absorbed Electricity Generation Cost 17,000 Cost of Fuel Being Subsidized
GWI Cost Being Absorbed (fuel) 2,000 Cost to the Treasury
Part Time Jobs Programme 10,000 Cost to the Treasury
Increased Income Tax Threshold 3,300 Cost to the Treasury
Cash Grant for School Children 8,600 Cost to the Treasury
Extending the Freight Charges Adjustment 6,000 Foregone Revenue To The Treasury
Public Assistance 700 Cost to the Treasury
Old Age Pension (increase) 365 Cost to the Treasury
Public Sector Employment Cost (YoY Increase) 15,800 Cost to the Treasury
TOTAL 88,765
The total estimated cost of the COL measures implemented by the government in terms of direct
cost to the treasury and foregone revenue to the treasury–is approximately $89 billion. This
represents 11.3% of the total budget, 28% of current revenue, and 43% of the NRF withdrawal
to finance budget 2023.

__________________________________________________________________________________________
21
Effectively, the impact of these measures altogether would translate to about $404,545 on an
annualized basis per household using a total estimated household of 220,000 as per the 2012
national census data.
Consequently, this is demonstrative of the effectiveness of Government’s series of interventions
to combat the COL and evidently, Guyana has managed to contain the COL impact on the
domestic economy much better than most countries globally. To corroborate this, Guyana’s
inflation rate remained in the single digit range, and which is projected to slow below 5% by the
end of 2023, thus remaining below the global average. On the other hand, the average global
inflation rate is above 7% while noting that many other countries are experiencing double digit
inflation. To this end, the World Economic Forum reported that inflation rates have doubled in
35 of 44 advanced countries over the past two years. Turkey had the highest inflation rate in the
first quarter of 2022 at 54.8% while inflation has grown the fastest in Israel, with a 25-fold
increase.
Expansionary Monetary and Fiscal Policy and Mitigating Inflation
Indeed, the government is pursuing an expansionary fiscal and monetary policy framework to
facilitate the accelerated development trajectory of the economy. In theory, it is true that
expansionary policies are inflationary. From all indications, however, the Government is mindful
of this and has managed to contain inflation while preventing the economy from overheating. It
is precisely for this reason why the government has been careful to NOT increase significantly
the current expenditure side of the budget.
In this regard, the current expenditure of the budget since the Government assumed office in
2020 only increased cumulatively by 51% or an average Y-o-Y increase of 12.76 %. In theory,
substantial increases in the current expenditure side of the budget would drive inflationary
pressures on consumption, and which would be difficult to scale back because this would
include, for example, larger increases, as the Opposition is advocating for, in wages and salaries
and social welfare programmes.
Conversely, to accelerate the development trajectory, there have been substantial increases in
the capital expenditure by over 400% cumulatively since FY 2020 with an average Y-o-Y
increase of 102%. Notwithstanding, capital expenditure and capital projects can easily be scaled
back to contain any inflationary impact or overheating of the economy. So far there are no
indications of the economy overheating and this can be explained by another inherent constraint,
that is a default mechanism anchoring the overheating risk of the economy. To this end, one of
the major challenges that the Government has to confront is absorptive capacity, wherein, this
speaks to the rate of implementation of projects coupled with the bureaucracy in the system.
While this is a constraint to the fast-paced development, it is also naturally working as an anchor
by staving off any strong inflationary impact that would lead to overheating.

__________________________________________________________________________________________
22
The Low-Income Housing Programme
The increase in the low-income mortgage ceiling is essentially to cater for low to moderate
income families. In so doing, low income families can now access up to $20 million at lower
interest rates.
More importantly, the low-income housing programme by the Government is designed as a
major poverty reduction tool. As such, low-income families are able to own their own home at a
cost below the market price for financing, which in turn empower those families, add to their net
worth and is a key pillar upon which they are lifted out of poverty. For example, they can then
leverage the value to raise capital to build micro enterprises and enhance their overall wellbeing
over time.
If the Government did not make this arrangement with the banks for low-cost financing, low-
income families would not have been able to afford their own home if they were subject to
borrowing at market rates.
Key Facts about the Government’s Housing Programme:
➢ The Low-Income Mortgage Program was introduced about sixteen (16) years ago under
former President Dr. Bharrat Jagdeo (Now Vice President), with a maximum ceiling of $8
million.
➢ The average interest rate (below the average lending rate of about 10%-16%) is 5.25%.
This low interest rate which in turn enabled access to affordable financing for new low-
income families was made possible through an arrangement brokered between the
Government and the banks whereby the Government waived the taxes payable on the
interest earned on home loans.
➢ The maximum repayment period is 30 years.
➢ The equity homeowners / borrowers are required to inject is about 10%-20%.
➢ At $8 million, the monthly installment is about $44,000 and at $20 million, the monthly
instalment is about $100,000.
➢ Cumulative inflation from 2007 to the present is about 54%. This means that $8 million
sixteen years ago is worth $12.3 million today.
➢ Per capita income sixteen years ago was US$3,658 which would translate to an average
monthly income of $64,015; per capita income as of 2022 is US$18,000 which would
translate to an average monthly income of $315,000.

__________________________________________________________________________________________
23
➢ However, for the sake of this argument, let’s use the non-oil GDP per capita income for
2022 which is US$7,330 – translating to about an average monthly income of $128,275,
thereby representing an increase of 100% over the last sixteen years.
Based on these indicators, the low-income bracket sixteen years ago was ≤ $250k and applying
the cumulative inflation over this sixteen years period and growth in per capita income, the low-
income bracket would now move to ≤ $385k. This level of cumulative increase would have been
facilitated through incremental cost of living increases in wages and salaries both in the public
and private sectors. For example, a junior clerk in a bank earned about $50k 16 years ago, now
a junior clerk’s salary in a bank is about $100k or more, representing a 100% increase over the
last 16 years. The same is true in other sectors.
There is also a Mortgage Interest Relief (MIR) program implemented by this Government
whereby eligible applicants (first time homeowners and the principal amount borrowed must not
exceed $30 million), such persons shall be allowed a deduction of interest paid on housing
mortgage loans from their chargeable income.
The average annual interest paid on an $8 million loan would work out to about $262k and in
the case of a $20 million loan would work out to $655k.
From a practical standpoint, low-income families typically have two income earning persons.
Most times when low-income families apply for a low-income loan, it would be two applicants,
both of whom are earning. And the credit assessment conducted by the banks will be based on
the combined income of both individuals.
When the low-income housing program was introduced around 2007, the maximum ceiling was
$8 million. It therefore means that low-income families could have accessed loans up to a
maximum amount of $8 million or less depending on their combined household income. The
low-income benchmark that the banks were using at that time to classify low-income families
was the combined household income of less than or equal to $250k. This means that families
earning over $250k up to a certain amount ($500k) were considered middle income families who
would be eligible for the regular residential loans that attract higher interest rates.
Year
Introduced
2007 2022/23 Increase $ Increase
%
G$ G$
Low Income Loan (Maximum) Ceiling 8,000,000 20,000,000 12,000,000 150
Per Capita Income (Non-oil) US$ 3,658 7,330 3,672 100
Average Monthly Low Income Based on Per Capita
Income
64,015 128,275 64,260 100
Two (2) Persons Income Per household 128,030 256,550 128,520 100
Average Installment (monthly) 44,000 100,000 56,000 127
% of total average household income 34 39
Household Loans & Advances 15,762,000,000 39,800,000,000 24,038,000,000 153

__________________________________________________________________________________________
24
Considering the cumulative inflation sixteen years ago and with the growth in the economy, the
growth in (non-oil GDP) per capita income, $8 million sixteen years ago is worth about $12.32
million today.
With these in mind, the increase in the low-income ceiling gradually of up $20 million in 2023, is
consistent with the foregoing indicators as well–that is to say, the cost of a low-income home
would have increased over the years with inflation, the per capita income would have increased
over the years (by 100%), the combined low-income household income bracket would have also
increased from up to $250k to up to about $385k.
In working out the instalment on these amounts, the instalment for an $8 million home loan is
about $44,000 which represents 17% of the maximum low-income bracket of $250k, and the
instalment for up to $20 million is about $100k representing 26% of the upward movement in the
low-income bracket of up to $385k.
It is worth noting that the total loans and advances to households including home loans,
education, travel, personal and others at the household level, stood at $15.7 billion in 2007
which increased to $39.8 billion or by $24 billion by the end of 2022, representing an increase
of 153% from where it stood 16 years ago. This is demonstrative of the fact that the low-income
home ownership programme is most effective, low-income families can afford to borrow and
access these loans to own their own homes and the rate of growth is exponential.
6.2 Poverty Reduction, Investing for the Future through a Balanced Budget
The notion that the budget is void of a poverty reduction strategy and that the budget is not
sufficiently balanced on the social side–were not compellingly articulated by the critics.
One of the key counter proposals by the Opposition, for example, in response to cost of living
and poverty reduction is to distribute the oil revenues in the sum of $300,000 per household.
The Opposition also argued that the cost-of-living phenomenon may persist for the next three
years (citing international agencies’ analysis). Hence, this is suggestive that the Opposition
proposal is to be maintained for the next three years.
As illustrated in previous sections of the report, the COL measures implemented by the
Government translates to about $400,000 per household albeit indirectly, which is more than the
Oppositions proposal of $300,000 per household through direct cash transfers.
Assuming that the Opposition is proposing an additional $300,000 per household through direct
cash transfers in addition to the COL measures implemented already, this will translate to an
another $66 billion per household on the current expenditure side of the budget. This amount
represents 8.4% of the budget, 32% of the NRF inflow to the budget and 21% of the current
revenue.

__________________________________________________________________________________________
25
To make this possible, it means that the Government would have to cut the capital expenditure
side of the budget.
The question is, which project should the government cut and / or delay to accommodate such
a proposal. For demonstration purposes, two major projects are the new bridge across the
demerara river which is an estimated and the gas-to-energy project. The budgetary allocation
for both projects in budget 2023 amounts to $45 billion giving rise to a shortfall of $21 billion.
This means that the Government would have to slash some of the road infrastructure projects in
the budget to reach the $66 billion for this proposal. With these adjustments, the configuration
of he budget will move from a 50:50 ratio to 59% (current expenditure) and 41% (capital
expenditure). Apart from such proposal having the potential to engender uncontained inflationary
pressures driven by consumption spending, it would effectively delay the development of the
projects that are actually designed to mitigate the impact of inflationary pressures attributed to
external factors. Consequently, not only Guyana but the entire region will be subject to pro-
longed risks of externalities on the regional and domestic economies. To this end, the gas-to-
energy project, together with the infrastructure development are absolutely critical to achieve the
objectives of the regional energy and food security agenda that the Government has positioned
Guyana to lead.
Social Services Sector
The budgetary allocations in the social services sector, which include allocations towards
employment cost for public sector employees, health, education, social welfare programmes,
housing and water, culture and youth amounts to $226.2 billion, reflecting a 42% increase over
the previous year and accounting for 29% of budget 2023, and 71% of current revenues. In view
of this, these are substantial budgetary allocations towards the social services sector – while
noting that the approximate sum of $226.2 billion is exclusive of allocations towards the public
safety and security.
How to Determine whether the Budget is a Balanced Budget?
With respect to the argument that the budget is not a balanced budget and not people centric,
the proponents of this view failed to state and justify what are the determinants of a balanced
budget and how is it that the budget is not people focused?
In this section, SphereX Analytics attempts to put context to this notion and demonstrate
evidently how the budget is a people focused budget, and to further contextualize the term
“investment for the future”, or, drawing the theme of the budget, “improving lives today, building
prosperity for tomorrow.”
In doing so, SphereX Analytics examined the composition of the population age groups using
the 2012 population census data (which is 11 years ago), whereby for the purpose of this
analysis, the age groups were adjusted upwards by 11 years, since the study was done 11 years
ago.

__________________________________________________________________________________________
26
Age Group Population % of Population
11-40 424,988 57
41-40 104,578 14
41-65 128,514 17
66-75 50,556 7
76+ 38,319 5
TOTAL 746,955 100
Source: 2012 Population Census Data (Age groups Adjusted by 11 years)
In examining the age groups of the population from the above illustration, 71% of the population
are in the age group of 11 – 40, 17% of the population are in the age group 41 – 65, 7% of the
population are in the age group 66 – 75, and the remaining 5% of the population are 76 and
over. Putting this into context, investing for the future and creating prosperity for the tomorrow
essentially means investing in the economy that will create sustainable prosperity for the 71%
of the population comprising of the present and future generation, who in turn have their entire
working life ahead of them – and in the process building and developing the economy. Another
24% of the population in the age group which is made of 17% in the age group of 41-65 and 7%
in the age group of 66–75, these age groups are also in the working population all of whom
ought to have the framework for improved standard of living and quality of life today and securing
their future as well.
Aligning this with the configuration of the budget whereby 29% of the budgetary allocations are
towards the social services sector and the remaining 71% allocated towards investing in the
infrastructure to enable the future growth trajectory and prosperity, this ratio configuration mirrors
the composition of the population in terms of age group where the future is for the 71% of the
population (11-40 years old). While this segment of the population needs social services, more
importantly, they also need the opportunity to build profitable enterprises for those who have
entrepreneurial ambitions, and job opportunities which can only be created through investing in
the economy and creating a conducive business and investment climate to so facilitate.
7.1 Conclusion
It is within these contexts, therefore, that it can be safely concluded that the budget is people
focused. It is a balanced budget catering adequately for the future generation of professionals
and entrepreneurs while improving the present-day conditions upon which their livelihoods
hinged. The budget also sufficiently caters for the elderly who account for 5% of the population
within the limitations of the financial resources available.

__________________________________________________________________________________________
27
About SphereX Analytics
SPHEREX Professional Services is an indigenous business intelligence and analytics firm in Guyana
that specializes in financial and economic analysis and corporate finance, investment, and economic
advisory services.
About the Author
Joel Bhagwandin
Director
SPHEREX ANALYTICS | Business Intelligence, Financial & Economic Analysis
Mobile: 592-652-1995
Web: www.spherexgy.com | www.jbinsight.com.
Email: jbhagwandin@spherexgy.com
LinkedIn: https://www.linkedin.com/in/joel-bhagwandin-57481470/.
Address: 165 Waterloo Street, Regus Building, Georgetown, Guyana

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