THE GOVERNMENT OF GUYANA FINANCIAL PLAN 2000

The table below presents a summary of the Government's projected fiscal operations for 2000. Some of the 1999 figures have been restated in the Estimates without attention being drawn thereto. The Plan projects a negative current balance of G$3.289Bn compared with a positive balance of G$4.965Bn in 1999.

Current revenues are projected to increase to G$38.270Bn in 2000 from G$36.584Bn in 2000 with the Inland Revenue Department (IRD) and Customs and Excise projecting increases of 7.87% and 10.76% respectively in 2000.

Total interest expenditure is projected to increase by 55.6% from G$7.494Bn in 1999 to G$11.657Bn in 2000 or approximately 30.5% of current revenue compared with 20.5% in 1999. Interest on domestic debt is projected to increase by 64.8% and that on external debt is projected to increase by 47.2%.

Current expenditure is projected to increase by 23.9% from G$24.125Bn to G$29.901Bn in 2000. Interest represents 28% of total current expenditure as compared with 31.78% in 1999 whilst personal emoluments represents 34.3% and other charges account for 37.6% of the total current expenditure. Budgeted current balance of G$(3.289)Bn (1999 - G$4.965Bn) represents -8.6% of current revenue in 2000 compared with 13.6% in 1999.

Capital revenue is projected at G$6.37Bn (1999 - G$4.09Bn) and capital expenditure at G$14.6Bn (1999 - G$12.332Bn). The revenue figure is made up principally of Balance of Payments support and commodity assistance loans mainly from the IDB and the IDA.

The capital expenditure budget for 2000 represents an 18.4% increase over 1999. This follows decreases of 5.4% in 1999 and 20.4% in 1998.

Debt repayment is projected at G$5.96Bn (1999 - G$5.07Bn) leaving an overall deficit of G$17.482Bn compared with G$8.351Bn in 1999. It is projected that the deficit will be financed from external sources of G$11.545Bn and G$5.267Bn from local banks.

The overall balance is projected at a deficit of G$17.482Bn which is more than double the deficit of G$8.351Bn in 1999.

Domestic and External Debt Repayment as a percentage of current revenue is projected at 15.6% compared with a revised percentage of 13.9% in 1999 and a budget of 16.1% for last year.

Projected current revenues of $38.3Bn is more than the revised for 1999 and the actual for 1998 and 1997 but may be an achievable target since revenues in 1999 exceeded the target by 4.7%. In 1998 and 1997 revenues fell short of target by 12.9% and 11.1% respectively.

Ram & McRae’s Comments

Focus 99 had predicted that that year’s revenue targets were over-ambitious having regard to shortfalls in 1997 and 1998. As it turned out the target was exceeded by 7% in the case of the IRD but fell short by 1.5% for the Customs and Excise Department.

Whilst the economy is expected to grow by only 3% total tax revenues is expected to grow by 9.3%. Personal emoluments expenditure is expected to increase by 20.5%, less than the 26.66% wage award suggesting that the Budget anticipates success in the rationalisation of the public service.

Government’s commitment to effectively eliminate the highly debated Sugar Levy is demonstrated by a reduction from $1.8Bn in 1999 to $1Bn in 2000. In the first PPP/Civic Budget in 1993 the Sugar Levy was $3.2Bn.

It is worth noting that interest expenditure is almost double total debt repayment and the combined total is in fact largely financed by borrowing externally and locally. The substantial increase in projected interest expenditure has to be seen against the under-expenditure in 1999 necessitating a reduction of 27.5% of budgeted 1999 charges. It is however, likely to continue to fuel the debate whether Guyana has benefited from debt write-off at the expense of debt relief.

Budgetary allocation for elections due in January 2001 is $1Bn. The Government has approached the International community for financial assistance but it is not clear whether that assistance is in addition to the Budget allocation.

It can hardly be encouraging to find that we have to borrow an almost identical sum to service debt.

FINANCIAL OPERATION OF CENTRAL GOVERNMENT (ACCOUNTING CLASSIFICATION)

G$ Million

ITEM

 

BUDGET

REVISED

BUDGET

ACTUAL

ACTUAL

2000

1999

1999

1998

1997

1.0

CURRENT REVENUES

38,269.5

36,584.0

34,939.0

33,121.2

34,082.9

1.1 Guyana Revenue Authority

34,809.6

31,845.4

30,970.5

29,071.6

29,556.2

1.1.1 Inland Revenue

17,222.8

15,966.6

14,912.7

14,106.3

14,403.1

1.1.2 Customs and Excise

17,586.7

15,878.8

16,057.8

14,965.3

15,153.1

1.2 Sugar Levy

1,000.0

1,800.0

1,800.0

1,999.6

2,000.0

1.3 Other

2,459.9

2,938.6

2,168.5

2,050.0

2,526.7

2.0

CURRENT EXPENDITURES

29,901.3

24,125.0

22,172.8

29,696.9

17,823.7

2.1 Personal Emoluments

14,244.0

11,821.0

9,643.8

9,790.9

8,931.0

2.2 Goods and Charges

8,687.5

6,874.0

7,065.0

6,310.3

8,892.7

2.3 Transfer of Payments

6,969.8

5,430.0

5,454.0

4,227.3

3.0

INTEREST EXPENDITURE

11,657.0

7,493.8

10,331.0

10,497.8

10,257.6

3.1 Domestic

5,870.0

3,561.2

3,770.7

3,086.1

3,880.8

3.2 External (Cash)

5,787.0

3,932.6

6,560.3

7,411.7

6,376.8

4.0

CURRENT BALANCE

(3,289.0)

4,965.2

2,435.2

(7,073.5)

6,001.6

5.0

CAPITAL REVENUE

6,370.8

4,089.0

4,317.0

2,842.4

310.8

6.0

CAPITAL EXPENDITURE

14,600.0

12,331.8

12,786.7

13,033.8

16,379.0

7.0

DEBT REPAYMENT

5,964.1

5,073.0

5,635.4

5,261.9

6,117.1

7.1 Domestic (Net)

2,401.0

1,666.6

1,666.5

315.7

1,758.7

7.2 External (Cash)

3,563.1

3,406.4

3,968.9

4,946.2

4,358.4

8.0

OVERALL BALANCE

(17,482.4)

(8,350.6)

(11,669.9)

(12,579.1)

(16,183.7)

9.0

TOTAL FINANCING

17,482.4

8,350.6

1,669.9

12,579.1

16,183.7

9.1 External

11,545.1

7,668.4

11,149.5

7,681.2

1,167.7

9.2 Domestic

5,267.3

1,467.2

(2,430.9)

4,538.4

14,496.2

9.3 Divestment (net)

670.0

(785.0)

2,951.3

359.5

519.8

Total Domestic and External

Debt Service as a % of Current

Revenues

46.0

34.4

45.7

47.6

48.0