As for other budgets in recent years, I was present in parliament and listened some to presentations; it was not a debate like those of presenters of years gone (1970s thru 90s) when there were sharp, witty, humorous remarks that evoked laughter among members and the audience. There were hardly any serious addresses or a real debate that left lasting impressions from either side. But one positive aspect is that there were no lewd, lascivious, misogynistic remarks and disrespectful presentations that denigrated members of the other side about their sexuality, family, gender, etc. that brought the chamber into disrepute. There was a lot of heckling mostly from government side; some of it was not necessary but it has become habitual. One had to be in the chamber to hear or see it; youths and the nation in general would be turned off. Hecklers don’t carry respect from the public. And almost every member was on the phone hardly listening to presentations, disrespecting contributions of colleagues.
As I learned from pursuing post graduate degree in Economics and in teaching the subject, no budget (not even in America or India) is without controversy and no budget is liked by everyone. There were several positive aspects of the budget and there were some negatives or items that government could have included or given additional revenues. I traveled around the coast engaging people and others conducted interviews for me on the budget and contemporary issues. There was an overall positive response to the budget by the public. It is hoped that the budget will translate into high paying jobs and social mobility; huge growth rates over the last five years have not uplifted lives as poverty remains stubbornly persistent at near 50%..
The opposition’s role is to criticize the budget and there was much of that. Only a few members on the government side focused on how it will transform the economy. Only a few opposition members were fair and objective. Almost every member on the ruling bench focused on history reminding the nation of the terrible governance of the PNC (APNU) during its 33 years in government. I suppose in an election year, that makes for good politics. Bishop Juan Edghill and Geeta Chandon were excellent. There were also very good presentations from Vickram Bharrat, Jermaine Figueira, Zulfi Mustapha, Annette Ferguson, newcomer Suresh Singh, and Vikash Ramkissoon, among a few others. The Opposition Leader Aubrey Norton erred in ‘proudly defending’ the ban on foods during the Burnham era.
Overall, the budget aims at inclusive development. The continued focus on capital expenditure and income-tax relief set the stage for continued growth. It was a politically crafted, populist budget in an election year with huge allocations for health, infrastructure, education, agriculture, social welfare, and other ministries. There was almost something for everyone. Every ministry got an increase. The Natural resource Ministry brings in the most revenues but got among the smallest allocation.
The budget strengthens infrastructure – roads, bridges, air strips, electric power, etc. Increased investment in infrastructure and social welfare will drive inclusive economic growth. Agriculture, a key pillar of the non-energy economy, received significant resources with the aim of enhancing productivity that is critical for food security. A significant amount of money has been given back in consumers’ hands via personal tax rate cuts, without disturbing any other macro consideration although it could drive inflation that is already very high. The positive impact from several tax-related proposals is well appreciated. More revenues in people’s pockets will boost consumption and add to growth, but it will also lead to increased imports and dry up foreign exchange. Higher disposable income, as learned from economics lessons, is known to trigger a vicious cycle of higher consumption and increased imports that hurts an economy if not managed well.
The revisions in personal income and corporate tax rates under the new tax regime, significantly reducing tax liabilities, offer welcome relief to middle-income earners and corporations. Overall, people I engaged around the country were pleased over the income tax relief, taking home more spending money for household expenses. However, it benefits a small fraction of the taxpayers as more than half of the workforce earn below the tax threshold. Lower-income groups remain untouched by any direct tax relief. Government should have added a scheme that directly benefit those outside of the tax threshold income. The low income and lower-middle-class populations, who barely earn enough to sustain themselves, end up paying a lot in VAT on essential goods and services that they can’t afford while those on higher income threshold, with lower taxes, have more disposable income to pay for such goods and services. The government could have offered some kind of relief to the poor like subsidies on essential goods (particularly staples — flour), medicines, utilities, etc. Schemes should shield the economically weaker section of the country. Policy must be directed at inclusive economic growth for all segments (classes) of the population not just the upper, middle, and the business class.
The budget will give a boost to the aspirations of young professionals already in or entering the workforce. Specifically, greater consumer spending will benefit retail and real estate, boosting employment opportunities. Enhanced spending can further drive infrastructure development, boost employment generation, and catalyze economic activity across all sectors. And, of course, it strengthens logistical backbone throughout the economy, ensuring long-term growth and employment opportunities.
The increased funding for entrepreneurial startups is welcomed. I would have liked to see significant funding for an internship scheme in ministries and the private sector. Also, there was not much emphasis on maritime development — the marine economy will assume importance as people move away from growing food; developing sections of the coast will create growth opportunities for trade and the emerging blue economy-related segments. Government could have offered farmers crop insurance against floods, drought, insect invasion, and other threats. There could have been more resources for enhancing post-harvest storage infrastructure, improving irrigation facilities, transforming the agricultural landscape, increasing rural incomes, and driving economic activity in the hinterlands. Higher rural purchasing power will indirectly benefit the corporate sector, particularly those involved in consumer goods and agricultural supply chains. More resources could have been devoted to improving rural and hinterland livelihoods because the budget appears more urban-centric. Also, government could have established an agency to look at economic diversification so to avoid the resource curse. An agency could have been created to advise or reorient efforts on good or better governance. It is not clear whether there will be realignment of education and skilling and reskilling strategies for new workers and those already in the workforce.
A critique of the budget is the lack of a clear goal. A budget is not merely an accounting exercise but also a platform for the government to present its economic vision. A vision was not very clear – what long term goal the country has; what it will like to see Guyana become; will Guyana become a health or tourism hub, should the country delve deeper into agro processing; will there be a manufacturing hub say for fertilizers or other products; etc. An ‘one office’ to ease the process of getting permits for business would be welcomed by investors.
The overarching framework of the budget suggests it is proactive and forward-looking. As businesses and stakeholders begin to analyse and the public adapt to the new measures, the true impact of Budget 2025 will unfold in the next few months.
