Government of Guyana Financial Plan 2022

The government’s projected financial plan for 2022 is summarized on page 20 of this publication. The current balance projects a surplus of $120,071 million, a reversal of $136,439 million from the revised 2021. Current revenue of $432,013 million represents an increase of $165,790 million, or 62.3% from the last estimate for 2021 of $266,223 million.

Current expenses are budgeted at $302,198 million for the year 2022, an increase of $27,227 million or 9.9%, compared to the revised 2021, while interest expenses are budgeted at $9,743 million, an increase of $2,123 million or 27.9%, resulting in a current balance of $120,071 million. compared to the latest estimate for 2021 of negative $16,368 million.

Investment income and grants are budgeted at $10,237 million, compared to $5,209.9 million for revised 2021. a deficit of $133,419 million according to the revised 2021 version, of which 41% should be financed by borrowing from external sources and 59% from domestic sources. Among current expenses, personal emoluments represent about 29.7%. Debt service as a percentage of current revenue is projected at 7.6% in 2022, from a revised 9.6% in 2021.

Income

The striking feature of the revenue statement is the massive influx of oil money into the country’s public finances. See table below. The Guyana Revenue Authority is expected to generate revenue of $286,816 million or 66.4% of total revenue, an increase of $31,731 million or 12.4% from the revised 2021.

Current income by type

On GRA Collections, internal revenue is projected to be $152,732 million versus $133,253 million in revised 2021, an increase of 14.6%, while value added and excise taxes are expected to earn $102,937 million from $94,778 million in revised 2021, an increase of 8.6%. Customs and Commerce Administration collections are expected to be $31,146 million, an increase of $4,093 million or 15.1%.

A review of revenue projections for the full year of 2022 shows corporate taxes increasing by 18.2%, personal taxes by 8.4% and the self-employed by 17.6%.

Analysis of internal revenue by type of taxpayer

Source: Public Sector Estimates, Volume 1. All amounts shown are actual, except 2017 and 2021 under review and 2022 under budgeting (in millions of dollars billions)

Excise tax payable primarily on vehicles, alcohol and tobacco is expected to remain stable at $40.3 billion.

Investment income and grants in 2022 are expected to increase by $5,209 million or 96.5% to $10,237 million, of which project and program funds are expected to increase by $5,032.9 million or 96, 7%, while the HIPC initiative and the MDRI will again not contribute in 2022.

Capital expenditure for the year is budgeted at $217.8 billion, or 39% of total budget expenditure. The allocation is 109% higher than the last 2021 estimate and 187% higher than 2020 capital expenditure.

Interest expense is expected to increase by $2,123 million or 21.7% from $7,620 million. Domestic interest is expected to increase by $1,085.4 million or 38.9%, while interest on external debt is expected to increase by $1,038.4 million or 21.5%.

The main element of debt repayments is projected at $23,153 million (2021: $17,874 million), consisting of domestic debt repayments projected at $9,680 million (2021: $5,799 million), while external debt repayments are expected to increase to $13,472 million (2021: $12,074 million).

Comments from Ram and McRae:

This is the first year that profit oil and royalty revenues are included in the estimates. This transaction touches on Section 216 of the Constitution and the Financial Management and Accountability Act. The latter specifies that all public funds form part of the consolidated fund, but this would be subject to the primacy of Article 216 of the Constitution, so it would seem that from both an accounting and legal point of view, the accounting method used for revenue put into the consolidated fund is authorized and appropriate.

However, we have doubts about the amount transferred to the Consolidated Fund. Our understanding of the 2016 oil deal is that taxes paid by the government for oil companies come from this fund. Accordingly, only the net amount held in the Fund is available for transfer. In any case, the payment of taxes by oil companies must be accounted for somewhere. It doesn’t seem to have been done.

Transfer payments are now the government’s largest current expenditure item. This item would include the various cash grants and would presumably include an allocation of five billion dollars ($5,000 million) for possible assistance to the most vulnerable to cushion the impact of the rising cost of living. These payments have grown exponentially and the amount of the financial plan greatly exceeds the amounts paid as personal emoluments. This is equivalent to issuing a blank cheque. We believe this is an appropriate area for the Auditor General’s ongoing review.

Please see Who Gets What in 2022 on page 22 for the breakdown of current and capital spending by ministries and departments.