Executive Summary
The government’s budget for 2019 continues a disturbing trend of prioritizing ‘the government’ instead of the Guyanese people in its funding decisions. It continues to shape a future in which the government is not accountable to taxpayers, where corruption and political nepotism are entrenched, and future oil revenues benefit only the governing political class. Once again, the budget cut funding for economic opportunity sectors limiting opportunities for unskilled and low-skilled workers, poor and low-income families, and small businesses to succeed. It continues to gut funding for the agriculture sector which employs 21% of the country’s workforce, most of whom are unskilled and low-skilled workers.
The crippling of the sugar industry and the gradual defunding of the agriculture sector from 2015, undoubtedly, have an air of punishment to it. Especially, given that the sector employs mostly workers of Indian descent who are largely unenthusiastic about the administration. The budget would worsen poverty, widen inequality, and promote more jobless growth. These outcomes would be accompanied by greater economic uncertainty, further decay of public trust, and potentially more social and economic conflicts considering the current constitutional impasse.
“This budget provides the clearest evidence yet of the mismatch between the government’s priorities and those of the Guyanese people and economy. Sadly, taxpayers’ money is used to fund the government’s priorities at the expense of their own livelihood and success” Dhanraj Singh.
While the budget cuts funding for agriculture out of concerns for fiscal sustainability, it provides billions more to support a growing government bureaucracy benefiting mainly the governing political elites. The budget themes are indeed clear – and very disturbing. Despite increasing funds to other sectors such as healthcare, education, and public safety, the scale of corruption, financial waste and misspending, and inefficiency in the implementing agencies offer little hope for public benefits and improved outcomes.
A week after the government approved a more than $300 billion budget for the fiscal year 2019 on December 14, 2018, a motion of no-confidence was tabled by the political Opposition and successfully passed in the National Assembly, effectively toppling the government. As per the Constitution, the government must resign and call general and regional elections within 90 days (on or before March 21, 2019). The validity of the motion was challenged on various grounds and has worked its way up to the Caribbean Court of Justice (CCJ) which has set May 10, 2019, for a hearing. To date, the government has not resigned and is continuing with business as usual.
The CCJ’s ruling will have serious implications for Guyana’s economy, regardless of whether it is in favor of the government or not. If it upholds the invalid ruling of the Guyana Court of Appeal, the government will remain in office and continues to implement its priorities for fiscal year 2019. This means continuing with the implementation of policies that have slowed the economy over the last three years, promote jobless growth, increase corruption, and with little preparation for oil and gas.
If the CCJ rules that the motion was validly passed, the consequences would be more severe. The government must resign and set a new date for elections. This, however, is not a foregone conclusion as the government has demonstrated its willingness to flout the Constitution to retain power. Its initial acceptance of the validity of the motion immediately after its passage and subsequent reneging and failure to abide by its prescription do not inspire confidence that it will comply with the CCJ’s ruling.
It is understandable that every administration would have a different vision for Guyana and is expected to advance policies to achieve that vision. However, only a vision and policies that promote public accountability and transparency, an efficient government, value for taxpayers’ money, evidence-based policymaking would create opportunities for everyone to succeed and sustainable long-term prosperity. To return the economy on the path to sustainable long-term growth and broad-based prosperity, lawmakers should:
- Realign spending priorities to public needs. Specifically, return public investment to economic opportunity sectors, especially agriculture, to create opportunities for poor and low-income families.
- Reduce the size of the public sector labour force. This would reduce public debt and free up resources for investment in key areas such as education, health, and infrastructure.
- Reverse costly tax and revenue policies that increase the cost of living, mostly for low-income families, such as VAT on electricity, some food items, and other necessities.
- Enforce existing transparency and accountable regulations and adopt new ones to tighten control on corruption, financial misspending, and waste in public agencies. These are especially important with the onset of oil revenues.
- Adopt legislation to require periodic independent performance evaluations of each public agency to determine what programs are working and sunset those that are not delivering value for taxpayers’ money.
Author
Singh, Dhanraj; Shivdat, Dr. John; Singh, Boamattie; Ramphul, Ryan; Gupta, Pritish; Ragubar, Elisia. See PDF for contact details.
Suggested Citation
Guyana Budget Policy Institute (2018). Budget 2019: A Disturbing Trend and Vision for Guyana’s Future. Annual Budget Report and Analysis. May 2018.
Key Words
Guyana, National Budget, Budget Policy, Policy Priorities, Public Accountability and Transparency, Public Finance, Taxation, Governance.
