Kaieteur News – A good example of how to structure a Budget was provided earlier this year by the Chancellor of the Exchequer of the United Kingdom. His Budget clearly outlined the priorities of the government and the measures which were being adopted to achieve these objectives.
The UK’s Budget set out three main priorities, namely: protecting jobs and the livelihoods of the British people; strengthening public finances; and pushing an investment-led recovery from the pandemic.
These priorities dictated the structure of the Budget. For each of them, there were clearly linked policies aimed at achieving these objectives.
In contrast, Guyana’s marathon Budget speech lacked that kind of coherence. It listed six main priorities: 1) keeping the population safe from COVID-19, containing the virus’ spread, ensuring treatment and vaccination, when available, and progressively reopening the economy; 2) ensuring a diversified and resilient productive sector; 3) initiating catalytic infrastructural investment; 4) establishing world class social services; 5) improving the quality of the public service; and 6) ensuring respect for the Constitution, the rule of law and good governance.
But when it came to linking policies and programmes to each of these objectives, the Budget disappointed. The only exception was in relation to the government’s catalytic infrastructural agenda.
Not listed among the main objectives was the environment. Yet, the Low Carbon Development Strategy (LCDS) found honourable mention within the Budget Speech. The PPP/C is keen to resurrect the LCDS. It announced that it would be reviving the LCDS and developing it into a comprehensive development strategy. This is an implicit admission, if ever there was one, that the original LCDS was never a comprehensive development strategy. Into just which of the six main objectives this fits is not clear.
No sooner had the vaccination campaign began, the government found itself in a fix. It had to procure the Sputnik V vaccines from the United Arab Emirates (instead of from Russia) at a price of G$800M. In making the announcement, the President indicated that adjustments would have had to be made to the Budget to cater for this, a clear oversight that adequate provision was not made to cater for such a large expenditure on vaccines.
Disappointingly, the rest of the Budget speech turned out to be a long diatribe, including much criticism of the previous government, and without an unmistakable coherence between these objectives and the numerous measures which were announced in the Budget, except for objective three which dealt with the catalytic investments. But then again, Guyana has been hearing this tune under the PPP for more than a decade.
A recent report in this newspaper informed the public that machinery and equipment obtained for the generating and utilising of electricity from renewable energy sources are now exempted from the value-added tax. This would mean that no VAT is now payable on solar panels, solar lamps, deep cycle batteries, solar generators, solar cookers, solar water-heaters, solar refrigerators and freezers, solar powered air-conditioners and inverters.
It was also reported that similar exemptions applied to water turbines, wind turbines and energy efficient lighting, including compact fluorescent lamps and light emitting diodes (LED). Additionally, the supply of machinery and equipment for utilising alternate energy technologies and renewable energy options, such as gasifiers to use biomass and harnessing renewable energy through wind, solar and water, as determined by the Commissioner, were also exempted from VAT payments.
It is surprising that in the section dealing with “Measures” to be implemented in 2021, no mention was made of the removal of VAT on these items. That would have fit squarely into the Low Carbon Development Strategy. This really demonstrates the disjointed approach which was taken in respect to the Budget.
After the Budget was passed, an order was passed reducing the excise taxes on petroleum so as to facilitate a reduction in the price of petrol at the pumps. Since then, the price has continued to increase. This ad hoc interventions made to cushion the price of petrol are not desirable and one would have expected that in the Budget speech, greater attention would have been paid to having a sliding scale reduction of the excise taxes on petroleum so that as the price rises on the world market, consumers know what the price at the pump will be. This failure is another example of the disjointed approach to the nation’s financial planning.
The government has previously announced plans to install another 400MW of energy, including through renewable sources. With this target in mind and the fact that the government can easily satisfy more than half of this target through a mix of renewable energy sources, it needs to be questioned why the need to rush a gas-to-shore project.
Why not take the time to carefully consider not only the feasibility of the project but also whether it would ever be needed in such a small economy. But the answers to those questions form part of the absence of an internal logic to not only the Budget but also to much of what government says it will do.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
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