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Jan 23, 2022 News
Kaieteur News – Guyana’s Vice President, Bharrat Jagdeo has revealed that his government will be using monies from the Natural Resources Fund (NRF) to support this year’s budget. He also related that his government will be using the oil fund to reduce the country’s dependency on borrowing.
The Vice President made these statements while he was being interviewed by Leron Brummell on the National Communications Network (NCN), on Friday while discussing the government’s budget framework for the year 2022.
Since the government began collecting oil revenues in early 2020, this withdrawal will be the first time the government is tapping into the NRF.
During the interview, Brummell asked the Vice President about mechanisms the government will be implementing to manage its spending as well as reducing its borrowing.
“So the fiscal deficit this year in this budget will be lower than the fiscal deficit last year…from a finance perspective that means we will have to borrow less, because some of the oil and gas revenue will go to replace the high level of borrowing that we have had,” Jagdeo responded.
However, the Vice President did not disclosed the amount of money that the government will be withdrawing from the oil fund. According to reports, at the end of November 2021, some US$534 million was sitting in the NRF.
According to Jagdeo, while the deficit may widen because big capital projects are coming on stream, the financing of the deficit will be reduced. He boasted that the country would no longer have to borrow large sums of cash owing to the government‘s decision to use some of the oil and gas resources to help with the country’s expenses.
He then highlighted, “a significant part of the borrowing started with APNU, $90B a year was coming from the domestic market.” The Vice President explained that with the PPP/C administrations mechanisms, it will leave more funds in the domestic market available for private sector lending.
Also, Jagdeo assured that there will be no upward pressure on the interest rates. In fact, he stated that the banks will have to be a bit more aggressive seeking out people to lend to, since the banks do not have an easy way of lending money to the government.
“So part of that is, when I spoke about this element of sustainability, I don’t want to get complex with it but that is part of the sustainability,” the Vice President said, before noting that this is a part of the government’s plan to use part of the oil and gas proceeds to finance the deficits.
According to the Vice President, these measures will create financial stability – thus putting back more monies into the pockets of citizens – creating disposable income.
Jagdeo said too that the early measures by the government in 2020, when the first budget was announced along with the removal of several taxes, has led to citizens paying about $40 million less in taxes.
In closing, the Vice President noted that while he is unable to give all the details of budget 2022, which will be presented on Wednesday, he can explain the framework of the budget and share what was in the head of the policy makers as they work on creating the new budget.
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