The Budget has no internal logic
Kaieteur News – The nation had to endure five hours of mostly political drivel from Dr. Ashni Singh, the Senior Minister in the Office of the President with responsibility for Finance. That was one hour for every percentage point reduction of water tariffs.
The average water rate paid by citizens is $2,000 per month. The savings, which the five percent will yield, will now allow households to purchase five mints. That is the sort of insult which the PPP/C government hurls each year upon citizens.
The PPP/C’s annual Budgets are tailor-made for the rich. But they throw enough crumbs at the poor to get them excited. The 2021 Budget is no different. This Budget throws a few sweets at the people while the contracting class will end up smiling all the way to the bank with a few corrupt politicians and public officials in tow.
The Budget has no internal logic. It is supposed to be a recovery Budget. But to what extent is it based on an empirical assessment of the local economic impact of the pandemic, the global economic slowdown and the elections impasse?
The Ministry of Finance still lacks the capacity to undertake the sort of economic-impact assessments which are needed to inform political directives. Despite the billions spent on building capacity what passes for economic planning and surveillance in that Ministry is mere accounting for expenditure and revenues. Were it not for the Bank of Guyana, the state of economic analysis would be far more dire than it is.
The Budget was supposed to be a recovery Budget. Its presenter was emphatic in stating, “Recover we must. And recover we will.”
But recover from what? The government does not know nor does it have the means to know the actual impact of the pandemic-induced economic effects. It cannot tell this nation, with any precision, just how many jobs have been lost and how many small businesses have been closed. Nor can it point, within the Budget, to any measure which will directly help those affected businesses to get back on their feet.
The Minister has said, “We will build back. The task is not easy, but it is not impossible. It will be made so much easier if we do this together as one Guyana.” But where are the policy measures aimed at building back and at uniting the country?
The 2021 Budget from this perspective is a farce foisted on this nation. This is no recovery or reconstruction Budget. It is not even a pro-growth Budget. It relies almost exclusively on oil production for the projected 20+ percent growth.
The Budget throws a few mints at the people. Old age pensions have risen by less than $5,000. Yet the school grants have increased by $5,000. Since it is estimated that there are 250,000 school children and less than 50,000 old age pensioners, if the monies which were being used to increase the student grant was diverted to old age pensions, each pensioner would receive $45,000 per month, which would be more than the $40,000 which the PPP/C promised in its Manifesto.
The PPP/C has the resources to pay pensioners the promised $40,000 per month. But its historic strategy has always been to give a little each year to keep people leashed to government hand-outs.
The working class has been the most affected by the pandemic. Not only have jobs been lost, but incomes have been eroded by the increase in prices in the markets. Those who eat caviar however are oblivious to the increase in the price of ochroes in the market. The price of a pound of ochro has risen from $60 to $300.
The recovery Budget does not reach the consumer. Yet, the government is focused on reducing the cost of building materials. It is the large hardware dealers who will benefit from the measures announced, not the consumer. Last year, the PPP/C announced the removal of certain taxes on steel and other construction materials. Yet, the price of steel went up even though world market prices were falling.
The PPP/C knows full well that it is one thing to remove taxes on items, but it is quite another thing to expect that the importers, wholesalers and retailers would pass on these savings to the public. Will the government be monitoring the prices of those items from which taxes have either been removed or zero-rated, to see if consumers will benefit from any reductions? Will it roll back the taxes, if it finds that the tax reductions are not being passed on to consumers? It will not.
The majority of Guyanese cannot afford internet (data). Many are forced to make great sacrifices to have data plans, so that their children can utilize the internet for their studies. The reduction on taxes on data, however, will not ease that burden by much. It will not make internet affordable to the poor. What it will do is to allow certain players in the sector to get a stronger foothold to compete with the main internet service providers.
And the PPP/C knows this. So when it tables a Budget, it has always done so with the interest of its friends and cronies at the back of its mind.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)