Dear Editor,
In a speech that reached the stature of an address to the nation, Dr. Singh showed why he is currently the front runner for the next presidential candidate within the PPP/C. His budget was well presented and his comments on “Building a more humane and caring society” was nothing short of presidential. He spoke with passion about the importance of a values-based society where civility, morality and ethical values are embraced. These next five years must deliver on this vision to move Guyana towards the next phase of the One Guyana initiative.
Overall, the budget was very encouraging with substantial tax cuts that will foster growth via increased business activity and increased foreign direct investment. The initiatives focused on easing the cost of living are encouraging and should be applauded. A key concern is the sustainability of such initiatives over the long term. As oil prices soften and the global economy continues to become more competitive it is great to see that the government is increasing the focus placed on market access for local businesses in the non-oil sectors. With these dynamics in mind CRG did however see substantial risk in the establishment of a budget that does not balance expenditure with revenues that exclude the use of the NRF. The strength of the disposable income programmes must be maintained by a strong financial foundation that is sustainable. By depleting the NRF to support the current budget the government is increasing the required return of the fund from 8% to over 13% if only interest earnings are to be used to continually fund these programmes. The announcement of a minimum interest earnings goal for the fund should be announced and used to guide future use of the NRF.
With oil prices projected to soften and an increase in projected output, Guyana does stand to lose income in the sector. This should be mitigated by planned storage to reduce price exposure. There is also an opportunity to leverage the spread in savings and lending rates to help reduce the stated risk of the economy overheating. This will also allow for improved agility and increased diversification of revenue streams by attracting additional capital inflows. The concerns raised over the shortage of skilled labour do provide an added incentive to reduce government spending on transformational projects to help balance demand and supply while also paying down interest bearing debt. Thus, helping to increase the strength of the economy, reduce the risk of an increased rate of inflation and improve the quality of work on key projects. One such project is the additional gas to energy plant which is to be established in Berbice. Based on the learning gained from the first project, it would be more prudent for the government to first retrieve the funds set aside for the decommissioning of wells to finance the project instead of interest-bearing borrowing from Exxon. When the plant is being built the pipeline should be laid to coincide with its completion to avoid paying for unused assets. The earnings from the plant should then be used to repay the fund for the decommissioning costs of the wells. This will help improve the financial value of the project and should make it positive, but if not a reevaluation of the undertaking must be done. The financials of the first gas to energy project are still a major concern and should be reviewed to ensure it is financially feasible (with a positive net present value) before undertaking the second project.
In the extractive sector safety and health continues to be of concern and the government’s percentage of gold and bauxite declarations should be increased by at least 2% and used to improve worker safety, strengthen environmental safeguards, strengthen water safety measures, improve environmental monitoring, and improve community health monitoring. Mercury contamination continues to be a major risk and kidney failure in communities where bauxite extraction occurs continues to be a major concern.
There were a few gaps within the budget where opportunities exist for an increase in investment. Reducing some road expansion efforts to fund road improvement would be a more effective option. Safety on the roads continues to be a major concern and the addition of road shoulders, bicycle lanes, an alternative dedicated route for heavy duty trucks and increased investment in road maintenance should be considered a higher priority during 2026. This does not diminish the importance of supporting increased access to agricultural lands. Many of the current farm to market roads need to be repaired and improved. This is a worthy first step before expanding to new areas. As these road initiatives develop it should also be noted that the investment in fire hydrants should be further increased, especially given the ongoing issues faced in our nation’s communities. High pressure lines in support of an increased presence of fire hydrants should be laid prior to the road construction and repair efforts. The budget should be adjusted for this.
The education sector continues to be supported in this year’s budget, but provision must also be made for improved school safety initiatives. Each school should have security systems and guards, and those schools with a history of violence should be provided the technology needed to prevent the presence of weapons on the school premises. To date, schools also continue to lack the sprinkler systems and other fire suppression and fire safety systems needed. The budget should have considered this, and funds should be reallocated to ensuring that our nation’s children are allowed to grow and learn in an improved safe environment. We do not want a repeat of the Mahdia Fire Tragedy. Let’s do what is necessary to prevent it from reoccurring.
Overall, the budget is well thought out, but unbalanced. The government should still be commended for its focus on the “Creation of opportunity and the generation of prosperity for the Guyanese people “. Some increases to our citizens are over 5% in real terms and the business environment will benefit from the planned tax incentives. Sustainability of the disposable income initiatives including the $100,000 cash grant is a must, and this can only be easily accomplished by balancing revenues with expenditure and investment earnings from a conservatively managed NRF. Dr. Singh and his team should be commended, and it will become essential for the PPPC to be able to show that they can pivot towards sustainably managing the economy and the One Guyana initiative for the long term if their prospects at the next general election are to be strong.