What’s In That Guyana Trillion Dollar Budget?

News Americas, NEW YORK, NY, Tues. Jan. 16, 2024: The Guyana government on Monday Jan. 15th, unveiled its largest ever fiscal budget to date – GUY$1.146 trillion or US 5.84 billion, allocating significant funds for the further development of sectors such as energy, agriculture, health, and infrastructure. Finance Minister Dr. Ashni Singh, in his fifth fiscal package presentation, emphasized that the budget is 46 percent larger than the previous one.

Here’s a summary of the Guyana Budget 2024.

Income Tax Threshold Raised: Monthly income tax threshold increased to $100,000, raising annual Personal Allowance to $1,200,000.

Life and Medical Insurance Deductions: Taxpayers can now deduct premiums for life and medical insurance up to 10% of their income or $50,000 monthly, promoting insurance coverage.

Duty and VAT Removal: Sports equipment, essential cell phone accessories, and firefighting equipment will have Duty and VAT removed to enhance access.

Fuel Cost Control: Zero percent excise tax on petroleum products will be maintained to mitigate rising fuel prices.

Reduced Freight Charges: Adjusted import freight charges to pre-pandemic levels extended for 12 months from January 2024.

Pension and Assistance Increases: Old Age Pension, Public Assistance, Minimum Pension, Survivor’s Pension, and Invalidity Pension all set to increase in 2024.

University Support: Elimination of outstanding loans for University of Guyana graduates employed or self-employed in Guyana after graduation.

Grants and Student Support: One-off grants for those near the old age pension qualification, increased student grants, and uniform voucher allowances.

Cost of Living Measures: $7 billion allocated for measures to aid food production and mitigate price increases.

Part-Time Job Expansion: Expansion of the Part-Time Job Programme, allowing one person per household to work in public offices.

Small Business Support: Collaboration with banks to lower interest rates on loans up to $5 million to support small businesses.

Eye Care and Health Services: Vouchers for eye tests and spectacles for school children and pensioners, as well as support for cervical cancer testing.

These measures aim to boost various sectors and enhance the well-being of citizens in the coming year, the minister stressed.

GUYANA OIL FUND

During his presentation of the 2024 National Budget, Finance Minister Singh emphasized the importance of an “optimal and dynamic financing mix.” The government is proposing a revision to the National Resource Fund (NRF) withdrawal rule, which, once approved, will increase the NRF withdrawal amount starting from this fiscal year. The revised rule will ensure that a larger portion of NRF inflows is saved as production and revenue increase, while the rest is transferred to the Consolidated Fund for national development priorities.

This proposal will be presented to the National Assembly for consideration and approval. The NRF contains funds originating from the oil-rich Stabroek Block offshore Guyana, where ExxonMobil and its partners, Hess Corporation and CNOOC, are producing light sweet crude using FPSO vessels.

In 2022, Guyana used oil funds for the first time to finance the national budget, with a total withdrawal of $126 billion (US$607.6 million) from the NRF. In 2023, $1002 million was withdrawn for national development priorities, with the last withdrawal made on December 27, 2023, totaling US$152.1 million (equivalent to $31.6 billion).

Dr. Singh reported that approximately US$1617 million in petroleum revenue was deposited into the NRF in 2023, resulting in an overall balance of US$1973.5 million, including interest income. In 2023, the NRF received US$1398.9 million in profit oil and US$218.1 million in royalty payments from the Stabroek Block operator, totaling US$1617 million in petroleum revenue.

For 2024, it is projected that there will be 202 lifts of crude oil from the three FPSOs in the Stabroek Block, with 25 of those lifts belonging to the government. The government’s share of profit oil in 2024 is estimated at US$2078.9 million, while royalty payments are projected at US$319.9 million.

Based on 2023 deposits, an estimated US$1154.3 million (equivalent to $240.1 billion) can be withdrawn from the NRF in 2024 and transferred to the Consolidated Fund to support the country’s development agenda.

The 2024 Budget is financed with a $240.1 billion transfer from the NRF to the Consolidated Fund.