Despite calls in some sections of the society for the rapid scaling up of public servants’ salaries using oil revenues, the Guyana government says it will not yield to such temptations. It warned that steep increases can lead to sustainability issues, inflationary pressures and even leave the country vulnerable to the Dutch Disease. In light of these risks, Guyana’s Vice President, Dr. Bharrat Jagdeo said a measured approach will be taken.
The Vice President outlined the foregoing position in response to criticisms of the government’s 6.5 percent salary increase for public servants. Earlier this month, the government announced that 54,000 public servants will receive a 6.5 percent salary increase retroactive to January, 2023 in their December 2023 salaries. This places an additional $7.5 billion in disposable income annually in their hands. Government had also highlighted that this year’s salary increase brings the cumulative total of across-the-board increases to public servants to approximately 23 percent over the last three years.
Vice President, Dr. Jagdeo said this is the type of cautious budgeting that must be done, warning that astronomical increases can invite dangerous consequences. He said the country’s oil revenues cannot be used to fuel major increases when there are other competing needs.
“You can’t spend more than you have, and you can’t spend all that you have on a single item. You can’t spend all you have on a single child if you have five children. You can’t fix the roof of your home if you spend everything on food and clothing. It’s like running a home…,” the Vice President explained.
Although public servants make invaluable contributions to the economy, he said they are only 54,000 people out of the approximately 700,000 population. “The rest of people have to be taken care of too,” the Vice President said, adding, “We have to take care of people’s health and education, we have to make sure that the country is fixed up, that its infrastructure is in order.”
The official said the government has to guard against going on a spending spree with the oil revenues on recurrent expenditure or it would risk the same fate of many countries like Venezuela and those in Africa and Asia.
He said too that salary increases have to be done in a manner that considers sustainability in the future. “What if the oil prices tank? How would we sustain the increases then?” he questioned, adding that it is a real possibility with the move to net zero emissions. For these and other critical factors, Vice President Jagdeo said the government has to be cautious about being locked into high expenditures of a recurrent nature.
