Guyana gov’t already planning third national budget to be fueled by oil revenues

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Guyana is planning its national budget for the fiscal year 2024, the third such for which oil revenues will be a contributor. Recent consultations with the country’s trade unions were led by Prime Minister, Brigadier Mark Phillips, and Senior Finance Minister, Dr. Ashni Singh, at the Arthur Chung Conference Centre.

The budget meetings included unions affiliated with the Federation of Independent Trade Unions (FITUG), the Guyana Trades Union Congress (GTUC), and the Guyana Public Service Union (GPSU). The government team for the consultations comprised several key ministers and officials from state departments.

Previous budgets have seen a substantial portion of revenues allocated towards infrastructure development. This includes the construction and refurbishment of roads, bridges, schools, hospitals, and energy projects. Additionally, the government has channeled funds towards public servant salary increments. Healthcare workers have benefited from a notable increase in wages and salaries, as Guyana has experienced a brain drain of qualified nurses over the past several years. 

The 2022 budget saw oil revenues constitute up to 23% of the initial total, with the Natural Resource Fund contributing approximately US$607.6 million. Meanwhile, the 2023 budget, which was initially pegged at GY$781.9 billion (US$3.75 billion), relied on oil revenues for 26.7% of its funds.

The Natural Resource Fund, established to manage Guyana’s oil wealth, is projected to have US$1.16 billion available for withdrawal and expenditure in 2024, based on a withdrawal formula in the law. This method ensures that only inflows from the preceding year are spent, protecting savings from previous years. In 2024, after the anticipated withdrawals, the Fund is expected to retain accumulated savings, from 2020-2023, of approximately US$820 million.

The oil sector in Guyana has experienced exponential growth since Exxon’s significant discoveries. Since 2015, Exxon has identified over 11 billion oil-equivalent barrels. Production kicked off in December 2019 and has escalated to 380,000 barrels per day (bpd). Exxon’s plans are setting the stage for oil output to surpass 1.2 million bpd by 2027. The government is gearing up to award more oil licenses to international oil companies later this year, signaling an expansion of the sector. 

Because of the growth of its oil sector, and the resultant impact on other sectors, Guyana was classified a high-income country in 2023, by the World Bank. However, there is still a lot of room for improvement in living standards for many of the country’s people. 

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