Guyana’s Vice President Dr. Bharrat Jagdeo said on Friday that the government intends to use some of the proceeds from its US$607 million Natural Resource Fund to finance the government’s budget for the fiscal year 2022.
Guyana has been borrowing to finance its budget for years but plans to lower its fiscal deficit this year.
“The fiscal deficit this year, in this budget, would be lower than the fiscal deficit in last year because from a financing perspective, that means we’d have to borrow less because some of the oil and gas revenue will go to replace the high level of borrowing that we have had.”
He said the deficit may experience some widening at this time given that government has ramped up spending for multiple big projects but added that the use of Guyana’s oil revenues will reduce financing needs and limit the widening of the deficit.
Dr. Jagdeo said the previous government had borrowed significantly, at about $90 billion a year to finance its budget. He expects the borrowing reduction in 2022 to have a positive effect for Guyanese borrowers.
“It now leaves more funds in the domestic market available for private sector lending. So, there is no upward pressure on the interest rates there. In fact, the banks have to be a bit more aggressive to seek out people to lend to, because they don’t have this easy way of lending to the government.”
Meanwhile, Dr. Jagdeo said the 2022 budget, which will be presented by Senior Minister with responsibility for Finance in the Office of the President, Dr. Ashni Singh, on Wednesday, January 26, will place major focus on infrastructure, tax reduction and human welfare.
“New highways, roads, investing on power grids, on ICT, the same things that make our businesses more competitive so we can generate more jobs and more diverse jobs in agriculture, in ICT and other areas, not just oil and gas,” the Vice President stated.
He said the government will provide “tax reductions, making the business process easier for people and of course implementing the Local Content Law, which will bring big benefits to Guyanese.”
Dr. Jagdeo also placed particular emphasis on creating a business-friendly environment that fosters job creation. The Government also intends to work with communities to reduce the cost of living.