Local Financial Analyst, Joel Bhagwandin recently completed a study which found that the Guyanese government has allocated an annual average of $189 billion towards immediate relief measures for citizens. In a disaggregation of the numbers, Bhagwadin’s report said this substantial figure accounts for 19% of the non-oil Gross Domestic Product (GDP) in 2022, making up 6.45% of the overall GDP for the same year. Additionally, the study explained that these relief measures represent 24% of the 2023 national budget and a noteworthy 63% of the Natural Resources Fund (NRF) balance as of the close of 2022.
Overall, he said the relief measures represent an estimated additional $945,000 in disposable income per household annually.
Bhagwandin’s study also delved into the intricate details of how this financial support has been distributed and its implications on the Guyanese economy. Notably, through the PPP/C 2020 budget, he noted that the government swiftly reversed over 200 punitive taxes and fees, including Value Added Tax (VAT) implemented by the previous administration. Bhagwandin said this reversal immediately restored $300,000 per household annually in disposable income.
Other crucial relief measures encompassed the reduction of Excise Tax on fuel from 50% to 0%, resulting in annual foregone revenue of $20-40 billion. Additionally, Bhagwandin noted that initiatives such as the part-time job programme, increased income tax threshold, as well as subsidies for electricity and water, and first-time low-income homeowners collectively contribute to the comprehensive relief strategy led by the government.
Another significant aspect highlighted in the study is the global economic context, particularly the inflation rates. Bhagwandin showed that while the global average inflation rate stood at 8.7% in 2022, Guyana managed to keep its inflation rate in the low single-digit range. Bhagwandin said projections indicate a further decrease below 5% in 2023, positioning the country favourably compared to many other nations grappling with double-digit inflation rates.
The study also sheds light on other substantial forms of financial commitment by the Guyanese government towards relief measures, illuminating the positive impact on household incomes and the country’s inflationary stability.
Bhagwandin’s analysis also provided valuable insights into the economic strategies employed by government, thereby contributing to a nuanced understanding of government’s handling of Guyana’s fiscal landscape.
