The Georgetown Chamber of Commerce & Industry (GCCI) in weighing in on the $300.7B 2019 Budget presented on Monday last by Finance Minister Winston Jordan registered its concern with the macroeconomic outlook for Guyana, among other things.
The body outlined that Budget 2019 indicates “Government’s intention to finance about 80 percent of the sizable fiscal deficit ($32.84B of the $41.49B) from borrowing from the domestic economy.”
Further compounding this the GCCI posited was “the concern that there is a projected increase in taxation by 9.9 percent, in an economy which is projected to expand by 4.6 percent. This outstripping worries us.”
In a statement, GCCI noted its major disappointment in this and its further disappointment that that there has been no adjustment to the tax regime of fuel despite its suggestion during consultations.
“It should be noted that in 2018, the price of fuel had a disastrous effect on the private sector earnings as costs skyrocketed and continues to affect every aspect of private sector operations, from manufacturing to distribution” GCCI said.
Coupled with fuel increases, GGCI registered its concerns with the slow rate of implementation of the Public Sector Investment Programme (PSIP) and the long gestation period of capital expenditure.
The Commerce noted that this is likely to create a drag on the economy as money is withdrawn faster than it can be injected.
“In the external sector, the large drawdown on the net foreign assets of the Bank of Guyana of US$104.1 million remains of concern; the sustenance of which is critical to external viability and the preservation of macroeconomic stability of the country” the Commerce revealed.
According to GCCI, given the dismal economic performance in Guyana labour-intensive sectors such as agriculture, fisheries, with the forestry sector, it is disappointed that the required stimulus needed to recover job losses were not adequately addressed in Budget 2019.
“Further, with a decline in spending on the Agriculture sector from $19.4B to $17.1B (from 7.1 percent of the Budget to 5.7 percent of the total Budget), the Chamber of Commerce believes that the dismal performance in the sector, unfortunately, is likely to continue. This is expected to have a negative impact on consumer spending in 2019” the statement asserted.
However, on a more positive note, the Commerce noted that they are satisfied with the implementations of a number of recommendations made during the budget consultations.
“The National Budget remains pivotal in charting the country’s development path and as such, its policy measures are important…During the 2019 Budget consultations, the GCCI, in meeting with the Ministry of Finance, made a number of recommendations based on discourse with its members, empirical and policy analysis…The Chamber of Commerce is pleased to see that some of the recommendations which were advanced to the Minister were well-received and taken on-board. Specifically, the Chamber of Commerce has noted that its requests to review the taxes on pesticides and limestone used in the agriculture sector, has resulted in exemptions being granted from Custom Duty and Value Added Tax (VAT)”.
Additionally, the Commerce said that it is pleased that its suggestions in the aviation industry have resulted in the VAT exemption of aircraft engines and main components.