The expansionary development agenda of the government necessitates the increase of the public debt ceiling relative to the size of the economy which is growing at a rapid pace. Of note, this increase is within the debt sustainability prudential benchmark.
Having examined the selected performance indicators of the government as presented herein, it can be safely concluded that the government’s investment agenda and allocation of financial resources in general, are so far yielding the desired results. These achievements, however, are not without having to navigate and combat a plethora of endogenous and exogenous constraining factors.
The Government of Guyana (GoG) sought the approval of the National Assembly to increase the public debt ceiling. The domestic debt ceiling was increased to $750 billion from $500 billion, and the external debt ceiling increased to $900 billion from $650 billion.
The government also sought the National Assembly’s approval of another Supplementary Appropriation Bill for the sum of $61 billion. The Opposition Parliamentarians who participated in the debate―questioned the necessity for the increased debt ceilings as well as the additional funding. The opposition argued that despite the large spending on capital projects, there is no improvement in the quality of life of the people. This article seeks to contribute to this debate with emphasis on a number of selected performance indicators across multiple sectors.
Discussion and Analysis
The Debt Ceiling
The expansionary development agenda of the government necessitates the increase of the public debt ceiling relative to the of the size of the economy which is growing at a rapid pace. The latest increase of the debt ceiling is within sustainable benchmark, such that it represents 56.9% of 2022 real-GDP and 45% of the GDP forecast for 2023.
As of 2022, the debt-to-GDP ratio was recorded at 26% and debt service to revenue ratio was 7%. This means that 7% of the current revenue of the government is used for debt service payments. The external debt-to-GDP ratio as of 2022 was recorded at 11% and projected to grow by one percentage point in 2023 to 12%, while the overall debt-to-GDP forecast for 2023 is 25%.
These are sustainable public debt indicators which are among the lowest in the world. For context, countries such as Japan, Greece, Singapore, Italy, the United States of America, the United Kingdom, and Guyana’s neighbor to the east, Suriname, to name a few, have the highest debt-to-GDP ratios in the world as of 2022, ranging from 241% (Japan) to 97% in the case of the latter.
Further, it would be interesting to note that the debt burden per capita (per person) in the case of Guyana is US$4,679. Conversely, the debt burden per capita of the United States is US$91,743, almost 19 times more than the debt burden per person in Guyana.
For those who are paying attention, it should not be surprising why the government needed approval for supplementary funds. There are primarily two factors that could commonsensically explain this situation. The first being budgetary shortfalls for the planned capital projects owing to rising costs for materials, which is an exogenous factor.
Second, the President, the Vice President, and all of the ministers continue to engage in community outreaches across the country. In so doing, decisions are often times made on the spot based on concerns raised by residents of the communities. The concerns are largely related to infrastructure needs such as roads, bridges, drainage, etc.
To that end, citing the Supplementary Bill, the additional funding are to finance the construction of the Wismar Bridge, improvement of various community roads and sea defenses, establishment and maintenance of wharf facilities, maintenance of the Demerara and Berbice Harbour bridges, expansion of the school feeding programme, drainage and irrigation works across the country, among others.
Selected Performance Indicators
In addressing the question of whether the public expenditure is yielding the desired results, it is worthwhile to examine the performance indicators of the government for the period 2020-2022 and the targets set for 2023. Space precludes listing all of the performance indicators in a single article, hence, this section only highlights a variety of selected indicators across multiple sectors for the period.
Agriculture Sector/Food Security Agenda
i) Production of aquaculture and inland fisheries was recorded at 135,653 kg in 2020 which increased by 643% to reach 1,003,302 kg by the end of 2022. The 2023 target is set at 3,061,000 kg, representing an increase of 2,123% over 2020.
ii) In 2021, a total of 30 farmers were trained in aquaculture practices, and in 2022, 434 farmers were trained, bringing the total to 464. The target for 2023 is another 300 farmers to be trained which will bring the total number of farmers who benefited from this programme to 764 by the end of 2023.
iii) For the period 2020-2022, a total number of 16,378 licenses were processed by the fisheries department. The target for 2023 is 6,845 which will bring the total to 23,223 new licenses issued by the end of 2023.
iv) In 2022, a total number of 6,030 farmers were trained in sustainable agricultural practices with another 11,000 targeted for 2023, thus bringing the total number to 17,030 by the end of 2023.
v) In 2022, a total of 101 farms were certified to produce wholesale food and agricultural commodities for export. In 2023, the target is another 150 farms to be certified which will bring the total to 251 certified farms by the end of 2023.
vi) In 2022, a total of 161,239 acres of cropland were under cultivation, which is projected to increase to 166,018 in 2023. In 2022, 42,032 acres of new farmlands were made available with another 43,333 to be made available in 2023, thereby bringing the total of new available farmlands for 2022-2023 to 85,365 acres.
vii) For the period 2021-2022, a total of 75 km of new farm to market access roads were constructed with another 40 km to be constructed in 2023, bringing the total new farm to market access roads to 115 km by the end of 2023. For the same period, a total of 335 km of farm to market access roads were maintained with another 50 km budgeted for 2023.
i) For the period 2020-2022, 695 km of road were rehabilitated with another 300 km for 2023, bringing the total to 995 km of road. Additionally, 3,500 km of roads were maintained for the period 2020-2022 with another 1,000 km budgeted for 2023, bringing the total to 4,500 km by the end of 2023. To put this into perspective, the distance from Georgetown to Corriverton, Berbice, is 172.1 km. So, the total length of roads rehabilitated for the period is equivalent to nearly six times the length of road from Georgetown to Corriverton, and the total length of road maintained for the period is equivalent to over 26 times the length of roads from Georgetown to Corriverton.
ii) For the period 2020-2022, 245 bridges were maintained with an additional 15 in 2023, bringing the total to 260 bridges by the end of 2023.
iii) In 2020, 101,595 meters of sea defence structures were maintained, 55,471 meters in 2021, 81,850 meters in 2022 and 98,613 meters targeted for 2023. For the period 2020-2022, 7,625 meters of sea defence were rehabilitated and another 1,850 meters targeted for 2023.
iv) In 2020, a total number of 2,037 vessels transited the channel which increased to 2,798 in 2022 and projected to increase to 3,791 vessels or 86% in 2023. This is indicative of the level of increase in economic activities in this sector.
i) Occupancy rates in established communities increased from 55% in 2020 to 92% by the end of 2022.
ii) The total number of housing areas with new infrastructural development works for the period 2021-2022 amounted to 42, with an additional 38 areas targeted for 2023, bringing the total to 80 areas.
iii) The total number of housing areas consolidated through road upgrades amounted to 26 for the period 2021-2022, with a target of another 11 in 2023, bringing the total to 37 by the end of 2023.
iv) Total number of housing areas installed with new electrical infrastructure amounted to 27 for the period 2021-2022, with another 15 targeted for 2023, bringing the total to 42 by the end of 2023.
v) A total of 1,050 new houses were constructed for the period 2021-2022, with targets for 2023 of another 2,000, bringing the total to 3,050.
vi) A total of 22 housing areas were installed with water distribution network for the period 2021-2022, with another 14 budgeted for 2023, bringing the total to 36 by the end of 2023.
vii) Five (5) recreational facilities were upgraded for the period 2021-2022 with another two (2) in 2023, bringing the total to seven (7).
viii) For the period 2020-2022, a total of 4,060 land titles/transports were issued with another 5,000 targeted for 2023, bringing the total to 9,060 by the end of 2023. And, for the same period, a total of 22,254 house lots were allocated up to 2022, with an additional 10,000 targeted in 2023, bringing the total to 32,254 by the end of 2023.
ix) For the period 2020-2022, a total of 613 informal settlers were regularized with another 200 target for 2022, bringing the total to 813 by the end of 2023. For the same period, a total of 71 informal settlers were relocated with another 100 targeted for 2023, bringing the total to 171 by the end of 2023.
x) In 2022, a total of six (6) housing areas were regularized with another five (5) targeted for 2023, bringing the total to eleven (11) by the end of 2023.
xi) For the period 2020-2022, a total of 2,316 planning applications were processed, with another 800 targeted applications for 2023, bringing the total to 3,116 by the end of 2023.
xii) As of the end of 2022, 96% of the population have access to reliable supply of potable water which is projected to increase to 98% by the end of 2023. As of the end of 2022, 75% of hinterland population have access to reliable supply of potable water which is projected to increase to 92% by the end of 2023.
xiii) As of the end of 2022, 81% of coastland communities have access to, at minimum, a level 2 health facility, while for the hinterland communities 63% of the population have access to same. By the end of 2023, these indicators are projected to increase to 83% and 66% respectively. As of the end of 2022, 85% of regional hospitals are equipped to provide specialists care which is projected to increase to 100% by the end of 2023.
xiv) In 2021, 8,000 persons accessed rehabilitation services for the first time which increased to 13,050 in 2022, bringing the total to 21,050 persons having access to this type of service for the first time.
i) In 2020, the crime rate per 100,000 persons was reported at 8,405, which declined to 6,372 per 100,000 persons by the end of 2022 and projected to further decline to 5,162 by the end of 2023.
ii) In 2020, 53% conviction was secured which increased to 70% by the end of 2022 and projected to reach 77% by the end of 2023.
Business Development, Support and Promotion
i) Approximately 57% of businesses in industrial estates are engaged in value-added production which is projected to increase to 75% by the end of 2023. In 2022, 92% of import/export licenses were issued in 24 hours which is projected to increase to 95% in 2023.
ii) A total of 1,479 small businesses received loans and grants for the period 2021-2022, with another 1,100 targeted for 2023, bringing the total to 2,579 by the end of 2023.
i) In 2021, 18,326 persons benefited from public assistance which increased to 28,108 persons in 2022 and projected to increase to 33,000 persons in 2023, representing an increase of 14,674 more persons to benefit from this program.
ii) In 2021, the total number of women who benefited from empowerment programs were recorded at 2,100 which almost double in 2022 to reach 4,023 women. In 2023, the target is 6,000 women to benefit from this programme, reflecting an increase of 186% from 2021.
iii) As of the end of 2022, 15,542 persons benefited from scholarship programmes with another 10,000 targeted for 2023, bringing the total to 34,231 by the end of 2023, thereby surpassing the 20,000 target by 2025 as per the government’s manifesto.
The performance indicators highlighted above represent a fraction of the total areas in which the government delivered public goods and services to the population. Notably, excluded from the list are the cash grants to school children, the school feeding programme, increases in pension, wages, and salaries, etc.
Considering the aforementioned, the total number of persons who benefited from all of the various programmes and initiatives highlighted amounted to 177,532. These are persons whose lives would have been positively impacted in many ways.
Moreover, based on the foregoing performance indicators, it can be safely concluded that the government’s investment agenda and allocation of financial resources in general, are so far yielding the desired results. These achievements, however, are not without having to navigate and combat a plethora of endogenous and exogenous constraining factors.
More importantly, the investments being undertaken in capital projects are absolutely crucial for both the present and more so the future generations. To this end, Guyana has a very youthful population, wherein approximately 70% of the population are below the age of 40 years.
With respect to the supplementary funds and the increase in the public debt ceiling, the government’s expansive development agenda and the rapid growth of the economy, coupled with the hands-on approach of the government to remain engaged at the community level with the people, have altogether induced the need for same.
Given that a single article is insufficient to expand on the development, and socio-economic impact of the government’s investment in infrastructure across all sectors, policies, programmes and initiatives, this article is the beginning of a series of articles that will be devoted to examining in-depth, each sector, policies, programmes, and initiatives.
About the author
Joel Bhagwandin, MSc., is the Director of Financial Advisory, Market Intelligence, and Analytics at SphereX Professional Services Inc. He can be reached at [email protected].