Analysis and News

Public Sector records $14.2 billion surplus for 2021 first quarter

BY GEOCAP's Contributor: Richard Bhainie

Guyana’s overall financial position of the public sector, which includes the Central Government as Non-Financial Public Enterprises (NFPEs) has recorded a surplus of some GYD 14.2 billion for the first quarter of 2021 which is reflective of an improved performance of both the Central Government and NFPEs.

According to the Bank of Guyana in their Quarterly Report & Statistical Bulletin 2021 Q1 Volume 15 Number 1, at the end of March, 2021, the Central Government overall balance amounted to some GYD 10.6 billion, relative to a surplus of GYD 6.5 billion which was recorded one year earlier.

The report highlights that the increased surplus is a result of increased revenue collections which were sufficient to offset budgetary spending during the review period.

“The current account recorded a surplus of GYD 14,805 million, owing to increased revenue collections from taxation as business activities picked up following the gradual lifting of COVID-19 restrictions,” the report stated.

The report explained that the total current revenue rose by some 9.7 percent to GYD 61.5 billion, a performance which is reflected of increased collection of income taxes by 9.8 percent to GYD 25.9 billion, value added tax (VAT) and excise tax by 7.3 percent to GYD 25.3 billion, trade taxes by 5.8 percent to GYD 5.5 billion and other tax revenues by 32.3 percent to GYD 2.4 billion. Non-tax  revenue also expanded by 29.5 percent to  GYD 2.3 billion.

On the other hand, the report stated total current expenditure (including interest charges) was GYD 46.7 billion, reflective of budgetary spending. Transfer payments amounted to GYD 21 billion while employment costs, spending on other goods & services and interest charges were GYD 16.4 billion, GYD 7.1 billion and GYD 2 billion, respectively.

The report also highlighted that the country’s capital account deficit stood at GYD 4.1 billion, with capital revenue amounting to GYD 318 million while capital expenditure amounted to GYD 4.5 billion. Further, Capital expenditure was in line with budgetary spending on developmental projects.

A breakdown of the capital expenditure highlights that disbursements for the construction sector amounted to some GYD 2.9 billion and represented 65.5 percent of total capital expenditure for the period under review. The remaining disbursements were: agriculture (7.8 percent), social welfare (6 percent), power generation (4.4 percent), health (3.5 percent), public safety (3.2 percent), administration (2.1 percent), environment & pure water (2 percent), housing (1.8 percent), transport & communication (1.7 percent), education (0.7 percent), financial transfers (0.5 percent), culture/youth (0.4 percent), manufacturing (0.4 percent) and national security & defence (0.1 percent). The report highlights that there was no capital spending on fishing and tourist development.

“Central Government financing position amounted to net domestic savings of GYD 22,576 million and net external borrowings of GYD 11,965 million,” the report said.

The Non-Financial Public Enterprises (NFPEs) recorded a surplus of GYD 3.6 billion, at end-March 2021, compared to a deficit of GYD 2.8 billion, at end-March 2020. The report noted that the surplus was a result of a 29 percent expansion in total receipts despite an increase of 4.1 percent in total expenses.

“Current receipts grew by GYD 7,708 million to GYD 34,251 million, mainly on account of higher receipts from local sales by 63.5 percent to GYD 20,910 million. Receipts from debtors and export sales also increased by 6.3 percent and 3.4 percent, respectively, to GYD 5,788 million and GYD 1,112 million, respectively. Conversely, other income and VAT refunds received declined to GYD 6,413 million and GYD 29 million, respectively,” the report stated.

For the reported period, current expenditure increased by 4.7 percent to GYD 29.2 million while capital expenditure contracted by 7.2 percent to GYD 1,374 million owing to lower capital spending by the Guyana Sugar Corporation (GUYSUCO), the Guyana Power & Light (GPL) and the Guyana Oil Company (GUYOIL).

Non-interest current expenditure rose by 4.6 percent to GYD 29.2 billion, due to higher payouts to creditors by 42.7 percent to GYD 8.3 billion, other current expenditure by 11 percent to GYD 9 billion and local government rates & taxes by 11.8 percent to GYD 24 million.

Conversely, there were reductions in payments for repairs & maintenance by 47.9 percent to GYD 331 million, freight charges by 24.5 percent to GYD 444 million, materials & supplies by 13.9 percent to GYD 6.8 billion and employment costs by 3.5 percent to GYD 3.8 billion. VAT payments to GRA were also lower at GYD 69 million. Interest payments grew by GYD 14 million mainly from increased payments by GUYSUCO.

The National Insurance Scheme’s (NIS) overall balance recorded a higher deficit of GYD 908 million at end-March 2021, relative to a deficit of GYD 401 million at end-March 2020. This was reflective of the expansion in total expenses by 9.9 percent to GYD 7.4 billion, which outweighed the increase in receipts of 2.6 percent to GYD 6.5 billion.

“Furthermore, NFPEs’ overall position resulted in net external savings of GYD 648 million and net domestic savings of GYD 2,992 million,” the report said.

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