Budgets are the lifeblood of nations. In Guyana, of course, the budget has become part of a cultural tradition. In the weeks prior to budget day, folks from all walks of life, and through the full gamut of the economic spectrum, speculate on the measures. And why shouldn’t they? The measures are the most visible and quantifiable items that immediately translate into a before and after at the dinner table. But budgets are more than a collection of sectoral allocations and line items. As the past four years have shown, the budget is a comprehensive articulation of a sets of objectives, built around a clear strategic vision.
As used here, strategic vision refers to the way a society is imagined, and from which a picture begins to emerge about the long-term totality of things in the economy, society, and culture. Unlike community, which is more organic, society is a product of social and political construction. While elements of community definitely seep into society, the latter takes its architectural form and social structure from the pertinent effects of economic governance.
The function of the budget is to actualize the vision, setting up the paths through which imagination turns to ideas, and where ideas are transformed into action. Accordingly, the budget has a double role: firstly, a conceptual one, and only secondarily, a functional one.
Let us deal with the underlying conceptual bases of the budget. I suggest that there are five principles that undergird PPP thinking as presented by the indefatigable Dr. Ashni Singh last Friday. They are as follows:
- That democracy and development are inseparable. The two are reciprocal co-implications.
- That the PPP budget is based on building strong macro-economic fundamentals aimed at the forward movement of
key variables such as the growth rate and per capita income. Simultaneously, human development is considered indispensable.
- That the foundation laid through the budget must have the capacity for self-generating economic capacities, a
kind of long-term, macro-structural multiplier effect. In different language we also know this as capital accumulation.
- That the expansion of the market as a self-regulating mechanism (in scope, debt, and capacity) must be accompanied by an expansive ecosystem of social protections.
- That economic development must act as a conduit to build national cohesion and cultural renewal.
The conceptual principles noted above in the PPP budgeting philosophy are themselves located in a larger framework of fiscal prudence and a long-term perspective on maintaining a stable monetary environment. Inflation management and employment creation are top priorities. By contrast, the opposition parties and their supporters in the media are bent on wild spending, most of it for end-user consumption rather than investments in the long-term. These same people forget the debt trap Guyana once found itself in under the PNC.
In the event you still do not know, the PNC debt was 900% of GDP in 1990. The 2015-2020 APNU-AFC term in office demonstrated that the impulses of the old PNC were still very much alive. Unlike Burnham and Hoyte, however, Granger and Moses Nagamootoo used the budget principally to tax and spend.
The tragedy of the PNC-APNU and AFC is that they do not have any strategic thinkers in economics or governance. Figures like Ganesh Mahipaul and Elson Lowe are low-level activists who have not shown much aptitude for abstract thinking, nor for theoretically informed engagement with the difficult questions of national economic priorities. They, like Norton and Hughes, are mostly focused on giving away free money, only to turn around and criticize those well-intended and balanced programs such as the $100,000 cash grant, the Because We Care grant, and the lifting of tuition off the backs of UG students. For his part, GHK Lall is more interested in writing poetry.
You, the reader, have no way of knowing that I wrote a 100-page M.A. thesis on petroleum and agriculture in Mexico. That was forty years ago. I argued there that neglect of the non-hydrocarbon sectors, and especially neglect of agriculture led to the cataclysmic economic rupture that occurred in that country in 1982. The PPP is well aware of the tendency for new oil economies to go rogue on the non-oil sector. This is why the PPP budgets since 2020 have all stressed support for broadening out the economic base of the country.
The APNU-AFC are too focused on giveaways and race talk to appreciate the subtler aspects of the budget which is aimed, in part, at fighting Dutch disease and the resource curse. Readers should take note of the depreciation of capital for poultry farmers, removal of VAT on agricultural machinery, free university and technical and vocational education, keeping the price of gasoline stable, removal of tolls (soon), the plan to halve electricity prices later in 2025, and adjustments to taxes for children. All of these, not to mention multi-billion dollar investments in transportation and communications infrastructure and health, are aimed at lessening the dependency on oil and gas. This is also why the manufacturing sector is expected to grow by 13% in 2025 and construction by 24.8%, with significant upswings expected in agriculture, services, and sports and entertainment.
Budget 2025 contains the kind of grand economic strategy advocated by leading development scholars such as Paul Collier, Amartya Sen, Daron Acemoglu, Simon Johnson, James Robinson, and, most recently, Stefan Dercon. All of these big thinkers in economic development place a high priority on democratic governance, sound macro-economic fundamentals, the capacity for internal capital accumulation, expansive social protections, and a drive towards national consensus. President Ali has insisted that all of the above must result in human development and human security. That is what budget 2025 is all about.