GUYANA: 2023 BUDGET SET AT G$781.9B – $208.9B from Oil Account

          – Govt. to draw down $208.9B from oil account for support

               Sugar, fisheries, gold industries perform poorly

Jan 17, 2023 – Kaieteur News – Senior Minister with responsibility for Finance, Dr. Ashni Singh yesterday unveiled a $781.9B budget for 2023 under the theme: “Improving Lives Today, Building Prosperity for Tomorrow.”

This is 41.4 percent larger than the 2022 budget which stood at $552.9B.

During an almost six-hour presentation in the National Assembly, Dr. Singh was keen to note that $208.9B in oil revenues will be withdrawn from the Natural Resource Fund (NRF) to support national development priorities this year. Last year, government had used $126B to prop up the 2022 budget.       

Dr. Ashni Singh presents Budget 2023

Speaking to the nation’s sectoral performance for 2022, the Finance Minister said the agriculture, forestry and fishing sector is estimated to have expanded by 11.9 percent in 2022. He said this growth is attributed to notable performances in the other crops, rice growing, livestock, and forestry industries. He said growth in these industries more than offset contractions in sugar growing and fishing.

Dr. Singh said the sugar sector is estimated to have declined by 18.9 percent in 2022, with sugar production for the year totaling 47,049 tonnes. He said this performance was largely the result of lingering effects of the 2021 floods, which caused lower yields per hectare and reduced cane quality, as well as technical challenges encountered in the first half of 2022.

In contrast, Dr. Singh said there is an estimated expansion of 8.1 percent for the rice growing sector in 2022, with total production of 610,595 tonnes. Like sugar, he said, there were some lingering effects of the 2021 floods that affected rice production in 2022. However, production grew to surpass 2021 levels, with yields increasing to 5.9 tonnes per hectare in 2022, compared with 5.5 tonnes per hectare in 2021.

Furthermore, the minister said the other crops sector is estimated to have grown by 15.3 percent in 2022, with expansions observed across all crop categories. He said significant growth was recorded in the production of crops such as eddoes, coconuts, sweet potatoes, plantains, lettuce, and sweet peppers. The contributing factors to higher output include increases in acreage cultivated and increased yield.

The livestock industry is also estimated to have expanded, growing by 9 percent in 2022. It is estimated that the production of pork, poultry meat, mutton, and beef grew by 15.8 percent, 12 percent, 10.1 percent and 1.8 percent, respectively, in 2022. On the downside, the production of eggs and milk declined by 37.5 percent and 10.8 percent, respectively.

In the fishing industry, Dr. Singh said it is estimated to have contracted by 4.8 percent in 2022. He said this is attributed to lower marine production, with shrimp and fish production falling by 7.1 percent and 0.7 percent, respectively.

On the upside, Dr. Singh said the forestry sector is estimated to have expanded in 2022, growing by 13.4 percent. It is estimated that approximately 441,000 cubic metres of timber products were produced in 2022, largely on account of growing demand from the construction sector.

EXTRACTIVE INDUSTRIES

The Finance Minister disclosed yesterday that the mining and quarrying sector is estimated to have expanded by 109.7 percent in 2022. The estimated growth is driven mainly by an expansion in the oil and gas and support services industry which, when combined with the projected growth in the other mining and bauxite industries, outweighs the contraction in gold mining activity.

He was keen to note that the oil and gas sector is estimated to have expanded by 124.8 percent in 2022, with a total of 101.4 million barrels of oil produced, compared with 42.7 million in 2021. This performance is attributed to the commencement of production at the country’s second floating, production, storage and offloading (FPSO) vessel – Liza Unity – early last year. In 2022, Dr. Sing said the Liza Destiny FPSO produced crude oil at an average rate of approximately 128,000 barrels per day (bpd), compared with 117,000 bpd in 2021, and the Liza Unity FPSO produced at an average rate of about 169,000 bpd, reaching a peak monthly rate of just over 233,000 bpd in December.

With respect to the bauxite mining industry, Dr. Singh said it is estimated to have expanded by 35 percent in 2022, with increased output from both producing operators. He said the total output from the industry is estimated to have expanded from 618,452 tonnes in 2021, to 706,634 tonnes in 2022.

He said output from the largest producer increased from 388,510 tonnes in 2021, to 407,225 tonnes in 2022, despite delays in the start-up of a new kiln. Moreover, it is estimated that output from the smaller operator grew from 229,942 tonnes in 2021, to just 299,409 tonnes in 2022.

On the downside, Minister Singh said the gold mining industry is estimated to have contracted by 2.5 percent in 2022, stemming from lower output from the small and medium scale producers. He said overall declaration of gold fell marginally from 499,054 ounces in 2021 to 486,415 ounces in 2022.

Further to this, the minister said the single producing foreign operator recorded a notable increase in declarations, with 101,418 ounces declared in 2022, while output from the small and medium scale operators fell by 10.6 percent to 384,998 ounces, attributed to lower declarations from the top two dealerships.

Kaieteur News understands that output from the other mining and quarrying sector, which comprises diamond, sand and stone mining, continued its upward trajectory, resulting in the sector expanding by an estimated 38.5 percent in 2022.

In fact, diamond declarations are estimated to have grown by 85.6 percent to 83,720 metric carats last year. Furthermore, sand extraction and stone production are estimated to have grown by 35.6 percent and 18.6 percent, respectively, supported by the heavy emphasis of construction activity in government’s Public Sector Investment Programme (PSIP) as well as rapid expansion in private sector construction activity. Notably, for the first time in the last five decades, 255,081 tonnes of manganese were produced in 2022.

In the manufacturing sector, Minister Singh said it is estimated to have expanded by 3.9 percent in 2022. While sugar manufacturing is estimated to have contracted by 18.9 percent, he said the rice manufacturing and other manufacturing subsectors are estimated to have grown by 11.7 percent and 2.8 percent, respectively. With respect to the latter, Dr. Singh said growth was driven largely by fabricated metal products, plastic products, and paper products, which grew by 4.9 percent, 35.7 percent, and 98.8 percent, respectively. On the downside, however, there was a 33 percent contraction in the manufacturing of pharmaceuticals and a 9 percent contraction in the manufacturing of chemicals, particularly oxygen, amid lower COVID-19 related hospitalisations in 2022.

Significantly, the Finance Minister noted that the construction sector grew by a very strong 26.3 percent in 2022. As was the case in 2021, he said this expansion is supported by intensified activity in the public and private sectors. Alongside massive Government investment in new and improved roads and bridges, housing developments, educational and health facilities, and agriculture infrastructure, Dr. Singh said private sector investment in the oil and gas and hospitality industries continues to boost growth in construction.

With respect to the services sector, he said it is estimated to have expanded by 9 percent in 2022. While growth was recorded across all service industries, Dr. Singh said the overall 2022 performance is mainly attributed to growth in wholesale and retail trade and repairs, administrative and support services, financial and insurance activities, real estate activities and transport and storage. These industries he said grew by 15.6 percent, 11.8 percent, 6.7 percent, 4.1 percent and 8.9 percent, respectively.

With continued interventions and policies geared at building a resilient economy, Dr. Singh said real Gross Domestic Product is projected to grow by 25.1 percent this year, a rate of growth which currently puts Guyana among the top five fastest growing economies in 2023. He said this position can be largely attributed to further ramping up of oil production anticipated in the Stabroek Block.

He said growth in the non-oil economy is currently projected at 7.9 percent this year, driven by continued expansion in construction, other crops, and wholesale and retail trade and repairs, alongside a rebound in gold mining.

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