Diaspora Engagement

Talking Dollars and Making Sense

Strengthening Guyana’s Teaching Profession

A Key to Economic Transformation

by

Rennie Parris, MBA

As we celebrate our rapid economic growth fueled by oil wealth, we face a critical challenge: ensuring that our education system keeps pace with national development needs. A well-trained teaching workforce is not only essential for shaping the next generation but is also a fundamental driver of long-term economic stability. Without highly qualified educators, our nation’s progress risks being uneven, with gaps in skills development that could slow the very growth we are striving to sustain.

Education quality is directly linked to economic performance. Studies show that nations with strong teacher training systems experience faster GDP growth, better job creation, and stronger innovation ecosystems. The World Bank estimates that improving teacher effectiveness can yield up to a fivefold return on investment through higher wages, increased productivity, and national economic gains. In the context of Guyana’s emerging industries—such as oil and gas, technology, and finance—a robust education system is critical for building a workforce equipped for the future.

While we celebrate our recent economic advancements, we must recognize that nearly half of our population still lives below the poverty line. Education, particularly when delivered by well-trained teachers, is the single most effective tool for breaking cycles of poverty and ensuring that all Guyanese benefit from national prosperity.

Currently, there are two main pathways for becoming a trained teacher in Guyana: the Cyril Potter College of Education (CPCE) and the University of Guyana’s (UG) Bachelor of Education programs. However, access to these programs is not evenly distributed. Many teachers in hinterland and remote areas struggle to get the necessary training due to infrastructure challenges, unreliable internet access, and financial barriers. Recognizing this gap, the Ministry of Education has mandated that all untrained teachers must complete formal training through initiatives like the Teacher Upgrade Programme (TUP). While this is a step in the right direction, more must be done to ensure that all aspiring educators—particularly those in marginalized communities—have the resources and support to succeed.

For Guyana’s education system to meet the demands of a rapidly growing economy, policymakers must adopt bold strategies to strengthen teacher training and retention. Expanding access to training programs in remote regions will require investment in satellite internet, offline learning modules, and mobile teacher training centers. Innovative partnerships with international institutions could also help develop flexible, blended learning programs that reach educators in all corners of the country.

Financial incentives must be introduced to attract and retain high-quality educators. A National Enterprise Fund for Education, financed in part by oil revenues, could provide subsidies for training costs, ensuring that teachers in rural and low-income communities do not face financial barriers to professional development. Housing benefits and relocation allowances for those serving in remote areas would further enhance teacher retention, while forgivable loan programs could encourage long-term service in critical subject areas such as STEM, special education, and vocational training.

Creating opportunities for career growth is also essential. A structured advancement framework should be established to allow teachers to specialize in leadership, curriculum development, or educational technology. Competitive salaries and performance-based incentives would help retain the best talent within the profession, while a mentorship network connecting new teachers with experienced educators could provide ongoing guidance and professional support.

The Guyanese diaspora remains an untapped resource for strengthening the education sector. Many accomplished professionals abroad are willing to contribute to national development through targeted investments, mentorship, and short-term teaching assignments. Investment vehicles designed specifically for diaspora participation in education initiatives could accelerate the development of high-quality training programs and ensure knowledge transfer between global experts and local educators.

As we pursue economic transformation, environmental protection and social equity must remain paramount. Our oil wealth must be leveraged not only for immediate economic gains but also for long-term sustainability. Implementing strict environmental standards for all development projects, protecting our vast rainforests as valuable carbon sinks, and ensuring indigenous communities benefit from economic development while preserving their traditional lands and ways of life are essential measures in this process.

Successful economic transformation requires strong institutional foundations. Transparency and accountability in resource revenue management must be prioritized to prevent corruption and inefficiency. Streamlining business registration and regulatory processes can encourage entrepreneurship, while the implementation of anti-corruption measures and robust oversight mechanisms will strengthen investor confidence. Establishing clear policies to promote local content and capabilities will ensure that our businesses and workers directly benefit from our country’s economic expansion.

Strengthening Guyana’s teaching profession is not just the responsibility of the Ministry of Education—it requires a multi-stakeholder approach. The private sector must invest in workforce development by supporting education initiatives and teacher training programs. The government must ensure that education funding from oil revenues is allocated transparently and effectively. Civil society organizations and advocacy groups must hold institutions accountable for delivering on their promises to improve education.

A nation’s wealth is not measured solely by its oil reserves but by the quality of education it provides to its people. As we navigate this historic period of economic growth, we must ensure that our education system keeps pace with national development needs. A strong teaching profession will not only empower future generations but will lay the foundation for a diversified, resilient, and innovative economy.

If we truly believe in inclusive growth and sustainable development, then investing in our teachers must be a national priority. The time for action is now.

As we celebrate our rapid economic growth fueled by oil wealth, we face a critical challenge: ensuring that our education system keeps pace with national development needs. A well-trained teaching workforce is not only essential for shaping the next generation but is also a fundamental driver of long-term economic stability. Without highly qualified educators, our nation’s progress risks being uneven, with gaps in skills development that could slow the very growth we are striving to sustain.

Education quality is directly linked to economic performance. Studies show that nations with strong teacher training systems experience faster GDP growth, better job creation, and stronger innovation ecosystems. The World Bank estimates that improving teacher effectiveness can yield up to a fivefold return on investment through higher wages, increased productivity, and national economic gains. In the context of Guyana’s emerging industries—such as oil and gas, technology, and finance—a robust education system is critical for building a workforce equipped for the future.

While we celebrate our recent economic advancements, we must recognize that nearly half of our population still lives below the poverty line. Education, particularly when delivered by well-trained teachers, is the single most effective tool for breaking cycles of poverty and ensuring that all Guyanese benefit from national prosperity.

Currently, there are two main pathways for becoming a trained teacher in Guyana: the Cyril Potter College of Education (CPCE) and the University of Guyana’s (UG) Bachelor of Education programs. However, access to these programs is not evenly distributed. Many teachers in hinterland and remote areas struggle to get the necessary training due to infrastructure challenges, unreliable internet access, and financial barriers. Recognizing this gap, the Ministry of Education has mandated that all untrained teachers must complete formal training through initiatives like the Teacher Upgrade Programme (TUP). While this is a step in the right direction, more must be done to ensure that all aspiring educators—particularly those in marginalized communities—have the resources and support to succeed.

For Guyana’s education system to meet the demands of a rapidly growing economy, policymakers must adopt bold strategies to strengthen teacher training and retention. Expanding access to training programs in remote regions will require investment in satellite internet, offline learning modules, and mobile teacher training centers. Innovative partnerships with international institutions could also help develop flexible, blended learning programs that reach educators in all corners of the country.

Financial incentives must be introduced to attract and retain high-quality educators. A National Enterprise Fund for Education, financed in part by oil revenues, could provide subsidies for training costs, ensuring that teachers in rural and low-income communities do not face financial barriers to professional development. Housing benefits and relocation allowances for those serving in remote areas would further enhance teacher retention, while forgivable loan programs could encourage long-term service in critical subject areas such as STEM, special education, and vocational training.

Creating opportunities for career growth is also essential. A structured advancement framework should be established to allow teachers to specialize in leadership, curriculum development, or educational technology. Competitive salaries and performance-based incentives would help retain the best talent within the profession, while a mentorship network connecting new teachers with experienced educators could provide ongoing guidance and professional support.

The Guyanese diaspora remains an untapped resource for strengthening the education sector. Many accomplished professionals abroad are willing to contribute to national development through targeted investments, mentorship, and short-term teaching assignments. Investment vehicles designed specifically for diaspora participation in education initiatives could accelerate the development of high-quality training programs and ensure knowledge transfer between global experts and local educators.

As we pursue economic transformation, environmental protection and social equity must remain paramount. Our oil wealth must be leveraged not only for immediate economic gains but also for long-term sustainability. Implementing strict environmental standards for all development projects, protecting our vast rainforests as valuable carbon sinks, and ensuring indigenous communities benefit from economic development while preserving their traditional lands and ways of life are essential measures in this process.

Successful economic transformation requires strong institutional foundations. Transparency and accountability in resource revenue management must be prioritized to prevent corruption and inefficiency. Streamlining business registration and regulatory processes can encourage entrepreneurship, while the implementation of anti-corruption measures and robust oversight mechanisms will strengthen investor confidence. Establishing clear policies to promote local content and capabilities will ensure that our businesses and workers directly benefit from our country’s economic expansion.

Strengthening Guyana’s teaching profession is not just the responsibility of the Ministry of Education—it requires a multi-stakeholder approach. The private sector must invest in workforce development by supporting education initiatives and teacher training programs. The government must ensure that education funding from oil revenues is allocated transparently and effectively. Civil society organizations and advocacy groups must hold institutions accountable for delivering on their promises to improve education.

A nation’s wealth is not measured solely by its oil reserves but by the quality of education it provides to its people. As we navigate this historic period of economic growth, we must ensure that our education system keeps pace with national development needs. A strong teaching profession will not only empower future generations but will lay the foundation for a diversified, resilient, and innovative economy.

If we truly believe in inclusive growth and sustainable development, then investing in our teachers must be a national priority. The time for action is now.

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📧 Terrence Blackman, Ph.D.

Founder & CEO, Guyana Business Journal

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The history of U.S. tariff policies and their influence on global oil prices provides critical insights into how Guyana, as an emerging oil producer, should navigate the evolving geopolitical and economic landscape. From the Smoot-Hawley Tariff Act of 1930 to the Trump and Biden-era tariffs, these economic policies have shaped global oil demand and prices, often with significant consequences for developing nations. Given Guyana’s reliance on oil revenues, understanding these historical precedents is essential to formulating a strategic response to current and future U.S. trade policies.

The Great Depression era Smoot-Hawley Tariff Act, enacted in 1930, significantly increased tariffs on over 20,000 imported goods in an effort to protect American industries. However, this led to retaliatory tariffs from major U.S. trading partners, triggering a collapse in global trade. The ensuing economic contraction drastically reduced industrial production, including demand for oil, causing a sharp decline in oil prices. This serves as a stark reminder that protectionist measures can have unintended global consequences, particularly for resource-dependent economies.

Similarly, President Richard Nixon’s tariffs in the early 1970s were aimed at addressing domestic economic challenges, including inflation and a weakening U.S. dollar. However, these measures led to a depreciation of the dollar, prompting OPEC to raise oil prices to compensate for their reduced purchasing power. This action, combined with broader geopolitical tensions, resulted in the 1973 OPEC oil embargo, during which oil prices quadrupled from $3 per barrel to $12 per barrel. The sudden surge in oil prices sent shockwaves across global markets, disrupting economies dependent on oil imports and leading to widespread inflation and economic instability.

During the early 1980s, President Ronald Reagan imposed tariffs on imported steel and other industrial goods to protect U.S. manufacturers from foreign competition. These policies, combined with increased global oil production from OPEC and new discoveries in the North Sea, contributed to an oil supply glut. As a result, oil prices collapsed from $35 per barrel in 1980 to approximately $10 per barrel by 1986. This period underscores the vulnerability of oil-exporting nations to global supply fluctuations and economic protectionism in large economies like the United States.

More recently, President Donald Trump’s trade war against China, initiated in 2018, included a series of escalating tariffs on Chinese imports. The resulting trade tensions slowed global economic growth, reducing demand for oil and leading to a sharp drop in oil prices. Brent crude, for example, fell from $85 per barrel in October 2018 to around $50 per barrel by early 2019. The prolonged uncertainty surrounding U.S.-China trade relations created significant volatility in oil markets, which was further exacerbated by the COVID-19 pandemic in 2020.

President Joe Biden has maintained some of Trump’s tariffs while also introducing new tariffs on China’s green energy sector in 2024. These policies have contributed to continued trade tensions, supply chain disruptions, and concerns over a potential global economic slowdown. As a result, oil prices have remained volatile, influenced by geopolitical factors such as Russia’s invasion of Ukraine and broader inflationary pressures.

For Guyana, these historical cases offer important lessons. The country has recently positioned itself as a major player in the global oil market, with significant offshore reserves and growing production. However, it must recognize the risks posed by external factors, such as U.S. tariffs, that can lead to demand contraction and price instability. A trade war between the U.S. and China or further tariffs on industrial goods could slow global economic activity, weakening oil demand and reducing revenue expectations for Guyana. Conversely, tariffs that devalue the U.S. dollar could push oil prices higher, benefiting Guyana in the short term but potentially leading to market corrections later.

In light of these realities, Guyana’s posture should be proactive and adaptive. First, the country must diversify its economy beyond oil to buffer against price volatility. While petroleum remains a cornerstone of economic growth, investments in infrastructure, renewable energy, and manufacturing can provide stability. Second, Guyana must strengthen diplomatic ties with both the U.S. and China to ensure that its energy market remains resilient amid trade disputes. Finally, the Guyanese leadership must leverage its oil revenues to ensure that our sovereign wealth mechanisms can sustain economic stability in times of global uncertainty.

Guyana must remain vigilant as the Trump administration considers new tariff policies that could disrupt global trade and energy markets. Learning from history, the nation should position itself strategically to mitigate risks associated with global economic fluctuations, ensuring long-term prosperity and stability.

The Guyana Business Journal is committed to fostering discussions on Guyana’s economic future. We welcome your thoughts on the pathways to sustainable development.  Please support the Guyana Business Journal and Magazine.

Talking Dollars & Making Sense: Guyana’s Great Leap Forward – A Bold Path to Inclusive Growth
By Rennie Parris, MBA

Welcome back to Talking Dollars & Making Sense. Today, we embark on an ambitious journey to shape a Comprehensive National Development Plan for Guyana, a strategic blueprint for long-term inclusive growth. This vision is built on six fundamental pillars: human capital and innovation, strong institutions and good governance, social inclusion and stability, infrastructure and spatial development, revenue management, and economic diversification. More than just a policy discussion, this is about imagining a future where every Guyanese can reach their full potential and where the nation ascends to new heights both regionally and globally. Together, we will explore the foundation of sustainable development and what it takes to build a prosperous future.

At its core, long-term economic growth is about people. It means creating opportunities for families to improve their lives, ensuring that young people can pursue their aspirations, and fostering communities that thrive across generations. For Guyana, this moment is historic. With abundant resources, a rapidly expanding economy, and increasing global attention, the country stands at a crossroads of immense potential. However, strategic planning and forward-thinking policies must carefully cultivate this potential. Economic growth is not just about production—it is about equitable wealth distribution, fostering resilience, and encouraging innovation.

Achieving sustainable growth requires focusing on three key elements. First, productivity must be enhanced by leveraging education, innovation, and technology to maximize resources. Second, inclusiveness must be ensured so that every citizen, regardless of background, can benefit from economic progress. Third, resilience must be built to safeguard the economy against global uncertainties and external shocks. Now is the time for Guyana to seize this opportunity and create a future that prioritizes sustainability, equity, transparency, and opportunity for all.

Guyana’s development rests on six fundamental pillars that form the foundation for long-term, inclusive growth. These pillars represent the key areas that will drive progress and ensure sustainable prosperity for all citizens.

At the heart of this vision is human capital and innovation. People are Guyana’s greatest resource, and investing in education, healthcare, and innovation is essential for sustainable development. Modern education systems, world-class healthcare services, and a thriving research and entrepreneurial ecosystem will foster a highly skilled and healthy population. Establishing centers of excellence, incentivizing innovation, and forming global partnerships will be crucial in unlocking the nation’s full potential.

Strong institutions and good governance are the backbone of national success. Transparency, accountability, and inclusivity must define Guyana’s governance systems. Trust between the government and its citizens is vital, requiring efforts to reduce corruption, streamline public services, and ensure justice is accessible to all. Digital transformation, anti-corruption measures, and citizen engagement will strengthen institutions and build a governance framework that supports long-term stability.

Social inclusion and stability ensure that no one is left behind in the country’s development. Every Guyanese, regardless of background, must have a role in shaping the nation’s future. Empowering vulnerable communities, women, youth, and Indigenous peoples will foster unity and resilience. Expanding social safety nets, promoting equitable policies, and encouraging dialogue among diverse groups will build a more cohesive and prosperous society.

Infrastructure and spatial development serve as the physical foundation for economic expansion. A well-connected nation, with modern roads, ports, energy systems, and digital networks, enables opportunity and progress. Prioritizing high-impact projects such as highways, renewable and non-renewable energy grids, and rural connectivity programs will ensure that development reaches every corner of Guyana, facilitating economic growth and regional integration.

Revenue management is critical in navigating Guyana’s oil wealth. Responsible financial planning will determine whether the country’s current prosperity benefits future generations. A strategic approach to saving, investing, and spending oil revenues will be essential for sustainable development. Prudent management of the Natural Resource Fund, with a focus on education, healthcare, and infrastructure, will ensure that national wealth is distributed equitably and transparently.

Economic diversification is the key to long-term stability. A resilient economy cannot depend on a single resource. Strengthening agriculture, tourism, manufacturing, and renewable energy while fostering new industries like biotechnology and technology hubs will drive growth. Diversification reduces economic risks, creates opportunities, and positions Guyana as a regional economic leader. Incentivizing entrepreneurship, modernizing industries, and building global partnerships will establish a dynamic and competitive economy.

This vision for Guyana is one where every citizen has access to quality education, modern infrastructure, and economic opportunities. It is a future where the nation is recognized globally for innovation and sustainability. Nationally, this means an economy that uplifts every community. Regionally, Guyana can be a leader in CARICOM, fostering growth and collaboration. Internationally, it can become a model of sustainable development, defined not only by its natural resources but by its resilience and leadership.

This is a once-in-a-lifetime opportunity to shape Guyana’s future. Realizing this vision requires bold leadership, active citizenship, and a commitment to shared prosperity. In the coming discussions, we will explore each pillar in detail, outlining practical steps to transform this vision into reality. Now is the time to act—Guyana’s moment is here. Together, we can build a legacy of resilience, opportunity, and hope for generations to come.

Got ideas or questions? I’d love to hear from you at talkingdollarsgy@gmail.com. Together, we can shape the future of our beautiful nation.

The Guyana Business Journal is committed to fostering discussions on Guyana’s economic future. We welcome your thoughts on the pathways to sustainable development.  Please support the Guyana Business Journal and Magazine.

Budget 2025: Massive Spending, Under-Prioritizing Human Capital Investment

Dr. Ramesh Gampat

February 7, 2025

Introduction

Budget 2025 (B25) is a comprehensive, well-laid-out document. It is impressive how the Ministry of Finance/Bureau of Statistics assembled data for 2024 so quickly.  Less than a month after the old year ended, they gathered the data necessary to prepare the budget. The six Appendices at the end of the document are data-rich and a gold mine for those interested in quantitative analysis. For example, Appendix I contains data on electricity generation, population growth rate, net migration rate, crude birth rate, crude death rate, infant mortality rate, and under-5 mortality rate. Appendix II has data on GDP and its sectoral breakdown from 2012 to 2024. In general, data in these Appendices and elsewhere are final and are rarely, if ever, revised. Few countries manage the astounding feat of generating final GDP data in the first month of the new year. The speed with which the data are produced and the failure to revise them raise questions about their reliability.

I would like to see a list, probably as another Appendix to the budget document, of all significant infrastructural projects since 2020, when each began, estimated date of completion, estimated costs, an annual breakdown of expenditure, and all related documents (project, monitoring, evaluation, and so forth), links to documents, when the project was approved, and names of the contractor involved with the project. This will help to assuage concerns over transparency and accountability.

The PPP frequently emphasizes its budgets as the “biggest ever,” a recurring theme in Budget Speech documents. There are two possible explanations. First, the PPP’s long-standing socialist economic and political philosophy has historically favored large-scale capital projects, a common feature of socialist regimes, though many have resulted in costly, underutilized investments. This focus has often come at the expense of prioritizing health and education. Second, beyond economic reasoning, there is a political motive: showcasing ambitious infrastructure projects as a tangible demonstration of commitment to development—one that emphasizes physical expansion over direct investment in human capital.

Before proceeding, I’d like to note that this essay supplements what I wrote about the budget in a letter to Stabroek News on 25 January.

Structure of Budget 2025

The introduction to B25 is mostly about criticizing the APNU+AFC Government and praising the current PPP Government “in achieving, restoring, and safeguarding democracy in Guyana” (1.3: 1).2 The PPP highlighted some of its achievements in “the short space of four years,” including:

• Reversed and reduced over 200 punitive taxes and fees therefore reducing the burden on the Guyanese People by more than $40 billion annually
• Removed excise taxes on gasoline and diesel, saving consumers $90 billion per annum
• Created over 60,000 new jobs, across all sectors of the economy
• Distributed over 40,000 house lots and issued over 10,000 new titles and transports, and
• Transformed the face of the country, with public investment projects such as new highways, roads, bridges, schools, and hospitals, and private investment projects such as new ports, hotels, restaurants, offices, factories, warehouses, and showrooms, everywhere for all to see

Upgrading and expanding Guyana’s physical infrastructure is commendable and a prerequisite to facilitate rapid growth, structural changes, and diversification. The speed at which this is done, the extent to which there are synergies among roads and bridges, the quality of materials used, the quality of workmanship, and corruption – all of these raise serious questions about the durability of the physical infrastructure. Then there is the serious threat of sea level rise, which can flood a large portion of the coastal plain in the coming three decades or so: why is the PPP Government investing so heavily in the coastal plain?

Of course, it would be ill-advice not to develop public infrastructure on the narrow coastal plain where some 85-90 percent of the country’s population lives and where a significant fraction of the non-oil economy’s productive capacity is located. Rather than a single-minded focus on the narrow coastal plain, a more balanced approach to investment in public physical infrastructure on both the coastal plain and higher ground inland is a sound “insurance policy.”

The next major section of B25 is called “Developments in the Domestic Economy in 2024,” followed by “Sectoral Development and the Agenda for 2025.” The Appendices contain valuable data on various socio-economic indicators. Appendix VII contains an important table called “Actual and Projected Natural Resource Fund: Inflows and Outflows.” Inflows into the NRF comprise petroleum revenue deposits, which include the government’s share of oil profits and royalties, and nominal return, comprising interest income and capital gains. It is somewhat puzzling (revealing?) that the major component of petroleum revenue deposits is called “Government Share of Profit Oil” and not “Guyana’s Share of Profit Oil.” Oil profits belong to Guyana and its citizens and not the government, whether the PPP or the PNC. This grave anomaly must be corrected.

“The Largest Budget Ever”

Budget 2025 is massive: $1.38 trillion dollar (US$6.63 billion) or 20.6 percent larger than the previous year. It is 3.4 times as large as in 2021, which was when the PPP Government gained full control over the budget, its amount, and pattern of spending. As another indicator of size, Budget 2025 is 62.6 percent of non-oil GDP, up from 57.4 percent in the previous year, which is why B25 can only be described as “massive” or as a “spending spree.”

The document called “Budget 2025 At a Glance” says it is “The Largest Ever[,] Fully Financed without No New Taxes.” The government will be spending more than it collects in taxes, various kinds of revenue (rents, royalties, carbon credit flows, fees, fines, etc.), import and export duties, and external grants. Such unprecedented spending inevitably comes with a rising fiscal deficit, which is the difference between revenue and expenditure.

The PPP assumed office in August 2020 and gained complete control over the budget and spending pattern in 2021. In 2020, the APNU+AFC government operated without an approved budget for the first seven months due to the dissolution of Parliament in December 2019. The year was also marked by extraordinary challenges, including the COVID-19 pandemic, which necessitated increased government spending. The fiscal deficit for the year ultimately rose from G$29,926.2 million to G$90 billion, which is probably the most significant increase (growth of 201.2 percent) in the current century, driven by a combination of pandemic-related expenditures, revenue losses from tax reforms introduced in the PPP/C budget, and increased spending in the latter half of the year.

Growth of the fiscal deficit fell rapidly thereafter, reaching 30.5 percent in 2023, but then jumped to 85.5 percent in the following year and is expected to contract by 15.6 percent this year. In terms of dollar amount, the fiscal deficit rose from G$114,848.9 million to (3)  G$376,408.5 million in 2024 and is projected to fall to G$317,845.9. The fiscal hole in 2022 is expected to be 2.8 times as large as 2021, down from 3.0 in the previous year. 4

How large is the fiscal deficit in relation to non-oil GDP? Since most, if not all, of Central Government spending is done in the non-oil economy and since more than 85 percent of oil GDP is siphoned off by oil companies, the relative size of the fiscal deficit must be gauged by non-oil GDP. In 2019, the fiscal deficit was a mere 2.8 percent of non-oil GDP, which rose to 10.2 percent in 2021 and expanded to 18.8 percent in 2024. The “red” statistic is expected to fall to 14.4 percent in 2025. Such a high deficit relative to GDP raises a red flag about the sustainability of massive Central Government spending. See Figure 1 for a visual presentation of the fiscal deficit, both in millions of Guyana dollars and as a percent of Non-oil GDP.

How is the fiscal deficit financed? By borrowing domestically and from abroad. In 2024 and prior years, domestic borrowing was used to fund most of the fiscal deficit: 76.3 percent in 2023 and 75.4 percent in the following year. The current year, 2025, breaks that pattern radically: 94.3 percent of the fiscal gap will be closed by external borrowing. In other words, “The Largest Ever” Central Government spending is made possible mainly by borrowing from abroad and drawdowns from the NRF (more on later).

Figure 1. Fiscal Deficit: Amount and Percent of Non-Oil GDP

Note: Fiscal deficit as % of non-oil GDP is graphed on the right axis; in dollar amounts, on the left axis Source: Budget Document, 2022, 2024, 2025

A rapidly rising fiscal deficit and borrowing to finance it raise an essential question: what is happening to the public debt? The latter has two parts: domestic and external public debt. The external debt stock (EDS) expanded by 1.2 percent in 2020 and by 5.5 percent in the following year. This external liability aggregate has been growing rapidly during the current PPP Government. It is expected to grow by 64.8 percent this year, up from 26.1 percent in the previous year. In 2021, the EDS was US$1.4 billion, but it is projected to rise to 3.7 billion by 2025. That is, the EDS in the latter year will be 2.7 times as large as in the former. There is another startling fact: Guyana’s external debt stock in 0225 will be the largest ever! Fortunately, most of the EDS is long-term in nature.

The domestic debt stock (DDS) contracted by 0.8 percent in 2020, rose to 42.1 percent in 2022 and contracted for the next two years. It is expected to expand by 25.9 percent this year., a rate that is twice as fast as the previous year. In terms of dollar amount, the DDS stood at G$17.4 billion in 2020, jumped to G$32.9 billion the following year, and is expected to reach G$56.5 in 2025. That is, the DDS in the latter year will be 2.4 times as large as in 2021.

Natural Resources Fund

In recognition of the need to effectively manage the economy and the expected revenue windfall, the Government considered it necessary to strengthen sound public financial management to create legislation to establish an SWF ahead of first oil.  After a series of consultations with various stakeholders, including the private sector and civil society, the Natural Resource Fund (NRF) was established by the Natural Resource Fund Act 2019 to manage the natural resource wealth of Guyana for the present and future benefit of the people and the sustainable development of the country. The objectives of the NRF are to:

• Ensure that volatility in natural resource revenues does not lead to volatile public spending.
• Ensure that natural resource revenues do not lead to a loss of economic competitiveness.
• Fairly transfer natural resource wealth across generations to ensure that future generations benefit from natural resource wealth and
• Use natural resource wealth to finance national development priorities, including any initiative aimed at realizing an inclusive green economy.

There were no withdrawals from the NRF in 2020 and 2021. Withdrawals began the following year, and a total of US$3.196 billion was taken out at the end of 2024. Another US$2.464 billion will be withdrawn by the end of 2025 so that US$5.660 billion will be taken out since 2022. Withdrawals in 2025 will be 4.1 times as large as in 2022. As a share of the yearly closing balance, withdrawals increased from 47.8 percent in 2022 to an expected 76.4 percent in 2025 but are projected to decline thereafter, reaching 56.0 percent in 2028. As a share of net inflows (all inflows[1] less outflows), withdrawals rose from 47.8 percent in 2022 to an expected 95.1 percent in 2025 and are projected to contract thereafter, reaching 74.0 in 2028. It is interesting to observe that almost all of the inflows in 2025 will be taken out (inflows, US$2.591 billion, outflows, US$2.464 billion).

Figure 2 shows year-end closing balance of the NRF in millions, while Figure 3 shows deposits (Guyana’s share of oil profit, royalites and interests), both in millions of USD.

Figure 2. NRF: Year-end Closing Balance, US$M

Source: Budget Document, 2022, 2024, 2025

Figure 3. NRF: Inflows and Outflows, US$M

Source: Budget Document, 2022, 2024, 2025

Drawdowns from the Natural Resources Fund will finance 37.1 percent of Central Government Spending (TCGE), up from a quarter in 2023 and 27.8 percent in 2024.

Inflation: Not A Problem

Judging from coverage in the local press, including Stabroek News very impressive cost of living series, inflation is taking a huge bite off peoples’ meagre wages and income, but that’s not what the Ministry of Finance and the Bureau of Statistics say, as we shall see shortly.

Lest it be forgotten, the Consumer Price Index (CPI) is produced only for Georgetown but not for other parts of the country.  It is possible that inflation – positive changes in the CPI – could be higher in other urban areas and especially in rural areas and the hinterland.  Th empirics of inflation in Guyana is dated and no study has been done in the last two decades or so. In the meantime, the economy has changed in fundamental ways, consumer tastes and preferences have changed in major ways, Guyanese have more disposable income, expectations of inflation have changed, and corruption has become a far more serious problem that adds to cost of production.  The bottom line is that while we have an educated idea of the causes of inflation, it is difficult to say the extent to which any given factor, say, imported consumer fuel inflation.

Consumption of imported consumer goods, including food items, is widespread throughout Guyana.  Transportation and storage costs are higher in rural areas and the hinterland – imported commodities have to be properly stored and transported from Georgetown to other areas.  According to Budget 2025, inflation was “estimated at 2.9 percent” (3.37: 16) at the end of 2024 and projected at 2.8 percent for 2025 (5.12:92).  That is, the government holds the position that inflation was not a problem in 2024 and will not be a problem this year.  Yet B25 says that there were “severe imported price pressures” (3.37: 16) last year.  Growth in the importation of consumption goods was driven mainly by more imports of other durables and food for final consumption, which grew by US$59.4 million and US$34.5 million, respectively (3.22:13).

Inflation: Strategic Containment

The government “worked to strategically contain [rising] prices … Food prices … rose by 5.6 percent and contributed 2.8 percentage points of the overall rate. Within food, vegetables and vegetable products accounted for 1 percentage point, while meat, fish, and eggs and cereals and cereal products contributed 0.7 of a percentage point and 0.6 of a percentage point, respectively.” (ibid). There is some inconsistency in quoted passage: the data seems to mostly pertain to locally produced food products and less so to imported food projects, which, according to B25, was an important driver of inflation.

If inflation was less than 3 percent in 2024, why did the government “worked to strategically contain [rising] prices?” That question is not answered in B25. Instead, the document says that the “Government is firmly committed to “increasing disposable incomes and supporting a higher standard of living for all Guyanese” (3.39: 17) and proceeded to list numerous measures to “Easing the Cost of Living” in 2025.  These measures are extensive, laid out in eight pages, and placed into five (5) groups: (a) easing the cost of living; (b) supporting the vulnerable; (c) national insurance scheme; (d) improving business competitiveness; and (e)increasing disposable income (6.1 to 6.30: 95-102).  Table 1 at the end of this essay contains a summary of these measures which are estimated to cost G$240.50 billion or US$1.2 billion or 17.4 percent of TCGE.  Table 2 summaries the detail data in Table 1.

The costliest of these measures, which falls under the group called “Easing the Cost of Living,” is dubbed “Containing the Cost of Fuel.”  In place since March 2022, this measure is estimated to cost G$90 annually. The second costliest measure is the National Cash Grant which comes under “Increasing Disposable Income.”  Estimated to cost G$60 billion (US$287.77 million), the National Cash Grant of G$100,000 (about US$480) is available to all citizens 18 years and over.  At the end of 2024, 400,000 citizens registered for the grant.

Given the total costs and the amount per citizen, around 600,000 citizens are eligible for the grant.  With a population of about 1 million, it seems unlikely that 60 percent will be 18 years and older.  Perhaps that is why only 400,000 citizens have registered for the grant.  But here is also the issue of cost: how much will it cost to deliver the cash grant to beneficiaries and how long will it take?  We do not know and B25 mum about this, another example of the lack of transparency.

How will the money get to citizens? A citizen would have to make two trips to some center: one to register for the grant, and another to pick her check.  Since various cash transfers/grants have been in place for some time and are likely to continue into the future, Guyana should develop a national electronic funds transfer system like that of India’s National Electronic Funds Transfer (NEET), which is a nation-wide centralized system owned and operated by the Reserve Bank of India. Among other things, the NEET offers round-the-clock availability on all days of the year, near-real time funds transfer in a secure manner, a beneficiary does not have to go to a bank to make a deposit, positive confirmation to the remitter by SMS/e-mail on credit to beneficiary account, and so on.  Such a system would avoid trips, delays and frustrations, reduce administrative costs and corruption.  It is a fast, safe, efficient and less prone to corruption.

The five groups of measures noted above are commendable and consume 17.4 percent of Total Central Government Expenditure (TCGE) in 2025, as noted earlier.  A closer scrutiny will place them into three alternative categories: subsides, social welfare, and investment.  Based on my estimate, subsides will cost G$168.5 billion (US$808.15 million) or 70.1 percent of the total costs of the five groups of measures.  Investment will cost another G$42.5 billion (US$203.84 million) or 17.7 percent, and social welfare G$29.5 billion (US$141.49 million) or 12.3 percent.

Given the high cost of living and the large fraction of people living below the poverty-line, the social welfare measures are well targeted: pensioners, public assistance, a “one-off injection” into the National Insurance Scheme, and a universal health voucher “to help finance a basic menu of health tests” (para. 6.13:  98).  Since public health is free and billions dollars are poured into health care each year, the need for such a voucher would suggests that Guyana’s public health care system is still very basic and thus far away from what B25 says: “An extensive expansion and modernisation of the [health] sector has since been launched, aimed at making it a truly modern sector capable of delivering world class treatment and care to our citizens” (4.107: 39).

The investment measures include reducing the cost of electricity, a one-off grant of $100,000 to newborn babies and various tax adjustment, among others. Subsides include abolition of bridge tolls, containing the cost of fuel, reduction of freight charges, improve business competitiveness, the national cash grant, among others. Subsidies are a fiscal burden, often require substantial government spending, which can divert resources from other important areas like education or healthcare, increasing fiscal deficits and potentially leading to unsustainable debt. Subsidies can distort market signals by encouraging overproduction or overconsumption of certain goods. This can reduce the efficiency of the economy, leading to resource misallocation (e.g., overuse of fossil fuels or inefficient farming practices). Subsidy programs can be poorly targeted, benefiting wealthier households or large businesses rather than the people who most need the help. They can also lead to corruption, as companies and individuals might exploit the system to obtain undue benefits.

On the other hand, proponents argue that subsidies can be a tool for poverty alleviation, economic development, and stability, especially in volatile or nascent sectors, while opponents warn that subsidies can lead to inefficient markets, fiscal strain, and the entrenchment of dependency, which may undermine long-term development.

Inflation: Causes

What other factor(s) drive inflation besides imported food prices? Mostly interestingly, B25, which was prepared by the Ministry of Finance (MoF), apparently take it that inflation in Guyana is a monetary phenomenon: “like 2024, monetary policy this year will remain focused on containing inflationary pressures and maintaining exchange rate stability” (5.12: 92).  There is no evidence that monetary factors are the main drivers of inflation and B25 even admitted that imported food prices are a major cause, as noted above.  Nor does it seem likely that upward fluctuating exchange rate contributes to inflation.  Mean cambio selling rate, which is the price individual Guyanese and businesses pay to buy FX, say USD, rose from G$213.61 per US$1 to G$217.24 from January to September 2024.  That’s an increase of 1.7 percent, which implies that the rising cost of the USD (exchange rate) is not a major source of inflation.

In other words, Budget 2025 says one thing explicitly and another implicitly: that imported consumer goods is a main driver of inflation in Guyana but also that monetary factors, such as money supply and monetization of the deficit, fuel the inflationary process.  Further, since the exchange rate has been stable, it does not contribute to inflation.  What is more likely is that inflationary pressure is broad-based and not limited to the food component of the CPI.

In sum, if, according to the MoF, inflation is not a problem, then there is no need for the government to “strategically … contain prices.” It does appear, however, that inflation in Guyana is quite likely underestimated, the data are questionable, and the Ministry of Finance is confused about the causes of inflation.  There is a dire need to foster a culture of local research, which is very difficult in a country that does not value research and data.

Investment in Human Capital

Ultimately, development is about people and thus about the enlargement of freedom and security; otherwise, it is useless. Given the dire shortage of human capital in a robustly growing economy, the relatively low level of functional literacy, and, more importantly, technical skills, investment in human capital should take center stage in any plan to grow and diversify the economy.

The data is most revealing. During the APNU+AFC administration, investment in education and health averaged 7.5 percent and 8.9 percent of TCGE, respectively. The current PPP administration invested less in education (average of 6.1 percent) and about the same more in health (9.0 percent). To put the issue differently, these two critical areas of human development and, thus, the motive force of economic growth received 16.3 percent of TCGE under the APNU+AFC Government and more than a percentage point less under the PPP Government (15.2 percent). This is unsurprising as the PPP has historically under-prioritized investment in human beings, especially health, nutrition, and education.

It is sub-optimal to invest large amounts of scarce public dollars (even if that does not amount to a large share of TCGE) in the hard (physical) and soft (systems, rules, norms) dimensions of the health and educational sectors if the trained and skilled personnel are not in place to deliver the services. There are numerous health facilities in the country, and the government is still building more, but access to quality public health is still a major problem, especially outside of urban areas. Many of these facilities do not have adequately trained medical personnel or at least a full complement. Many of those who work at these facilities, especially those in rural areas, are barely conversant in English.

Take the Suddie Hospital on the Essequibo Coast. We Essequibians have a well-known saying: “people goh deh fo dead. ” I am not saying that these facilities are completely useless. Rather, I am saying that they deliver sub-standard health services on an untimely basis. If the public health and education system were functioning as intended, there would not be thriving private health and education sectors. In general, people with serious medical conditions must “join de line” at Georgetown Public Hospital, which has a long wait time. Alternatively, they go to private facilities to get quality care and pay an exorbitant price for something that should be free, according to the Constitution. Those with even more serious health conditions travel abroad to get treatment.

It is of vast importance that the Government cease creating white elephants throughout the country and start focusing seriously on equipping existing facilities with adequately trained and skilled staff, adequate, well-maintained equipment, and trained technicians.

Conclusion

Budget 2025 is the biggest in the country’s history; it is a historic budget. It continues to devote massive amounts to physical infrastructure projects, a source of widespread corruption and frustration. Infrastructural projects are necessary to accelerate development, but the quality of these projects and their maintenance leave much to be desired, to say nothing about cost and time overruns. More than a third of the massive spending is made possible by offshoring funds from the NRF. Even so, the fiscal deficit is large and growing and is expected to be over 14 percent of Non-oil GDP this year. The result is a precipitous rise of the public debt stock, both domestic and external. A grave shortcoming of the massive budget is the under-investment in much-needed human capital, given the dire shortage of skilled and unskilled laborers.

GDP and inflation data are open to question, and inflation appears to be considerably underestimated. The MoF argues that imported consumer products and monetary factors are major drivers of inflation but offers no evidence. It is baffling that inflation is under 3 percent, but yet the government doles out cash grants and various forms of subsidies to help people cope with the high cost of living. Various subsidies, including the National Cash Grant, amount to G$168.5 billion (US$808.15 million) in 2025. Budget 2025 is not free of contradictions.

Finally, since cash grants are likely to continue in the future, it is strongly suggested that the government develop a national electronic payment system, much like India’s National Electronic Funds Transfer. It will be less costly to administer grants, safe, efficient, less frustrating, and less susceptible to corruption.

Endnotes

1. I thank Dr. Terrence Blackman for his helpful comments on an earlier version of this article.
2. All citations/references in this article refer to “Budget 2025,” unless otherwise noted. My approach is to cite the paragraph in Budget 2025, followed by the page number. For example, “(1.3: 1)” refers to paragraph 1.3, page 1.
3. Note that while the fiscal deficit tripled from 2019 to 2020, it expanded by 201.2 percent during period. The first part of the previous sentence refers to dollar amounts, the latter to rate of growth.
4. One notable feature of Guyana’s annual budget, regardless of whether the PNC or the PPP is in power, is that the fiscal deficit is underestimated. For example, Budget 2023 projected a fiscal deficit of G$92,048.65 million, which turned out to be G$167,031.12 million; and Budget 2024 projected a fiscal deficit of G$198,737.09 million, which turned to be G$291,916.13 million.
5. A deficit of 14.4 percent of Non-oil GDP in 2025 seems unlikely for two major reasons: the Non-oil economy is expected to grow by 13.8 percent in 2025, which is about the same as the previous year, and the tendency of the MoF/BoS to underestimate the deficit reported in the Budget.
6. Inflows = Guyana’s share of oil profit + royalties + interest income + capital gains
7. There are only a handful of studies of inflation in Guyana: (i) Syfox, Cloyd. 1992. “Inflation in Post-Independence Guyana.  A Quantitative Analysis.  In Transition, Issue 19: 48-70; (ii). Gampat, Ramesh. 1995. “Inflation in Post-Independence Guyana: A Note on Syfox.” In Transition, Issue 24: 89-97; (iii) Gampat, Ramesh. 2000. “Exploratory Models of Inflation, 1960-1990.  In Transition, Issue 90: 49-97; and (iv) Solomon, Cyril. 2013. “Inflation in a Small Open Economy: The Case of Guyana.” In Transition, 42(1): 26-40.

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Dr. Gampat brings a wealth of expertise to this discussion. He holds a PhD and MA in Economics from the New School for Social Research, New York, with a strong focus on econometrics, as well as a BA in Economics from the University of Guyana, where he graduated with distinction. His extensive background includes training in Advanced Negotiation (Harvard University), and Management Training (UNDP). With decades of experience in economic analysis and public policy, Dr. Gampat provides a rigorous and insightful examination of Budget 2025.