Guyana’s best economic days are ahead

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by Correspondent

 

Guyana has a plenitude of natural resources, including fertile agriculture lands; vast areas of tropical hardwood forests of various ecosystems; a multitude of plant and animal species, abundant fish and shrimp grounds, both in its numerous rivers and in the Atlantic Ocean; and a wide variety of minerals, including gold, diamonds, a range of semi-precious stones, bauxite and manganese.

These provide real opportunities for private sector development, sometimes on their own, in partnership with foreign and local investors, and/or in partnership with the government. Moreover, because of its many rivers and close to 365 days of sunshine, its potential for renewable energy sources, including hydropower, is immense.

Guyana also found in its backyard, oil otherwise known as black gold in addition to mineral gold-yellow gold. We have rich agricultural lands-brown gold. We have an abundance of water-liquid gold. We have incredible weather devoid of hurricanes- nature’s gold and we have an incredible diversity of races-human gold

Added to that golden list is the known fact that Guyanese worldwide are renowned for their “golden” hearts.

 

 

So, why does Guyana find itself in today’s paradox of being one of the poorest countries in CARICOM and the Western Hemisphere, while sitting on a treasure trove of national endowments and riches? Why is our growth rate so anaemic?

Why is our unemployment rate hovering between 10 and 20 percent, as suggested by some reports, with even higher rates in hinterland and rural areas, and in communities such as Linden? Why is our savings rate so low, at just about five percent of Gross Domestic Product (GDP)? Why is our poverty rate over 36 percent ?

Finance Minister , Winston Jordan attempted to explain why this is the case. He said that principally, as a result of high gold prices, which fuelled an upsurge in gold production; and a special arrangement, under PetroCaribe, which allowed for a premium price to be paid for over 100,000 tons of rice and paddy, the economy averaged in excess of four percent growth up to 2013. However, by 2014, growth had slipped under four percent and was under one percent in the first half of 2015.

 

 

While the fiscal deficit remains manageable, the Finance Minister said that Guyana’s debt situation, at over 65 percent of GDP, would be a challenge to the public sector’s ability to provide the necessary infrastructure and other facilities and services.

He noted that the World Bank is unflattering in its assessment of doing business in Guyana.  According to the Doing Business indicators, Guyana’s overall rank is 123; cost of starting a business (percent of income per capita) is 11.5 percent; it takes an average of 195 days to deal with construction permits; 442.9 percent of income per capita goes into getting electricity; it takes an average of 75 days to register a property; and the total tax rate is 32 percent of profit.

 

 

Jordan said that there is vast room for improvement, if Guyana wants to encourage the private sector to make a meaningful contribution to economic growth and the reduction of poverty.

He said that as a nation we must be keenly alert to the vulnerabilities and challenges which our economy faces.

He said that the business sector represents an engine of growth and employment in this country.  However, this sector faces obstacles, including access to finance. The Finance Minister expressed that environmental vulnerabilities are ever present and can have detrimental effects on the economy.  He said that Government will however,  deal with rainy seasons, flooding, and droughts.  Jordan said, too, that there is a very high probability that at least one of these phenomenon will occur each year.

 

 

By mid-year 2015, Jordan expressed that the forestry, sugar, rice, and fisheries sub sectors had all been affected by environmental factors, resulting in lower economic activities and, by implication, lower growth in our GDP, export activities and balance of payments.

He said that the effects of climate change now requires investment in climate change adaptation and disaster risk management, which, though challenging, present new opportunities for private sector involvement.

The Finance Minister said, “We operate in a competitive world, where countries produce similar products and often, much more efficiently than we do.  Guyana’s economy still depends heavily on the production and export of primary commodities. We have vulnerabilities due to export and import concentration.  If there are global price and demand changes, these shocks are felt throughout the economy, including our balance of payments. Yet repeated budget speeches of the past administration point to the ‘resilience to the economy’, while failing to acknowledge and recognize that the economy’s characteristics have changed little in the last 50 years.”

He continued, “Maintaining a stable political climate remains a priority for this Government.  As we experienced over the last 12 months, the prolonged political contretemps of prorogation, dissolution and the eventual holding of elections engendered a lack of confidence in the future, reflected in delayed investment decisions, a fall-off in investments, and reduced public and private sector spending. The consequence of all of that was the inevitable contraction of the economy.”

 

 

The Finance Minister added, “However, encouragingly, the data for private sector credit for the third quarter have shown growth, indicative of an improvement in private sector outlook. We must also keep in perspective that Guyana’s economy is producing, in many cases, with aged machinery and aged production processes. These otherwise uncomplimentary characteristics do not have to continue to be structural impediments to growth.”

He assured that Guyana can grow from this, if all continue to be energetic, fearless, imaginative, and wise.

Jordan stressed that Guyanese need to be the initiators of policies, projects and programmes that aim to harness the creative potential of the private sector into the reality of sustainable development of our country. He said that Guyanese must release the productive force and entrepreneurial spirit of individuals, companies and groups. In this regard he commended that, “Guyana’s best days are ahead.”

I firmly believe that Guyana with the correct rebalancing of our economy, and with strategic interventions both by the Government and the Private sector, will achieve the “potential” about which we keep hearing.

 

 

How can this be accomplished? Well,  the Finance Minister recalled that President, David Granger, has called for Guyana to become a “green economy”. He reminded that the President reaffirmed this call on the international stage when, on September 25, 2015, he signed the 2030 Agenda for Sustainable Development at the United Nations with over 190 other World Leaders.

“This is our President’s vision for prosperity. This is our country’s blueprint for sustainable green development,” Jordan remarked.

This 2030 Agenda has also been adopted by the Global Private Sector. Hence, for the first time, all development partners-Governments, the Private Sector, Civil Society and International Development Institutions, are in agreement on the social, economic and environmental dimensions of development, as well as the means of implementation of this Agenda, namely, finance, technology and human capital, among others.

The Finance Minister said that Government is committed to the 17 goals and 169 targets of the 2030 Agenda for Sustainable Development.

The 2030 Agenda for Sustainable Development gives Guyana the architecture to achieve all that it needs to while allowing for individual and collective prosperity. Its 17 goals are full of high growth opportunities and potential for all of us.  The goals include : bringing an end to poverty, bringing affordable and clean energy, ensuring industry innovation and infrastructure and bringing an end to hunger.

In this light, he said that Guyana’s manufacturers, must be able to see the opportunities inherent in these few goals alone and therefore it should provide an economic paradise for them.

He stressed that manufacturing in Guyana must become a key driver of rapid economic growth, and the associated creation of employment, both directly and indirectly. The Finance Minister said that there is considerable accumulated evidence that manufacturing still functions as the heart of the economic development process.

He said that there are success stories around the world which demonstrate the power of manufacturing-led growth. He listed some of the success stories to exist in countries like: Brazil, China, Indonesia, Japan, the Republic of Korea, Malaysia, Singapore, Taiwan, China and Thailand.

 

 

The Finance Minister said that in order for Guyana to transcend its sugar, rice and other product issues, it must manufacture. Jordan emphasized that those within the sector must add value.

He said that stakeholders in the various sectors must use technology and innovation to become globally competitive. The Finance Minister asserted that the “old” Private Sector must lead in the effort to adopt new technologies and to be more innovative.

Jordan concluded that what Guyana needs is cheap energy to open the floodgates of manufacturing along with good economic and political governance to open the floodgates of prosperity.

 

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