Latest update November 27th, 2024 1:00 AM
Dec 28, 2010 Features / Columnists, Peeping Tom
As the year winds slowly down to an end, it is time to reflect on some of the more important developments of 2010.
The economic scorecard is mixed. For the fifth straight year, Guyana will enjoy a positive but moderate growth rate. This is good and bad; good in the sense that the economy is not retrogressing and has seemingly emerged from the slump that it had found itself since 1997 when the high growth rates began to collapse.
For five straight years, the economy has registered significant growth based on the performance of certain commodity goods, but primarily because of the stimulus provided by huge public sector spending within the local economy. This year is no different and the economy is once again expected to register growth, according to the International Monetary Fund, of just under four per cent.
However, major sectors of the economy remain in a deep crisis. Sugar, for example, is in deep recessions, with this year expected to register the lowest production in decades. Unless the industry can turn around in the first crop of next year, something that is doubtful, the industry faces an uncertain future, and more and more persons are likely to leave the industry, thereby creating a severe manpower shortage for a sector which has long prided itself for its contribution to overall national employment.
Gold prices on the other hand remain very high. And thousands of Guyanese are benefiting because of these high prices, as are foreigners involved in the sector. Greater investor interest has also been created, with many foreign companies expressing interest in medium- and small-scale mining permits.
As glittering as gold looks, however, there is a great deal of uncertainty over the future of the industry. Some operators are concerned about the possible impact of environmental concerns on the future of the industry, considering the agreement that Guyana has signed with Norway.
The government needs to read these concerns and respond to them, since rumours and uncertainty can be extremely damaging to the performance, and can force many miners to seek their fortune in other areas. This would be a travesty considering the thousands of small miners for whom gold mining is a lifeline.
The fortunes of the rice sector have been historically tied to international prices and the weather. When prices are high, farmers do well but when they are low, as they often seem to be, farmers suffer great losses. There have been futile attempts in recent years to try to offset the effects of adverse weather. And so the rice sector remains highly volatile.
Instead of considering expensive and unaffordable crop insurance, the government should appreciate the broader lesson of national economic performance and seek to apply these lessons to the rice sector.
What has been primarily responsible for Guyana’s consistent growth over the past five years has been the stimulus that public spending has had on the economy.
A number of major investment projects such as the Berbice River Bridge, the National Stadium, and the Skeldon Sugar Factory have had a tremendous impact on the service sector, and this trend is likely to continue into the future.
The lesson here is that Government is capable of ensuring greater stability within the rice sector, not only by its continuing emphasis on infrastructural works, but by commandeering the purchasing and selling of rice as was done in the past.
The government has managed to secure important markets for rice, including the market in Venezuela. Yet, the industry remains at the mercy of private millers and exporters, who in turn complain about the volatility of international prices. The government needs to get directly involved in the purchasing and sale of rice so as to cut out the middle men and ensure a fairer deal for farmers.
As good as rice looks at the moment, production will, within a few years, reach its limit and as long as farmers remain susceptible to the prices offered by millers, there will be uncertainty.
As promising as the economy looks, therefore, what is emerging is a picture of great uncertainty in the pivotal sectors of the economy. To overcome these uncertainties requires a certain vision, one that should define the respective roles of the State and the private sector, so that in as much as growth is taking place, the underlying lack of certainty within the critical sectors will be removed and there will be greater confidence for the future of Guyana.
Nov 27, 2024
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