Let us not be distracted … our economy is growing

Aug 14, 2016 AFC Column, Features / Columnists

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The Business Support Organisations such as the PSC and the GMSA have been asking for our response to

the consistent yammering of the opposition, of their claims that the Guyana economy is tottering, that Government has no plans for the forward movement of the agriculture sector, or the manufacturing and food production sectors or of the fisheries and timber sectors.
The indisputable statistics are now out which prove that the economy has indeed grown in the first half of 2016. In fact, the trend of positive movement in the gold mining sector and with bauxite sales picking up, it is very possible that our growth figures will pass 4 percent by this December.
Last June, just before the release of the half-year report, Minister of Business, Dominic Gaskin was invited by the GMSA to speak with their members and clear the air with respect to the trajectory of the national economy. Below is an abridged version of his address.Globally Guyana is ranked 124th out of 188 countries on the Human Development Index, according to the UNDP 2015 Human Development Report. This ranking is based on four criteria – life expectancy at birth, mean years of schooling, expected years of schooling, and gross national income per capita.
The same report indicates 1.2% percent of our population is in severe multidimensional poverty. Multidimensional poverty factors in deprivations in areas such as health care, education and standard of living, in addition to simply looking at income levels.
On the World Bank’s Doing Business 2016 Index which measures the ease of doing business in 189 countries, Guyana is ranked 137th.
In 2015 Guyana’s economy grew at a rate of 3%, down from 3.8% in the previous year and 5.2% in 2013. Our GDP for 2015 was approximately US$3.2B. Our total public debt stood at US$1.5B at the end of 2015 and this year’s budget deficit was G$40.9B.

UNEMPLOYMENT
The rate of unemployment is generally defined as the percentage of the total labour force that is unemployed and is seeking work or willing to work. For years we have not been compiling and publishing this data. Every successful economy in the world pays very close attention to unemployment data, because it is one of the main benchmarks used to assess the Government’s performance.
But how can this government craft a comprehensive targeted strategy to address unemployment when there was no available data to indicate the extent and locations of the problem? We are, however, beginning to put measures in place to reduce unemployment.
In Guyana, the sectors that provide the best opportunities for direct employment are bauxite, sugar, rice, gold and timber.

GUYANA IS NOT IN CRISIS
Most of the private sector seems to embrace the opinion that this economy is in crisis. Please do not get distracted by this because it is a notion! Guyana recorded 2 percent national growth for the period January to June 2016 which was largely attributed to the mining and quarrying (65.7%). Gold production grew by 94.3% and bauxite by 2.9%.
Positive growth was also recorded in the “other crops” sector including livestock (0.8%) and fisheries (2.1%).
There are many reasons we could ascribe to the growth Guyana recorded in 2013 (5.2%); in 2014 (3.8%) and 2015 (3%). You are aware of many of those circumstances such as private sector unease during the election year as well as the period (2014) during the prorogation of parliament.
In 2016 January to June, the manufacturing sector contracted by 14.1% mainly due to reduced rice and sugar production. El Nino played a role in this, as did the loss of some overseas markets. However, there are many reasons for us all to be very optimistic that the budgeted forecast of 4.4 percent growth for year 2016 will be realized. The forecast for gold production in 2016 has moved up to 650,000 ounces, and the outlook for the forestry sector is not bleak.
The Guyana economy is not in crisis. Take a look around. Venezuela’s socio-economy is in crisis, Brazil’s is in trouble with negative growth for the second consecutive year; Trinidad and Tobago is projecting negative growth of 2% again; Barbados is unlikely to grow by more than half of a percentage point this year; and Suriname’s economy grew by just 0.2% in 2015.
A green economy, powered with affordable and renewable energy, driven by foreign earnings derived from exports of a range of value-added goods and services, is well within our means. So is the sustainable growth of this economy and the sustainable exploitation of our natural resources.
Guyana is now a signatory to the 2030 Agenda for Sustainable Development which is made up of 17 Sustainable Development Goals to end poverty, fight inequality and injustice, and tackle climate change by 2030. Each of these goals is further broken down into a set of very specific, targeted and time-bound objectives and we are committed to these targets.
In addition, we fully intend to prioritize the development and improvement of infrastructure in order to make our economy more attractive and more competitive. This includes our national transportation network such as roads, aerodromes, bridges and ports; our energy infrastructure; our information and communication technology infrastructure; and our sea defense.
This is the platform on which Guyana will become a model for sustainable economic development, and this is the model that our government is asking you to believe in and to invest in, because the private sector is an important stakeholder in Guyana’s economy.
But as a government we cannot expect you to invest in a vision, even if it is a shared vision, unless you are confident that we know what we are doing and we have solutions to the problems you face. Even though our economy is not in crisis, the indicators do reveal several areas in which a lot of work needs to be done if we are to encourage investors, local and foreign. Those areas include:
*Reforming the taxation regime
* Revamping the Customs logistical process for importing and exporting goods
* Improving electricity services from application to supply to charges
The Ministry of Business is currently working with a team from the World Bank on a programme to tackle the indicators laid out in the “Doing Business” Report. Legal and ICT consultants were recently engaged to identify the legislative requirements through which we could better regulate and protect our businesses, and the ICT deficiencies that need to be corrected to allow government to provide better services for businesses.
We are also working on developing an electronic trade facilitation system for processing in one transaction, all imports and exports, licenses and permits. It’s called the Single Window Automatic Processing System (SWAPS). The business associations have been calling for this system for many years now and we intend to fast track this acquisition.
A lot of money will have to be spent and none of it will happen overnight, but we will see these reforms through, because we know that these are the things needed to transform our country.
Guyana has been receiving a lot of attention since the 2015 announcement by ExxonMobil of the find of large quantities of hydrocarbons in our EEZ. Companies and individuals from around the world are now giving us a closer look. When oil flows, money flows and everyone wants to participate.
We welcome the attention and the benefits. Word gets around about the experiences of international companies in different countries and we must all bear that in mind. Our private sector needs to make the necessary preparations for increased economic activities even before oil production. We cannot sit back and expect to benefit from what will happen.
I urge you to learn fast about how the oil industry works and what the demands of an offshore oil industry are likely to be. While the prospect of Guyana becoming an oil producing nation is certainly an enticing one, the benefits could be illusionary if we allow ourselves to be misled into believing that this will automatically transform our economy and provide the good life to all of us.
Let us not be distracted from pursuing our own vision for Guyana’s economic development because it is that vision that will show us the ways to maximizing the benefits.

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