…CDB urges end to political uncertainty
The Caribbean Development Bank (CDB) says Guyana is on the verge of a sharp increase in economic growth this year but immediate prospects partly depend on ending political uncertainty.
In a country brief released on Wednesday the CDB said in his November 2018 budget speech, Finance Minister, Winston Jordan was targeting 4.6% GDP growth in 2019, with all major sectors contributing. However, the Bank said increased political uncertainty in early 2019 may dampen this momentum. The uncertainty to which the bank refers is the
Opposition no confidence motion, which was passed in the National Assembly on December 21, 2018. It is alleged that the opposition might have induced former Government Member of Parliament, Charrandas Persaud to vote with it on the motion, thus allowing the motion to pass. Government has since challenges the validity of the vote on several grounds. The matter is currently before the Court of Appeal.
In addition, the CDB said economic growth in Guyana increased to 3.4% in 2018, which was mainly due to increased construction activity. Sugar output fell as restructuring of the industry continued, while there was mixed performance in the extractive industries. Fiscal performance was boosted by a tax amnesty, which increased revenues and helped stabilise the overall deficit. Public debt as a percentage of gross domestic product (GDP) increased.
The CDB also noted that preparation for oil production continues, noting that commercial production is due to commence in 2020. This, the bank said will increase economic growth and provide windfall revenues for the Government of the Co-operative Republic of Guyana.
The Bank said the proposed Natural Resources Fund (NRF) is supposed to help manage the risks associated with this new development, including minimising negative impacts on other non-oil industries. Reforms to the ‘doing business’.. environment are also necessary to ensure that non-oil industries can become more competitive. Other risks include political uncertainty.
For 2018, the CDB noted that economic growth is estimated to have risen in 2018. It said based on Ministry of Finance data, GDP grew by 3.4%, compared with 2.2% in 2017. This partly reflected preparation for the first commercial oil production in 2020. Construction activity rose by 12%. Output from other services was up 15%, linked to increased visitor arrivals.
Of the traditional main industries, sugar output fell by nearly 30%. However, the Bank noted that the government has commenced a restructuring programme of the Guyana Sugar Corporation (GuySuCo) being financed by a 5-year external bond issue for $30 billion. This restructuring includes reducing the workforce and divesting assets, in order to reduce subsidies. Further, the B ank observed that the mining industries had mixed fortunes in 2018, noting that gold extraction declined, mainly due to falling declarations by small and medium-scale miners. However, bauxite production was up, and declarations of diamonds, sand and stone increased.