TODAY is Budget Day and the government has signalled that its main thrust will be building on the gains achieved during last year. Initial indications are that there was favourable economic growth in 2009 in the midst of a deep recession in the world economy that experienced a decline after nearly two decades of positive economic growth. Growth recorded here in 2009 was driven mainly by output in the production of gold buoyed by the most favourable price in the international market that topped the US$1200 per oz mark in 2009.
Rice production also recorded a high level of output but the performance of sugar and bauxite, the two other pillars of the economy, was flat in 2009.
Effective monetary policy by the Central Bank ensured the stability of the Guyana dollar for the longest period despite the turmoil experienced by the countries in the Caribbean with their exchange rate and balance of payments in 2009. The exchange rate remained very stable at G$200 vis a vis the US dollar and stable at both the nominal and real exchange rate level.
Inflation remained stable and the stable price level was due mainly to the decline in the import price of fuel as well as other critical consumer prices in 2009.
Analysts say the outlook for economic growth in 2010 looks positive but the economy will have to grow at a faster pace in the medium term to catch up with the lost decade of the 80’s.
While the economic base must be diversified away from primary commodities, the critical challenge is an improvement in the overall production and productivity levels.
Finance Minister Dr. Ashni Singh told the Guyana Chronicle over the weekend that this year’s budget will reflect the government’s consistent emphasis on particular development themes, such as preserving macro-economic stability and investing in expanding the country’s physical infrastructure.
As we noted in this column last week, the government has commendably been investing massively in improving infrastructure such as roads, schools, hospitals and health centres and housing schemes and Dr. Singh said this will continue.
He explained that the deliberate emphasis on expanding the physical infrastructure is because of its important role in enabling economic growth and improving the quality of life of Guyanese.
The Finance Minister reported that Guyana’s economic performance last year indicated relative resilience and the global effects did not threaten macro-economic stability.
“In fact, we have been able to preserve such stability and continue to grow”, he reported.
Head of the Presidential Secretariat Dr. Roger Luncheon last week also indicated that the 2010 Budget will reflect increased expenditure, job creation and job security with emphasis on monitoring and evaluation.
By all accounts, Guyana has managed to weather the impact of the global crisis better than many other countries in the Caribbean, some of which have seen rising unemployment, wage freeze and other harsh consequences.
The global crisis is not yet over and if the country is to build on these gains, overall production and productivity has to be increased.
It is clear that the economy can do without the unnecessary strikes and industrial conflicts that surfaced last year and all stakeholders will have to display a greater level of maturity in addressing national issues.