Macro-economic stability spawned favourable investment climate – Dr. Singh
…says diversification of economy realised
Minister of Finance, Dr. Ashni Singh, has said macro-economic stability is inextricably linked to Guyana’s favourable environment which is attracting investment; and for this reason, “we have pursued that objective with a very strong focus.”
He made the comments during an exclusive interview with the Guyana Chronicle on Friday, when he spoke predominantly about the 2011 national budget to be presented today. The Minister said Guyana’s economy has achieved a level of diversification which has aided in its resilience to the shocks due to the non-performance of any one major sector.
Dr. Singh said over the years, Government has been embracing a macro-economic policy framework that lends itself to macro-economic stability and growth. “And I believe we have achieved this, as demonstrated by the performance of the economy over the recent years,” he said.
On the importance of macro-economic stability, the Minister said an investor and even a private citizen does not wish to preoccupy themselves with questions of what the value of their investment or what the value of their assets will be “tomorrow. “
“They do not want to be concerned with exchange rate fluctuations, about interest rate volatility, about price volatility. instead, they want to know that when they make an investment, that the value of that investment will be preserved and that it will grow; and they want to know that risks associated with things like interest rate fluctuations, currency fluctuations, those risks are minimised,” he said.
“As you know, the economy has continued to grow. Certainly at the mid-year we recorded positive growth. I will make this observation, and it will be expanded upon in the budget, that the resilience that we are observing in the Guyanese economy is not by accident. It is in fact the result of very deliberate policy stance and I believe that it is evidence of the progress that we have made in strengthening the fundamentals of our economy, including diversifying the sources of growth,” he said.
The minister said that there was a time when one dominant sector of the economy did poorly, the entire economy did poorly.
“That has changed now and we are not susceptible any longer to the vagaries of one single sector. No one sector occupies a dominant position. The economy has already achieved a significant degree of diversification, to the credit of our policy position and Guyana’s private sector,” he said.
Dr. Singh pointed to sugar as one example, where the industry’s woes do not negatively affect the entire economy.
“Guyana’s private sector has been investing and has been very much a part of Guyana’s diversification,” he said, adding that a lot of the services offered are in response to the policy framework created by Government. “People are investing and expanding their businesses and you see it in every region in Guyana. You have a very vibrant private sector in Guyana and that is a signal of confidence in the economy,” he said.
Speaking to the Guyana Chronicle in an interview on Friday, Chairman of the Private Sector Commission (PSC), Ramesh Dookhoo, said the Guyanese economy is in a position of stability, as the country prepares for budget time.
He said that as expected, there should be a lot of spending in the social sectors to drive the economy and create employment. “Because of recent economic successes, we will have a larger budget [than last year’s, which was $143 billion],” said Dookhoo. Further, he said Government has been maximising tax-collecting opportunities.
But he said that one issue that should be revisited by the Government is that of personal income tax. “We would be encouraged if this is revisited, but we know that the chances of this happening are slim,” he said.
He said that with the economy performing creditably over the past years, and with the resilience that has been built into it, there is a real case for the revision of personal income tax so that the working public could benefit. He also spoke of relief desired in the area of Corporate Tax, one of the ever-present bugbears of the business sector. He said too there is thinking in the direction of its eventual revision and the Private Sector welcomes this.
He noted that a revision of Guyana’s Corporate Tax will bring the country more in line with other countries in the region and will be a fillip for investment from overseas and locally, saying that it will make Guyana just as competitive as these places. “It will fuel more success…more people will come into the tax net and it will encourage people to invest,” Dookhoo said. Further, he said that Guyana has the right package of incentives for investors to enhance this competitiveness, and Guyana must take credit for this.
Dookhoo pointed out that the PSC is working along with many Government agencies to improve the process of starting a business and addressing trade facilitation issues, all with a view to making Guyana a better place to invest. He said too, that with the growing number of Guyanese businesses and investments, the relevant Government agencies are hard-pressed to keep up with their growth and need additional capacity.
On the question of budget consultations between Government and the private sector, Dookhoo said that this once-yearly ritual is not as relevant as it used to be, given the many channels of communication that exist between Government and the private sector.