Minister Irfaan Ali adumbrates Budget highlights
INITIATING the budget debate from the government side of the House in the National Assembly last Tuesday, Minister of Housing and Water, and acting Minister of Trade and Tourism, Irfaan Ali, said Budget 2012 was a landmark budget in many regards, being the 20th successive budget presented by the PPP/C government since it was democratically installed in 1992. It is noteworthy, he asserted, that no democratically elected government in Latin America and the Caribbean can boast of achieving this feat. First outlining the fundamentals leading to the current healthy state of Guyana’s economy, Minister Ali then spoke broadly to successive PPP/C Government’s developmental agenda, policies and programmes.
Conceding that much more is needed to be done, the minister continued as follows: “Not only have Guyana’s rates of GDP growth improved, but so too have the macroeconomic fundamentals and key social indicators. For instance, the fiscal deficits and public debt have been on a downward trajectory since 2006. The public external debt estimated at 47.0% of GDP is one of the lowest in the Caribbean; a marked improvement relative to ratio of over 600% in 1989. Inflation has been contained in the low single digits and the nominal exchange rate is broadly stable against the US dollar. Meanwhile, key social indicators have improved. Extreme poverty was estimated at 18.6% in 2006, down from 29% in 1992 (Inter-American Development, Bank, 2008). Guyana’s Human Development Index rose from 0.606 in 2000 to 0.633 in 2011. As a result of these improvements, the country is now categorised as a medium human development country, having moved up two points in the 2011 Human Development Report, ranking 117 out of 187 countries.” In the same vein, he noted, “To a large extent the country’s economic progress since 2006 may be attributed to the enhancement in governance framework and sound macroeconomic policies. The improvement in governance is clearly evident from the World Bank’s Country Performance and Institutional Assessment (CPIA) score. At the end of 2009, Guyana’s CPIA score stood at 3.4 – compared with an international benchmark of 3.5. Even though the overall score remained unchanged since 2005, there were notable improvements in the areas of economic management during the period 2006-2008. In the area of policies for social inclusion/equity there were also considerable improvements; this coincides not only with the economic expansion, but the social and political stability enjoyed over the past five years.” According to Minister Ali, the stable social and political environment, coupled with Guyana’s ‘pro business polices’, have contributed to the improvement in the local business environment which, in turn, is responsible for the massive foreign and domestic investment the country attracted between 2006 and 2011, with Foreign Direct Investment (FDI) trending upwards between 2006 and 2010 and eclipsing the levels reported in the early 1990s. He opined that it is also noteworthy that a significant proportion of the FDI inflows went into the transportation and telecommunication, and mining and quarrying sectors during the period of 2004-2011. When combined, he asserted, these sectors attracted over 80 percent of the total foreign investment between 2004 and 2006, and more than 50 percent of the total foreign investment from 2007 to 2011. The energy and manufacturing sectors, according to Minister Ali, for the first time benefitted from significant foreign investment, while the tourism and hospitality and agriculture sectors continued to attract these inflows.
Continuing his highlights, the minister stated that over the past five years the domestic financial sector has also played an important role in extending credit to the local private sector due to the easy monetary policy stance of the Central Bank. Based on the official statistics from the Bank of Guyana, the minister listed some of the advantages afforded, with domestic credit to the private sector increasing from $67.2 billion in 2006 to $94.2 billion during 2011, which facilitated all the major sectors of the economy, including the agriculture, mining and quarrying, manufacturing and services sectors benefitting from higher loans and advances from the commercial banks: He averred that the household sector has also benefitted significantly from the expansion in credit from the commercial banks and that interest rates also trended downwards during this period, with the average lending rate declining from 13.2 percent in 2006 to 11.68 percent at end of 2011.
Meanwhile, he added, the mortgage rates by the New Building Society moved from 7.5 percent at the end of December 2006 to 6.85 percent at the end of December 2011.  Underpinning Finance Minister, Ashni Singh’s assertions during his budget presentation, Minister Ali reiterated that the country has made considerable progress towards achieving the MDGs as documented in the Millennium Development Goals (MDG) Progress Report 2011.
According to the minister, amongst the MDGs already achieved are nutrition and child health, and MDG 1 (hunger targets), as acknowledged by the FAO in Rome, while those on course to being achieved include education, water, sanitation and HIV. He avowed that these results also confirm the success of Guyana’s social programmes. Basing his arguments on the results of the government programmes over the last six years, Minister Ali contended that there should be no reason for changing course at this juncture in our history, but that it is advisable to instead continue to pursue the programmes and policies, as set out in the 2012 budget, in order to achieve the national priorities of job creation; the provision of housing (or shelter)for all, especially the poor; the transformation of the economic base so that the economy is more resilient to external shocks; improvement in the competitiveness of the economy; the improvement in Guyana’s human capital; delivery of better quality social services; strengthening the national institutions responsible for safety, security and justice; promotion of positive and stable economic growth; creation of a friendly business environment to encourage both domestic and foreign investments; maintaining fiscal prudence; equitable distribution of the country’s wealth; and the protection of our environment, among many others outlined in Budget 2012.
To achieve the foregoing, he cited examples of budgeted expenditure, policy priorities and socio-economic benefits and impacts, cutting a wide swath across all the sectors. In conclusion, the minister said “…though it may be hard to digest, the PPP/C Government has been charged by the citizenry of this country to continue progress. Any analysis of the socio-economic environment of this country will show the impressive management of the Guyana’s economy under the PPP/C leadership. And it is abundantly clear that investment is flowing in, that private sector initiatives are expanding, new sectors are developing, jobs are being created, and governance is improving… let progress continue as we unite in our purpose of prosperity for all Guyanese.”