-says positive growth underpinned by improved revenue collections

THE Economic Commission for Latin America and the Caribbean (ECLAC) has announced that Guyana’s economy is projected to expand by 3.5 per cent in 2018 as structural reforms begin to take hold and help to boost economic activity and accelerate the implementation of infrastructural projects.

According to the Commission’s Preliminary Overview of the Economies of Latin America and the Caribbean, favourable international prices and access to new markets are expected to provide impetus for increased rice production; and the output of the gold and services sector will continue to expand.

Government has already made significant strides in the process of stabilising the country’s economic position, especially with a budget of $267.1B for 2018, which was dubbed the largest budget in the country’s history.

During the first half of 2017, the Government focused on quickening the pace of spending under the Public Sector Investment Programme (PSIP) and instituting structural reforms geared towards promoting diversification and greening of the Guyanese economy.

The preliminary overview however indicated that in 2017, given Guyana’s high product specialisation, falling commodity prices continued to negatively impact export performance, while lower private sector investment, coupled with adverse weather conditions, led to declining output in key sectors, such as mining, sugar, forestry, and finance and insurance.

Those factors, although important to economic growth, would not hinder Guyana’s economy from achieving its expected overall growth of 2.9 per cent in 2017, ECLAC stated.

And, according to ECLAC, that growth will be fuelled by increased activity in the manufacturing (primarily rice), construction and other services sectors. Evidence of the projected growth was the fact that Government generated an overall fiscal surplus of $8.3B by mid-2017, relative to the G$0.82 billion surplus in the first half of the 2017 year. A fiscal surplus is defined as the amount by which government income exceeds spending.

REVENUE COLLECTIONS
This positive outturn was underpinned by improved revenue collections, up 13.1 per cent as increases occurred across almost all fiscal categories, particularly in income tax from both private corporations and individuals, as well as withholding, value added and excise taxes, ECLAC stated. “This more than offsets a 6.5 per cent expansion in current expenditure owing to increased employment costs and purchases of other goods and services,” outlined the report.

In this regard, ECLAC explained that there was a significant reduction in transfer payments, as disbursements to the Guyana Sugar Corporation (GUYSUCO) fell by G$2 billion during the review period. Further, the overview stated that a combination of procurement planning and capacity constraints, which led to delays in the implementation of projects under PSIP, meant that only 27.9 per cent of budgeted allocations were spent in the first half of 2017. In the real sector, growth in agricultural production slowed to 6.4 per cent in the first half of 2017, from 10 per cent in the same period of the previous year, as adverse weather conditions affected output.

INCREASED PRODUCTION
There was, however, a marked increase of 31.6 per cent in rice production during ECLAC’s review period, as farmers aggressively expanded sown acreage in response to favourable market prices, gains were made in penetrating new markets and the Guyana Rice Development Board (GRDB) progressed in fostering an industry shift towards value added. ECLAC indicated that the rice industry was the main driver of growth in manufacturing, increasing by 9.9 per cent during 2017.

Sugar remained stagnant since, according to ECLAC, although cane yields in terms of tons per acre were higher than the previous year, falling global prices and mechanical problems at the Skeldon estate meant that domestic sugar output declined 12.4 per cent during the first half of 2017.

The Government of Guyana however expressed its commitment to improving the economic position of Guyana. President David Granger had said at the launch of the inaugural Business Summit early this year that the Government of Guyana is open to dialogue and working with the members of the private sector in Guyana for the growth of the country’s economy even as he noted that the administration is focused on creating a business environment, which promotes investments, innovation and is governed by the appropriate institutional framework.