–greater output expected this year with second oil-producing vessel, emphasis on non-traditional crops

DESPITE the debilitating effects of COVID-19 and those brought on by periodic floods in 2021, Guyana’s economy remained resilient and productive as a result of prudent management and effective fiscal planning.

This resilience was reflected by the country’s ability to not just satisfy local demand, but also its obligations to international and regional markets.

As outlined by Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, during his presentation of Budget 2022 on Wednesday last, the country recorded a 68 per cent increase in export earnings last year. Specifically, the country earned US$4.3 billion in 2021 juxtaposed to US$2.5 billion in 2020.

“This was mainly driven by oil exports growing by 179.6 per cent to US$2,975.5 million [US$2.9 billion] amid increases in both volume and price,” Dr. Singh said, adding that non-oil export earnings amounted to US$1.3 billion.

Matching the intensity of the rise in exports was total import payments which grew by 90.8 per cent to US$4.2 billion.

This, according to Dr. Singh, was on account of the arrival of ExxonMobil’s second floating production storage and offloading (FPSO) vessel, Liza Unity, which accounted for US$1.6 billion or 38.6 per cent of total imports for 2021.

But even with the unavoidable increase in imports, the country’s export earnings are projected to increase yet again this year, as a result of a projected increase in crude oil exports by 107.7 per cent to US$6.1 billion.

This growth will be stimulated by the operations of the very Liza Unity FPSO, which will be servicing ExxonMobil’s Liza Phase Two development project. The vessel will produce up to 220,000 barrels of oil per day, and will be supported by a total of six drill centres and approximately 30 wells.

This includes 15 production wells, nine water injection wells, and six gas injection wells. Liza Phase Two start-up is expected in early 2022 and will develop approximately 600 million barrels of oil.

The Liza Phase Two project will be followed by the Payara project, for which the Prosperity FPSO vessel is being developed.

Outside of the lucrative oil and gas sector, the country will also be building on the strength of other economic sectors; this is reflected by the projected 17.1 per cent increase in non-oil exports to US$1.6 billion.

Specifically in the area of agriculture – one of the main contributors to the country’s gross domestic product (GDP) – there are plans to expand production and exports of non-traditional crops such as corn, soya, coconuts, broccoli, cauliflower, spices, citrus, and fresh flowers.

“In this regard, focus will be placed on the cultivation of high-value produce, providing support for farm inputs for climate smart cultivation, restructuring the extension services to align with farmers’ needs, and pursuing applicable research, to improve farmer profitability and enable them to become more competitive,” Dr. Singh related.

Added to this, President Dr. Irfaan Ali, in November 2020, had said that trade facilitation is an area which will receive the government’s attention.

Issues such as delays in customs clearance, increase costs and reduce export competitiveness will soon be addressed through an electronic single window for trade, which will reduce time and costs, the President said.

“We will also be seeking to ensure that investors’ applications and requests are facilitated more promptly. As part of our agenda to improve ease-of-doing business, the Guyana Office for Investment (Go-Invest) is being restructured as a vehicle to attract and facilitate investment and export promotion,” President Ali related.

As a result of strategic planning and increased investments, Guyana’s economy is on course to growing by 47.5 per cent and 7.7 per cent in the non-oil economy, in 2022.

This economic performance will follow growth rates of 19.9 per cent and 4.6 per cent recorded at the end of 2021, despite the persistence of COVID-19, as well as the impact of floods. With this rate of overall growth, Guyana is likely to be amongst the fastest growing economies worldwide in 2022.

“The very creditable performance of the non-oil productive sector reflects the delicate and dynamic policy balance struck between aggressive containment of COVID-19 on the one hand and phased reopening of the economy on the other hand,” Dr. Singh said.

He also credited the performance in 2021 to prompt and proactive flood mitigation measures, which helped limit the fallout in the agriculture sector and supported the sector in resuming activity in the shortest possible time.

Additionally, the services sector recorded extraordinarily strong performances in response to a policy framework that has stimulated historic levels of demand for services and facilitated a commensurate response on the supply side.

Based on Budget 2022, the government intends to maintain and even enhance its approach to stimulating growth in various economic sectors.