Viable economic performance in Guyana in 2009

The period 2008-2009 was undoubtedly an economically challenging one for the world, and Guyana was not spared the effects of this flagging economic situation.  Historically viable export products which have consistently provided sustainable economic benefits for this country, suffered to some degree; however in spite of this, quite a number of successes were recorded.

The Global downturn has undoubtedly severely affected many countries in the Caribbean region and further afield.  Tourism, the breadbasket of many states in the region, has been hard hit; people do not have the kind of resources they previously had to indulge in the pleasures of the open Caribbean Sea nor sample the incredible and unique culture of the Caribbean and its people.  Closures of once booming industries have been a steadily occurring incidence in a number of states; remittances have been severely slashed.  Economic advisors and pundits the world over continue to thump their fists predicting further economic hardships before a turn-around can occur.

But amidst all the gloom and doom Guyana’s economic position has strengthened.  The sugar industry, as advised by Finance Minister, Dr. Ashni Singh in his presentation of the 2010 Budget, achieved higher production and export volumes last year than the previous year.  The 3.3 percent production increase was achieved even amid several challenges in the industry during the year.

The Rice sector also recorded its highest yields ever, measured at 70 bags per hectare in 2009, due to the introduction of new varieties and expanded farmer education programmes in the form of Farmer Field Schools.  This resulted in an overall increase in production by 9.2 percent, the industry’s highest production level in a decade.

The Bauxite industry, more so than the other local products, felt the effects of the economic situation; however it was not as severely hit as other bauxite sectors across the region.   RUSAL’s investment in Guyana’s bauxite industry in some aspects mitigated the impact, jobs were preserved and there was no closure, unlike the situation in Jamaica, which suffered a much different fate. 

Conversely, gold, which has been hard-hit in recent years, flourished last year, with declarations growing by 14.7 percent to 299,822 ounces; the highest level non-Omai declaration in a single year.  This is due in no small part to Government’s track record of working closely with the sector through the years, even at a time when gold prices took a nose dive at US$253 per ounce, as well as its investment in infrastructure and the fiscal regime.

The Finance Minister in his presentation noted that Government’s continued support of the industry has allowed for gold declarations last year reaching historic levels, generated by more than 800 small to medium-sized operations with individual productions ranging from 20 to 20,000 ounces, all of which employed about 10,000 persons.

The other crops and livestock sector grew by 5.8 percent due in no small part to the emphasis placed on research and development in 2009, both of which are key elements in the sector’s diversification and modernisation strategies.

Balance of payments improved at the end of 2009 with an overall surplus of US$234.4M, compared with a surplus of US$5.6M in the previous year, while the current deficit was reduced by 31.6 percent. 

It is quite remarkable that Guyana has been able to achieve this much in one year, particularly noting the present global conditions.  Not only on the local traditional products has Guyana been able to achieve success; President Bharrat Jagdeo’s advocacy of the Low Carbon Development Strategy saw the signing of the Memorandum of Understanding between Guyana and Norway.  That agreement will earn Guyana US$250M by 2015 in performance based payments with US$30M being received this year as the first tranche.

Guyana saw an improved fiscal performance in 2009 in the non-financial public sector, which recorded an overall deficit of $13.5B or 5.3 percent of the GDP, a significant reduction from the 7.6 percent in 2008. Current revenue increased by 15 percent, some $94.9B, over the 2008 figures, in Central Government.

The inflation rate at the end of the year was 3.6 percent, a decline even in the economic hardships wrought by the financial meltdown. The exchange rate stabilised by the end of the end after a marginal decrease in transactions, the market however adjusted and the value of the Guyana dollar appreciated by 0.97 percent against the US dollar. 

Overall, the Guyanese economy grew by 2.3 percent in 2009; and while that is somewhat less than the 2008 growth, it is still a significant achievement in light of the harsh global conditions.  As the Minister pointed out in his presentation, “these achievements of the past year must neither be viewed in isolation from context nor as accidental occurrences.  Instead, they are the direct result of a careful and deliberate policy stance, aimed at maintaining macroeconomic stability, strengthening the underlying capacity of our economy and improving the circumstances of our people.”

The Inter-American Development Bank continues to support Guyana’s pursuit of sustainable economic development through its support in a number of areas, and has since expressed its satisfaction with several achievements under the Fiscal Management Programme (FMP).  Guyana’s financial management has improved, the budget has gained in transparency and infrastructural development has been advanced. 

Guyana has also seen substantial debt being written off under the Heavily Indebted Poor Country (HIPC) initiative, and the country, under the guidance of President Jagdeo, has been able to sustain a stable macro-economic environment which has resulted from the progress in the structural adjustment reforms in the financial sector.