…projects 3.4 % economic growth
…livestock sector records 29.1% growth, mining declarations down
FINANCE Minister, Winston Jordan on Monday unveiled a $300.7 billion budget for 2019, which includes a range of measures from the raising of the income tax threshold to increases in Old Age Pension and Public Assistance.
The budget which represents a 12.6 per cent increase over 2018, also announced that the economy is projected to grow by 3.4 per cent this year, a significant improvement on the 2.1 per cent it recorded last year. Themed “Transforming the Economy, Empowering People, Building Sustainable Communities for the Good Life,” Jordan said the budget presents government with yet another opportunity to highlight its successes and achievements, noting that the government is dedicated to the overall improvement in the quality of life of citizens as represented by a budget “that guarantees equality and inclusivity in resource allocation for all Guyanese.”
He told the House that the target for real growth in the economy for 2018 was 3.8 per cent, but at the end of the first quarter, the outlook for the year was revised to 3.4 per cent, given the lower-than-expected performance in gold and sugar. However, by the end of the first half of the year, economic activity had picked up in several other sectors, resulting in robust half-year growth of 4.5 per cent, and an upward revision of the projected annual growth rate of 3.7 per cent, for 2018.
“I wish to report that the latest projection for real growth in the Gross Domestic Product (GDP), for 2018, is 3.4 per cent, a significant improvement on the 2.1 per cent recorded in 2017,” Jordan told the House.
He spoke about the benefits of early presentations of the budget- a feature introduced by the coalition government. He said these have been evident in the ability of managers to execute their projects and programmes over the twelve month planning horizon, instead of the truncated year that had become the norm in the not-too-distant past.
Jordan said 2019 holds special significance for the country from at least three standpoints. First, he said it is the year preceding the observance of the Golden Jubilee of the Republic. As such, preparations will begin during 2019 to ensure that this auspicious occasion is celebrated fittingly, in February 2020, when we would get another opportunity to reflect on our journey as a nation, our achievements, our hopes and our aspirations.
Secondly, 2019 is the year preceding General and Regional Elections are constitutionally due. In recognition of this, he said the budget of the Guyana Elections Commission (GECOM) has been almost doubled from its 2018 allocation. This is to facilitate early preparations and to ensure the smooth conduct of these most important elections. From what has been widely considered to be well too executed Local Government Elections.
“I am in no doubt that GECOM will be approaching the task with due diligence and commitment,” Jordan added. Thirdly, 2019 is the year preceding first oil, currently projected to be in the first quarter of 2020. “It is well known that our country is endowed with an abundance of natural resources, with an extensive tropical forest cover of more than 87 per cent of Guyana‘s territory. In spite of these significant assets, economic growth has been highly volatile, low and uneven over the past decades, with geopolitical events, natural and man-made disasters, and global commodity price swings being amongst the contributory factors. In addition, given the economy‘s reliance on primary commodities, there has been little opportunity for diversification.”
Jordan said the discovery of very significant oil reserves has put Guyana at a critical point in its history, providing citizens with the opportunity to shift “our development path, modernise our economy and transform the lives of our citizens. We are poised for rapid economic expansion, and our government is committed to pursuing economic and social policies conducive to equitable, sustainable and environmentally-friendly growth.”
Jordan said the shaping of the 2019 budget benefitted from input derived from an expanded pool of private sector bodies, non-governmental organisations, civic groups and ordinary citizens. He said this year he undertook several visits to manufacturing and other firms, to get a first-hand look at their operations and to glean a better understanding and appreciation of their challenges and difficulties. This budget, he said, benefitted from those interactions and the many suggestions proffered for increasing production, boosting exports and improving the business and investment climate.
According to him, in spite of the severe contraction of 25.2 per cent in sugar production, the Agriculture, Fishing and Forestry sector is projected to grow by 1.1 per cent, in 2018, better than the 0.4 per cent growth recorded in 2017. Solid performances are expected to be recorded for livestock, other crops, forestry and rice. Jordan added that with the Guyana Sugar Corporation (GuySuCo) now charged with managing the operations of three estates, the viability of our sugar industry has been given a new opportunity with restructured cost profiles. The ongoing recapitalisation of the Albion, Blairmont and Uitvlugt Estates, as part of the Sugar Task Force three-year plan for GuySuCo, is anticipated to result in production in future years rising from a low of 98,000 tonnes by the end of 2018, to nearly 145,000 tonnes by 2021, Jordan said.
“Mr Speaker, while the sugar industry endeavours to come to terms with the reality of operating in the 21st century, the rice industry continues to make commendable strides. The introduction by the Guyana Rice Development Board (GRDB) of a new and higher yielding variety – GRDB 15 – in time for the second crop of 2018, as well as improved practices and domestic prices is expected to result in growth of 0.2 per cent in total production for the year.” Jordan said. Guyana, like many others in the CARICOM region, still grapples with a high food import bill, despite an abundance of fertile soils and water.
He said farmers have increased their production of traditional and other non-traditional crops, which has resulted in the volume of exports of fruits and vegetables expanding by 5.9 per cent at the end of the third quarter, when compared with the same period, in 2017. Growth in the other crops sector is expected to continue to rise in the last quarter, and annual growth for 2018 is projected to reach 5.0 per cent.
The livestock sector, Jordan announced too, has rebounded this year, with production as at the end of June growing by 29.1 per cent, when compared with the same period, in 2017. “The absence of chicken shortages, thereby negating the need to issue import licenses thus far, in 2018, testifies to Guyana being on the right path to self-sufficiency in chicken production. Higher beef, pork and mutton production, as a result of better breeds and enhanced practices, also contributed to growth in this sector at mid-year, and are likely to lead to similar gains in the second half of the year. As such, the livestock sector is forecasted to grow by 21.1 per cent this year.”
For the fishing industry, Jordan said this sector saw mixed results at the half year mark. However, in spite of the contraction in output of shrimp, tuna and aquaculture, an expansion in total finfish production resulted in a growth in this sector of 5.6 per cent at the end of June. An increase in the number of artisanal vessels will see finfish production reaching higher levels in 2018, when compared with the previous year, Jordan said, adding that this performance, however, is expected to be overshadowed by declines in production in the other categories of fish. Overall, it is anticipated that this sector will contract by 1.9 per cent, in 2018.
In forestry, Jordan said growth in this sector is projected to be a disappointing 0.2 per cent, following a promising performance up to September. He blamed this on poor weather conditions affecting the transport network and delayed road maintenance served to constrain further growth of this sector. In 2017, the forestry sector expanded for the first time since this administration took office and revoked some of the lopsided agreements that allowed for the wanton destruction of our pristine forests. “This growth was extended, into 2018, supported by a number of interventions, including Budget 2018 measures and the continued partnership with the private sector. Thus, by end-September, production was 19.3 per cent higher than the same period, in 2017.”
BALANCE OF PAYMENTS
Jordan told the House that the deficit on the overall balance of payments is projected to widen to US$180.7 million at the end of 2018, from a deficit of US$69.5 million at the end of 2017. The current account is expected to deteriorate to a deficit of US$463.8 million in 2018, compared to a deficit of US$297.3 million in the previous year. However, the capital account is anticipated to strengthen to a higher surplus of US$283.0 million, from US$228.0 million, over the same period. “…despite positive prospects for net current transfers, the current account is expected to weaken due to the worsening of the merchandise trade and services accounts.
The position on the merchandise trade account, from a deficit of US$206.6 million, in 2017, to a higher deficit of US$299.7 million, in 2018, is anticipated to result from an increase in total payments for merchandise imports, together with lower total earnings from merchandise exports.” According to Jordan, the latter is projected to decline by 3.1 per cent to US$1,392.1 million, largely on account of lower receipts from gold and sugar exports.
The downturn in gold export earnings is anticipated to be as a result of lower declarations. Lower earnings are also expected from rice exports, which, together with gold and sugar, will not be offset by receipts from all other exports. Total import payments are forecasted to grow by 2.9 per cent, to US$1,691.8 million, in 2018, largely due to higher payments for fuel and lubricants, and capital goods. The former is expected to increase by 5.7 per cent, driven by higher prices, while the latter is projected to grow by 4.3 per cent. Total payments for consumption goods imported are also estimated to increase by 1.7 per cent.
“Mr. Speaker, the net services deficit is forecasted to expand to US$453.4 million, in 2018, from US$372.3 million, in 2017, due to higher deficits on both the factor and non-factor services accounts. The weakening of the factor services account by US$33.4 million is expected to result from higher payments as compensation to employees as well as higher interest payments on loans to the public sector, while the worsening of the non-factor account by US$47.6 million is due to higher freight payments.” “Mr. Speaker, contrary to the two aforementioned components of the current account, net current transfers are expected to increase to US$289.3 million, in 2018, from US$281.7 million, in 2017, due to lower outflows of remittances to bank accounts abroad. “
Jordan said the balance of payments deficit will be financed by a drawdown of US$104.1 million on the net foreign assets of the Bank of Guyana, debt relief of US$17.9 million, and debt forgiveness of US$58.7 million.