Doom, Gloom & Boom… What a year it has been for Guyana
Let’s face it. This year was not Guyana’s best performance in many respects. Sugar showed ‘sickly’ production, rice was booming but still struggling to find new markets and other sectors seemed too burnt out to help carry the burden of transforming and supporting the economy as the Government had planned. It comes as no surprise therefore, that Minister of Finance, Winston Jordan, projected during his 2017 Budget presentation that the economy for 2016 struck up a 2.6 percent growth. Supporters may say, “Well what’s the big deal? 2.6 percent growth is positive growth.” But the big picture is that Guyana’s economy has not slid that far down the growth rate scale since 2009. It begs to question what economic conditions could have contributed to such a worrying state of affairs for Guyana this year. Speaking with the Guyana Inc. Magazine in an interview, the Finance Minister proffered a number of explanations. The Finance Minister noted that prior to Guyana’s independence in 1966; the nation had been depending largely on certain traditional sectors for its growth. These sectors include; sugar, rice, bauxite, forestry, and gold. As is the case with most economies, those sectors took turns at different periods in leading the growth for the economy. But age, global changes and lack of transformation has taken its toll on certain sectors. As such, sectors such as sugar and bauxite are yet to stand on their two feet again. In the area of sugar, the performance of this sector in the last eight years has been wanting. Production gets worse by the year and the projection for year end or even next year is no different. In his 2017 Budget speech, the Finance Minister said, “Sugar is projected to decline by 18.7 percent, to reach 188,000 metric tonnes in 2016. The low production is attributed to the El Niño dry spell experienced earlier in the year which resulted in lower yields, combined with late planting and the frequency of strikes, during the second half of the year.” Jordan told this magazine that given the dismal performance of the sector, a number of measures will soon be taken to diversify the industry. He said this is more than necessary as it is already sucking some $32B from the Treasury with no meaningful and positive returns for the economy any time soon. The rice sector also ran into trouble this year. As such, production levels dipped and the Government is scurrying trying to find new markets. This state of affairs is due to the fact that Guyana lost its preferential market in Venezuela under the famed “PetroCaribe Deal.” Under that arrangement, Guyana received payment for its rice to Venezuela at a concessional price; a price that was above world market prices. However, the Venezuelan Government decided not to renew the deal with Guyana in 2015, leaving the nation like the proverbial “fish out of water” that is in search of new shores to take its rice at a similar rate. Since the Spanish speaking country ended the contract with Guyana, the rice sector has taken a hit. Jordan, in his 2017 Budget, also reported on this. He said, “Due to continued uncertainty in the rice industry, output is expected to reach 600,000 metric tonnes in 2016, representing a decline of 12.8 percent from the levels achieved in 2015. The El Niño weather phenomenon and the loss of the lucrative Venezuelan market contributed significantly to the decline in production level. Nevertheless, the Government continues to encourage both farmers and millers to move towards more value-added products…” As for the bauxite sector, this industry has been struggling for decades to get back to its glory days. At one point, the bauxite industry was the sector that contributed significantly to the Gross Domestic Product and the economic growth of the nation. Its performance in 2016 has been deemed to be satisfactory by the Finance Minister. He noted in his mid year report on the economy that bauxite production increased by 2.9 percent in the first half of 2016 to 760,689 tonnes, compared with 746,824 tonnes achieved during the same period in 2015. The Guyana Inc. Magazine understands that the performance in the industry is expected to see progression in its production in the next year. This forecast, according to the Ministry of Finance, is based on investment in the Kurubuka mine. The area is said to be extremely rich in bauxite. Augmenting the projected position of the sector for 2017 is the fact that global bauxite prices are set to increase in 2017. Guyana’s forestry sector perhaps took the hardest crash in 2015 and 2016. This was as a result of the Government’s resolve to close gaps for abuse in the sector. Over the years, several media houses in Guyana would have reported on the wanton abuse taking place in the nation’s forests by some foreign companies. It was noted that the nation’s logs were being shipped out without being properly monitored thereby leading to the loss of billions of dollars in revenue. The Government, since taking office, clamped down on the practice of the exportation of prime species of logs. That action, though needed and commendable, had its implications on the sector. In fact, the forestry sector’s production declined by 13.1 percent during the first half of 2016 when compared to the same period last year. By the end of December, the industry is projected to contract significantly by 33.3 percent. This is as a result of a number of factors; one of which was explained above. Another factor includes the United Kingdom’s ban on greenheart logs from Guyana. The saviour for the economy this year was gold. The new star sector for the economy achieved new heights this year. It is the one sector that is actually “booming” for Guyana. In his 2017 budget, the Finance Minister lauded the stellar performance of the sector while speaking to its projected production by the end of 2016. He said, “Gold production is expected to reach 644,814 ounces as a result of the combined efforts of small and mediumsized miners responding to the generous concessions granted by Government and rising global gold prices, and the two foreign-owned companies reaching full capacity.” Putting the performance of the gold sector aside, the traditional sectors for Guyana do not paint an uplifting picture for the nation’s growth rate. Instead, the 2016 performance of those sectors convey an image of doom and gloom. It further underscores the need for Government to hasten its move towards retooling the economy and shifting its focus to other industries such as ecotourism and information technology to help spur increased growth rates.