Chairman of the Private Sector Commission (PSC) Ramesh Dookhoo welcomed this year’s $192.8 billion national budget, saying that measures taken in 2011 to address needs of the private sector have borne fruit, while calling for continued incentives.
In an invited comment yesterday, Dookhoo, who cautioned that his statement was preliminary, stated that he was happy that GDP growth for 2011 was 5.4 per cent, adding that it was good for a stable exchange rate to be maintained.
Dookhoo said the PSC executive is studying the budget in order to present an official position on it at a news conference planned for tomorrow. He said that he was pleased with the tax measures announced, and noted that they would benefit the poor and the vulnerable.
Dookhoo also said that the healthy state of the economy as pictured by the budget is a case for the continued incentivising of the private sector. Although the government reduced the corporation tax, last year, he noted that the collections still exceeded the figure for 2010. From 2011, commercial companies, except for telephone companies, paid corporation tax at a rate will of 40 per cent of chargeable profits, instead of 45 per cent. Further, the corporation tax for non-commercial companies was cut from 35 per cent to 30 per cent of chargeable profits for 2011.
Dookhoo added that while the PSC would have loved to have seen more measures announced in that budget to benefit the needs of the private sector, it must be recognised that incentives must come in tandem with growth of an economy.
The budget announced that credit by the banking system to the private sector grew by 19.9 per cent to $134.6 billion in 2011, underlying which were a 42.4 per cent expansion in credit to the agriculture sector, and a 31.5 per cent increase in credit to other manufacturing. These were followed by a 24.7 per cent increase in credit to distribution and 22 per cent and 18.9 per cent increases, respectively, in credit to the other service sector and real estate.
Singh said interest rates continued to trend downwards, with the commercial banks weighted average lending rate declining by 27 basis points to 11.68 per cent while the small savings rate declined by 68 basis points to 1.99 per cent, reflecting the continued availability of liquidity in the banking system.
“In addition, the 91-day Treasury Bill rate also declined in 2011 by 143 basis points to 2.35 per cent, reflecting the intense level of competitive bidding for Treasury Bills. These developments helped to facilitate the growth observed in private sector credit,” Singh noted.
Meanwhile, the foreign exchange market recorded a 17.7 per cent increase in activity in 2011, amounting to transactions totalling US$6 billion, consistent with the higher level of trade and remittances. The market had an adequate supply of foreign exchange to provide for a stable exchange rate, and the Guyana dollar ended the year at $203.75 against the US dollar as compared to $203.5 at the end of 2010.
Singh added that merchandise imports expanded by 24.8 per cent to US$1.8 billion, primarily attributed to a 41.3 per cent increase in the value of fuel and lubricants imported. Other imports increased by 18.4 per cent, with non-fuel intermediate goods increasing by 10.2 per cent, while capital goods and consumption increased by 38.9 per cent and 10.8 per cent, respectively, he said.
Singh also announced that net current transfers increased by 11.8 per cent to US$414.6 million, due to higher receipts of worker remittances, which increased from US$367.8 million to US$412.2 million.
“Net payment of services amounted to US$145.5 million compared to US$84.1 million due to a US$39.3 million increase in non factor services mainly as a result of higher cost for transport and freight, while factor services moved from a net receipt of US$12.8 million to a net payment of US$9.3 million,” he said.
He also noted that the capital account recorded a surplus of US$373.2 million compared to US$339.2 million from the year before, which was attributed to higher foreign direct investment concentrated mainly in the mining, and telecommunication sectors.