Despite Guyana’s economic growth, overall socio-economic developments may not have improved significantly and this needs detailed examination, President of the Caribbean Development Bank Dr. William Warren Smith says.
“The United Nations Human Development Index points to improvement between1995 and 2005 but there are some indications of stagnation thereafter. This suggests that overall socio-economic development may not have improved significantly despite the reported gains in economic growth, in employment and in education. This obviously warrants some detailed examination,” the CDB president told an audience that included President Donald Ramotar, government ministers and members of the diplomatic corps, businesspersons and other officials at a Canadian High Commission-sponsored investment conference at the International Convention Centre today.
The two-day conference being held under the theme ‘Maximising Opportunities for Investment in Guyana’ is focusing on enhancing Guyana’s economic prosperity by identifying the challenges and opportunities facing foreign and local investment in Guyana.
Speaking at the opening ceremony, Smith said that the amount, type and quality of investment can have a profound impact on growth dynamics, on prosperity and the social well-being of Guyana. “A review of Guyana’s key macroeconomic fundamentals paints an encouraging picture,” he said while noting that Guyana’s economic growth remains unbroken for seven years.
The CDB president praised Guyana’s reduction of its debt and said that the country’s risk of debt distress is now rated as moderate and its debt carrying capacity is assessed as relatively robust. He also praised the drop in unemployment and pointed out that poverty- though still high- has also fallen though the results are not so clear cut with regard to broader human progress. It was in this light that he said that despite Guyana’s economic growth, overall socio-economic developments may not have improved significantly and needs detailed examination “Encouraging as the results are overall, we should ask ourselves will this performance continue, how can we get better results and what are the lessons for the future,” he added.
Smith outlined several factors inclusive of macroeconomic stability, the issues surrounding the cost of doing business, human capital development and environmental management and climate resilience that must be considered in relation to investment.
He said that macroeconomic stability is vital for sustaining investment and economic growth while investment is also more likely to flourish if the financial sector is stable. Investors thrive when the exchange rate is credible and foreign reserves are healthy, he said. Smith lauded the work of the government in pursuing macroeconomic stability but said that there are still areas for improvement.
“In the financial sector for example, we know that intermediation is low, the stock market remains underdeveloped with a small number of listed companies and low trading volumes. There may be a case for further regional financial integration to broaden the investment market, to increase capital availability and to reduce capital costs,” he stated.
However, he said that the potential benefits must be weighed against the requirements for sharing information, for harmonizing regulations and for coordinating policies.
In relation to the cost of doing business, the CDB president said that lowering entry barriers and improving regulatory frameworks are important for promoting investment and stimulating growth. He noted Guyana’s low ranking in the World Bank’s 2013 ‘Doing Business’ survey which is below the regional average for Latin America and the Caribbean and said that policy makers must be open to assessing all the relevant factors and taking appropriate corrective measures in a timely fashion.
As it relates to building capacity and strengthening institutions through education and training, Smith said that while improvements have been made in Guyana, there are issues of quality that still remain. He noted that there are movements in the right direction.
Long-term growth also requires a commitment to integrating environmental concerns into decision-making, Smith added, pointing to Guyana’s vulnerability to natural hazards such as flooding. These are necessary for promoting investor interest and promoting long term growth in Guyana, he said.
Meantime, the CBD president also revealed that under the Bank’s new country strategy for Guyana, Georgetown can access a relatively new US$65.3 million climate action line of credit. This is being funded by the European Investment Bank and will provide concessionary resources for climate change related interventions such as energy efficiency, and low carbon technologies among others. He urged the government to take advantage of this “low cost” facility.