Minister of Finance Winston Jordan and Bank of Guyana Governor Dr Gobind Ganga yesterday insisted that there is no sluggishness in the economy, while saying that the numbers show the economy is doing well and is projected to do even better by year end.
“It was suggested that let the IMF [International Monetary Fund] come and let them tell us. Well, the IMF was here about two or three weeks ago…and they said… that generally the economy is in good shape. That the economy grew by 3% last year and that it is projected to grow by at least 4% this year. This clearly cannot be an economy that is on the decline, is sluggish and so on,” Jordan told a press conference yesterday.
This pronouncement comes at a time when the opposition has publicly said that there is a slowdown in the economy and Jordan has acknowledged that there is reduced spending due to a dent in the pillars of the parallel economy.
Opposition leader Bharrat Jagdeo has expressed the view that government does not have any plans to develop the economy and that after one year of APNU-AFC in office, Guyanese are worse off.
“It is not a doomsday scenario, we are doing reasonably well and we will continue to do reasonably well if we continue to manage the economy in a way that doesn’t allow it to deteriorate,” Jordan told reporters in the Ministry’s Boardroom.
Despite his talk of the economy doing well, Jordan had said last week that Guyana is currently experiencing a reduction in free spending due to a decrease in illegal activities, including narco trafficking. Jordan, during an interview with the Government Information Agency (GINA), had agreed that the economy was not as buoyant as it needs to be, while noting that illicit drugs and other illegal activities had helped create a parallel economy.
“So, the more that you go after that, and the more it will miniaturise, that is the less free spending you will see… it’s going to take a time for the economy to get comfortable with that, but in the meanwhile we will be putting other incentives to stimulate growth in the economy, but one good thing we can say, the economy will grow,” he was quoted as saying.
The minister yesterday said that he has noted continued suggestions about “sluggishness in the economy, about slowing down and the economy is not doing well” and he affirmed the government’s belief that it is in “good shape.” He said that many doubted government and the numbers for economic growth which it put forward but the IMF has since confirmed this.
Jordan said the projected 4% growth is close to the average growth rate that the economy would have achieved over the past decade. “So within the space of a year of us coming here, we would have been able to reverse what seemed to be a decline of 3% last year. “Decline in the sense that the growth year for last year was 3% compared to say 2014, where I think it was in excess of 4% and previous years where it averaged around that,” he said.
The minister said too that despite all the issues government would have faced after taking office last May, “we were able to do a range of things,” but he added that the newspapers have failed to be balanced on the issue as comments were sought “from the usual suspects.”
“Here you can see in newspaper where just a one-sided view is given and [after] a whole year of achievements you have a couple of people, all they do is gripe whole day,” he said, in an apparent reference to Stabroek News.
Meanwhile, Dr Ganga, in brief remarks, said that inflation has been constrained and there is an estimated .5% deflation for the first quarter of this year. He said that Guyana is seeing a net purchase of foreign exchange to the tune of just over US$25 million, which has resulted in a “relatively unchanged exchange rate.”
He said that on the current account, the bank is seeing a significant movement in terms of moving from a deficit of US$73.4 million to a surplus of about US$51.5 million. With regard to the capital account, he said the bank would have seen movement from a deficit of US$51.7 million to US$14.8 million.
Reserves, he added, have increased from $598 million at the end of 2015 to about $619 million at the end of March 2016.
“…We are seeing some improvement in terms of the overall balance. We have seen a marginal decline in external debt and a marginal increase in domestic debt,” he said, while adding that there was a “flat movement” for the financial sector.
“All in all, the financial system is quite healthy, [and] sufficiently capitalised,” he said. “Basically, we have seen an economy with very sound macroeconomic indicators (and) good confidence in the system to move forward,” he added.
Consumers not getting reductions
Jordan, speaking on government’s successes over the last year, noted that salaries were increased by more than 5%, pensions were increased by a “substantial amount,” there was a VAT reduction on various items, incentives to the gold sector, electricity tariff reductions, gasoline price reductions and increases in the income tax threshold. He pointed out that none of this was given in the one year review done by the newspaper.
He said that one now has to investigate if the consumers are actually benefiting from the incentives given. “Are you, the consumer, getting the benefit…? With the reduced gasoline prices, are you getting the benefit of a reduced bus fare? With reduced electricity prices, which is good for the manufacturing sector, have you seen any reduction in the prices of any one of these locally produced goods?” he asked, while adding that the government doesn’t see a reflection of the partnerships it pushed.
“We can’t go and hold the hand of a manufacturer and say listen, we have just reduced electricity by x percent why don’t you… that pressure also has to come from other members of society, that, ‘look, the government has just reduced electricity prices, why you are not reducing your prices of your commodities? Instead of having the pressure groups coming back to government for even more reductions,” he said
Jordan said government will look again as to how it will manage incentives so that the consumer gets the benefit of the reduction. “As it stands, at the moment the consumer is not getting these reductions that we have been able to do at great cost,” he said.
Jordan also said that government has been working to enhance the country’s business climate. “We haven’t been sitting down on our laurels. Since we came into power, I have been beating the doors down at the IDB, CDB and other multilateral institutions to get our programme with them going,” he noted.
Loans for key areas
According to him, the government has been able to complete some strategic approaches to the formulation of loans for the 2016/17 period. He informed that government is looking to get a number of loans in key areas.
He mentioned the Agri Development Loan, which will deal with agri diversification and livestock development in the intermediate savannahs. Jordan said that government is also looking for a Business Development Loan to improve the way business is done in Guyana. He said that government wants to improve the country’s rating on the World Bank’s Doing Business Index. He explained that this loan will look at the various aspects of improving the business climate here.
“When I met with the private sector during the last budget, they said that one of the hindrances to exports was that we didn’t have a properly certified lab to export to various places. Well, we are discussing as part of the Business Development Loan—the development of a state-of-the-art lab in which all of these activities could take place,” he noted.
In terms of partnership with the Caribbean Development Bank (CDB), he said that government is looking at the Single Window Automated Processing System (SWAPS) project which had started under the previous government and had either been abandoned or was incomplete. “We are looking to get assistance,” he said, while noting that government is also pursuing a loan for the justice sector for its improvement, particularly to address the backlog of cases, updating legislation and modernisation of the judiciary.
As regards the health sector, he said government hopes to get a loan which will target the reduction in maternal, child and infant mortality, a modern and centralised place for baby care and improving institutional capacity.
Government is also seeking financial assistance for suicide prevention, he said.
Jordan informed that with regard to the World Bank, an interim country engagement note has been completed and this would allow government to access resources for the University of Guyana, which will included the construction of new labs, lecture halls, library, improvement to the management information system and rehabilitation of the sewage system.
He also spoke of a programme for the improvement of the education sector that will look at the education curriculum from the primary to university level and a national payment system to remove Guyana’s use of paper money as a means of transacting business.
Jordan said too that a project to revamp and improve long-term planning in the country should get underway in the second half of the year.
He spoke of government’s vision of improving the water and sanitation sector, inclusive of water treatment plants and sanitary landfills. Clean energy, particularly solar energy, will also be addressed, with Bartica being the first clean energy driven town, he added.
Jordan told reporters that under the International Fund for Agriculture Development, government is looking at a rural and hinterland development project geared towards agro processing and the development of small scale agriculture business, particularly in the hinterland regions of the country.
As regards the coastland, he said government is seeking a loan to pilot small scale agri-development in several areas inclusive of Ithaca, Buxton, Triumph and Mocha.