Guyana Govt maintains economy will get better with time

Although minimal growth was recorded over the past year in the local economy, Government has maintained that they did favourably well given the insurmountable challenges that they were faced with since assuming office in 2015 and things will only get better with time.
Finance Minister Winston Jordan said on Monday that growth in the economy cannot only be assessed by the per cent average but goes beyond that. He said a lot has to do with the increased activities and benefits that trickle down to the people and the advancement and investments made overall.

Another important factor to be considered is the Government’s determination to implement transformative programmes and policies that includes the restructuring of many economic sectors. “If we can go slowly but sustainably, I think at the end of the day, we will be better off,” he stated.
Jordan said boasting about a 4.5 per cent growth rate is good, but only if all the traditional sectors continue to flourish. “It has nothing to do with the new Government coming into office. It means poor prices, poor supply. Unsustainable polices means unsustainable economy,” he added.
The Finance Minister admitted that it is not easy managing an economy where there were thoughts of perceived stability and sustainability but only to find that “the situation is far from reality”.
However, Jordan admitted that the coalition Government inherited an economy that was growing, and recalled that the growth rate in 2012 was 4.8 per cent. In 2013, this figure climbed to 5.2 per cent largely due to rice production growth rate, and by 2014 growth plummeted to 3.8 per cent.
“By the time election came around in 2015, growth plummeted again to 3.2 per cent which was expected in an election year because people were pessimistic. Having slowed, by 2016, growth rebounded to 3.4 per cent and as a result of this, we projected growth at 3.8 per cent for this year,” he stated.
With the dim performance of sugar, however, Jordan told media operatives that Government has been very cautious and have since revised the growth rate to 3.1 per cent. “There isn’t anything we can do about sugar. It will take us a long time to get sugar right and when we do, it will not be like the heavy days in the 70s when we had sugar production of 355,000 tonnes etc,” he added.
Had sugar performed well continually throughout the year, and the fact that rice has done exceptionally well, the country would have surpassed the 3.8 per cent growth rate, he posited.
Declining reserve
Responding to media reports about a declining economy, the Finance Minister said the reserves are not static. Rather, they move up and down and at any time there will be a certain number.
“Reserves could be 600 today and tomorrow its 570. But by the time you ask the question next month, it gone back to 620. We can’t be fast and loose with these numbers,” he argued.
At the end of 2012, reserves at the Central Bank were US$862.2 million. Of that amount, US$160 million roughly came from the International Monetary Fund disbursements. “So even though we were not on a disbursement per say, US$160 million came from the IMF disbursements.”
In 2014, reserves plummeted to US$665.6 million but in 2015 it went to US$598.5 million. Consistent with growth performance of the economy, reserves in 2016 had gone back up to US$615.7 million.
Jordan therefore contends that the reserve figures are not only in keeping with international standards but this does not in any way affect the country’s economic performance.
“In terms of nominal numbers you can see at any point in time, the reserves will be moving upwards and downwards.
But what is key, if we want to talk about reserves, is how many months of imports can that reserve allow us? Now the benchmark is three months of import cover. Our half-year reserves are US$574 million and that is equivalent to 3.4 months of import coverage.”
The Minister also defended Government on its reportedly excessive spending and debt collection. He said that while debt is expected to continue rising, Guyana is within the international standard limit.
Opposition Member of Parliament, Irfaan Ali, recently highlighted that even with increased production in the key traditional sectors, data compiled in the recent mid-year Finance Ministry Report has clearly showed that the economy is eroding at a fast rate.
Ali pointed out that as foreign exchange tanked, imports will become relatively expensive. “Overall, imported goods would become relatively expensive, hence stoking inflation in the process,” he contended.
Ali noted that net foreign reserve plummeted from US$633 million in June 2016 to US$574 million in mid-2017; the lowest ever recorded in over seven years.
The Opposition MP said it is also worthwhile to mention that net foreign revenue to external debt ratio had increased from 172 per cent in mid-2016. (Samuel Sukhnandan)