The Private Sector Commission (PSC) has termed the year 2010 as very successful in various aspects of its
Ramesh Dookhoo
intervention and programme; and has, further, predicted growth in all the productive sectors: business investments, employment creation, and profits, due to a stable economy.
A 2.9 per cent growth of the Gross Domestic Product had been predicted for 2010. However, this has been affected by the fluctuation of sugar production for the year, and the PSC has warned that there will be need for continued work in the sugar sector to build up its resilience.
Growth of GDP for the first half of the year was 2.8 per cent, driven primarily by growth in the services sector and in some agricultural and mining outputs.
In a New Year’s statement, PSC Chairman Ramesh Dookhoo disclosed that output in the rice and forestry sectors, as well as improved performances in the information, communication, and distribution sectors contributed to the expansion of the economy.
He added that, for the first half of the year, the balance of payments, while showing a surplus, was less favourable than in the same period in 2009. The value of the surplus fell to US$34.6 million from US$57.3 million in the same period in 2009. The difference was mainly attributable to an increase in the merchandise trade deficit, though this was partially offset by an increase in transfer payments. Imports of intermediate and capital goods also increased but were offset by higher capital inflows.
The balance of payments is expected to record a deficit by the end of 2010, due to higher food and fuel prices, although the capital account may register a surplus due to increased private capital inflows.
Export receipts were up to US$398.6 million, from US$354.7 million at mid2009. This was attributed to an increase in the export price of all major commodities except sugar. Sugar receipts were down as a result of a 22.2 per cent fall in the average export price of sugar. Overall, sugar receipts for 2010 are expected to be less than in 2009, putting some downward pressure on the balance of payments. The export contribution of private companies also contributed to the enhanced export figures.
The Guyana dollar, despite some rough patches earlier in the year, depreciated by only 0.25 per cent as foreign trade increased, putting pressure on the exchange rate. However, the rate had stabilised and marginally appreciated to $203.50 for US$1.
Among some of the major achievements of the PSC during 2010 is a more productive relationship with government. Previously, the lack of this collaboration “had severely constricted private sector growth,” Dookhoo added.
Among the key areas where the PSC will be focusing its attention in the New Year are climate change; peace and unity in the nation; and continued economic growth, enhanced by more attractive taxation reforms and regulatory frameworks.
The PSC has successfully partnered with government and national agencies towards the engagement of a consultant to review the tax study that had been commissioned by the government, and to recommend appropriate changes to the country’s tax structure with the objective of formatting a new tax structure that would be friendlier to the business community and the average employee without compromising government’s tax collection.
The PSC said the success of 2010 can be seen in a recent survey of publicly traded companies, which revealed that key results for these companies were enhanced over three years, but were more prevalent in 2010. Revenues went up by seven per cent on average, taxes by 17 per cent, and pre-tax profits went up by 13 per cent. This speaks to expanding activity in the economy; more disposable income; and more lending by the banking sector, fuelled by the development of the housing market.
Outlook for 2010/11
The outlook for Guyana’s economy in 2010 going over to 2011 remains positive, the chairman said. It has been projected that economic growth would be fairly strong. The further strengthening of the net foreign assets of the banking system should continue to lend confidence to Guyana’s foreign currency markets and provide sup-port for the exchange rate.
The consistently high and volatile prices for crude oil on the international market continue to impact on domestic prices, and are a drain on the country’s foreign resources. The trend in economic activity established in 2010 should continue into 2011, but will be guided by the need to maintain price stability.
Among the key areas that will need continued attention in 2011, the PSC stated, are bauxite recovery, for its output; addressing operational issues in relation to sugar production, to increase the sector’s resilience; and the rice sector, capitalising on the gains made in 2010. Employment creation is expected to be continued in the New Year from additional business investments. Also, the trend in the international price for gold should continue into the New Year.
“The Private Sector Commission has had a busy, productive and rewarding year in 2010, and we look forward to better serving the private sector in 2011. We in the commission have pursued our objectives of preserving, propagating and encouraging the principles of private enterprise, as outlined in our mission statement, with great commitment and zeal,” Dookhoo said.
