The coalition Government is no stranger to revising growth figures, having done so several times last year. But the poor state of interior roads, coupled with high fuel prices and other factors, could see Guyana’s economy further declining.
This is according to Opposition parliamentarian Irfaan Ali, who has said that Government’s projection of 3.8 per cent growth may fall short. Ali on Saturday debunked the Government’s optimistic outlook while referencing the Bank of Guyana’s statistical abstract.
“High fuel prices and deplorable interior roads will place added burdens on loggers, miners, rice farmers. We have heard of the downsizing of sawmills, closure of small and medium-scale mining activities, increased construction cost due to the increased cost of sand,” Ali pointed out.
On the other hand, the Government’s projected inflation rate of 2.4 per cent for 2018 is also not likely to be borne out, Ali said, adding “high fuel prices coupled with the introduction of more than 200 tax measures will likely stoke inflation above the projected amount”.
The fact that Guyana’s balance of payments is projected to record a deficit of US$79.7 million was also zeroed in on by Ali, who noted that a deficit of US$94 million has already been recorded, surpassing the year’s projection in three months. Nor do Guyana’s international reserves look positive.
“Within the first quarter of 2018, to satisfy the huge balance-of-payments deficit, US$99 million was used. As of May, international reserve held by Bank of Guyana was at its lowest in 10 years at US$485 million. Moreover, external debt service to export ratio has increased from 4.8 per cent to 7.4 per cent.”
Ali also noted that during the first quarter of 2018, Central Government recorded a deficit of $1.6 billion. He explained that poor Public Sector Improvement Plan (PSIP) implementation rates, the fuel prices and the retraction of traditional sectors like sugar, rice, gold and timber are all contributing factors.
Meanwhile, he was unsurprised that domestic debt was projected to grow by this year-end. In fact, he reminded that the Inter-American Development Bank (IDB) had warned of this recently.
When it comes to debt, the Public Debt Annual Report released by the Finance Ministry last year had highlighted that since 2015, there has been a 4.1 per cent rise in Guyana’s indebtedness to creditors.
The report details that Guyana’s total debt, inclusive of external and domestic debt, increased to $330 billion as of December 2016. The Ministry attributed this to disbursements from the Export Import Bank of China towards the Cheddi Jagan International Airport (CJIA) expansion project, as well as monies from multilateral creditors.
A breakdown of the figures shows that total external debt amounted to $240 billion, a 72.6 per cent bite out of the total public debt. On the other hand, domestic debt stood at $90.6 billion, or 27.4 per cent of the total.
Board of Governors meeting
At the recent 48th annual meeting of the Board of Governors of the Caribbean Development Bank (CDB) in Grenada, Minister Jordan had made an address to the gathering. There, he announced that the previous 3.8 per cent growth projection he had announced at the last budget reading would be revised downwards.
Guyana’s last best growth rate was 5.2 per cent in 2013. World Bank records show Guyana’s growth rate in 2014 was 3.8 per cent; in 2015, 3.2 per cent, and in 2016, 3.3 per cent. For 2017, initial projections of 3.8 per cent were revised to 3.1.
This figure then went to 2.9 per cent, before the final figure of 2.1 per cent was announced. Jordan had claimed that the poor performance was linked to the dismal figures for sectors including sugar – a sector the Government itself radically downsized when it came to office.