… calls for more local manufacturing to spur growth
With already poor production levels of the sugar and rice industries, Finance Minister Winston Jordan has called for increased local manufacturing to help boost the economy.
Discussing Guyana’s fiscal status and the reasons behind the implementation of several taxes in the 2017 National Budget, Jordan said Government had to take several stands as it seeks to stabilise an economy that is not yet at that place where it needs to be.
The Finance Minister said the Administration came into Government with the pressure of the expectations of increased wages and salaries by citizens, the pressures of the dwindling sugar industry and an economy that is not growing as rapidly as one would like it to.
He said the traditional sectors have also not been performing as well as they should, and as such, some amount of diversification must be had.
To this end, he called for increases in the local manufacturing sector.
“Very little manufacturing activity takes place in Guyana… the last number I looked at manufacturing, without sugar and rice milling contribute a mere five per cent to [gross domestic product] GDP, which is very low,” Jordan told journalists at a press conference on Thursday.
According to him, Government must diversify as quickly as possible since it is difficult to meet all claims in the manner they are made.
He said Guyana cannot continue to borrow, which will in effect incur debt on generations to come.
Speaking on the implementation of taxes, Jordan said the moves were necessary to boost an economy.
He said in order to get the economy going, taxes must be generated.
“I don’t want to do what I think most people are doing which is isolating [Value Added Tax] VAT,” Jordan said.
According to him, VAT as a tax has to be seen in a context. He said in putting forward its economic policy as outlined in Budget 2017, the Finance Ministry had to set up a scheme where it could ascertain how much revenue could be collected and how much deficit financing could be indulged in.
Knowing that, he said, would give an idea of how much could be borrowed abroad and locally.
“We have to generate the taxes and income from the economy even as it is growing,” he said.
Unrealistic manifesto promises
Speaking about the revenue, Jordan mentioned that Government had promised in its manifesto that it was going to do a number of things, including reducing VAT.
However, he noted that in hindsight, it was found that it could not have been done within the first 100 days. He said immediately after assuming office, it was suggested that this could not have happened but outlined that the problem was further compounded by three critical expenditures.
These include the Guyana Sugar Corporation (GuySuCo). He said it was just a few weeks being in office that the new Administration came to understand the magnitude of the GuySuCo’s troubles and the extent to which it would require domestic financing to keep it afloat.
Added to that, Jordan posited, was the collapse of the Venezuela market, where millers and farmers were getting a favoured price, but because of the issues, the farmers were left stranded without payment. Jordan also spoke too of the aggression Guyana faces on the external front which required new funding to aid in the diplomatic assistance. (Guyana Times)