Government on Monday tabled in the National Assembly a budget to the tune of $267.1 billion, introducing several measures to support its green agenda and improve various key economic sectors.
Finance Minister Winston Jordan presenting the 2018 Budget to the National Assembly on Monday
In presenting the Budget themed “The Journey to the Good Life Continues”, Finance Minister Winston Jordan also disclosed that the economy was expected to grow by 2.9 per cent, failing to meet the revised growth projection of 3.1 per cent for 2017.
He reminded that the initial projected growth of the economy was 3.8 per cent, but this was revised by midyear to 3.1 per cent after the economy only grew by 2.2 per cent in July of this year.
According to the Minister, this was mainly on account of poor performance in several key sectors, including mining, sugar, forestry and fishery. However, he said the economy was performing fairly well when compared to sister Caribbean countries that continue to see significant economic decline.
“As a commodity-dependent economy, we must remain vigilant of the impact of fluctuations in international commodity prices,” he said, explaining that agricultural commodity prices remained broadly stable for most of 2017, growing at one per cent, and were expected to increase marginally in 2018.
Minister of State Joseph Harmon walking along side PPP MP Juan Edghill before the 2018 Budget presentation
Minister Jordan told the National Assembly that while the price of Brent crude oil, one of Guyana’s key imports, remained relatively low during the course of 2017, prices are expected to rebound.
At the end of 2017, oil prices are expected to average US$53 per barrel, and US$56 per barrel in 2018, a reflection of strong oil demand, falling stocks, and production restraint among Organisation of the Petroleum Exporting Countries (OPEC) producers.
Sectoral performance
Detailing the performance of each sector, the Finance Minister noted that the agriculture, fishing, and forestry sector is expected to recover this year, with an estimated growth of 0.2 per cent.
This reversal, he said, will be a result of the anticipated positive growth performance in the rice, fishing, livestock, and other crops subsectors, which will more than compensate for the continued decline in the sugar and forestry industries.
According to him, the rice industry is expected to record an output of 602,087 tonnes for 2017, an increase of 12.7 per cent over 2016. This is owed mainly to an additional 14,000 hectares planted for the 2017 spring crop and a further 74,481 hectares planted in the autumn crop.
As for sugar, Jordan noted that production was expected to decline to 152,000 tonnes in 2017, a 17.2 per cent reduction compared to 2016‘s output. Opposition to the ongoing restructuring of the sugar industry led to the loss of almost 22,000 man days on account of industrial action, he claimed.
In forestry, the Minister told the National Assembly, some improvement was expected with a projected slowing of the contraction to 7.2 per cent in 2017, from 27.3 per cent in 2016. Total production for 2017 is projected to be 10 per cent lower than 2016.
The mining and quarrying sector is anticipated to contract by 1.9 per cent, compared to the 46.1 per cent expansion in 2016.
Economic performance
Shifting his attention to the country’s overall economic performance, the Minister said the overall balance of payments is expected to improve slightly to a deficit of US$53.1 million in 2017.
This outcome will be primarily driven by an improvement in the capital account, from a deficit of US$13.2 million in 2016, to an anticipated surplus of US$181.8 million in 2017.
“This is in spite of the deterioration of the current account from a surplus of US$13 million in 2016, to a projected deficit of US$235 million in 2017,” he told the National Assembly.
Minister Jordan noted that the anticipated decline in the current account was expected to be as a result of increased deficits in both the merchandise trade (by US$140 million), and services (by US$74.1 million) accounts, and reduced net current transfers by US$33.9 million.
“Although the current account is expected to weaken, the capital account is anticipated to improve due to strengthened net medium and long-term capital flows, both Private and Public Sector,” he added.
Projected Foreign Direct Investment, particularly in the oil and gas sector, is also expected to drive the US$145.2 million increase in Private Sector medium and long-term capital.
Additionally, net capital to the non?financial Public Sector is anticipated to strengthen to a surplus of US$67.2 million, reflecting higher disbursements of loans.
Minister Jordan boasted that the coalition Government managed to maintain stable macroeconomic fundamentals. However, he said their efforts continue to be constrained by the lack of economic diversification, which leaves key sectors and industries vulnerable to external shocks and internal meltdowns, as in the case of the Guyana Sugar Corporation (GuySuCo).
“Going forward, Government will continue to assess the economic situation and employ timely policy measures to correct imbalances and mitigate negative effects that could stymie growth. In this regard, in 2018, we will aim to strengthen our analytical capability to determine the macroeconomic effects of various policies and interventions,” he added.
With this capacity, he said, Government will be better able to guide the development of the Green State Development Strategy (GSDS), as well as the sectors and regional strategies going forward.
