– US$94M deficit attributed primarily to fuel price hikes
Guyana’s overall Balance of Payments deficit has skyrocketed to US$94 million. Compared to US$8.8 million for the corresponding period last year, this represents a telling indicator of Guyana’s economic situation.
Finance Minister Winston Jordan
The recently released Bank of Guyana (BoG) Quarterly Report and Statistical Bulletin, from which the above figures are culled, attributes this Balance of Payments deficit to an expanding current account deficit and to higher fuel prices.
“This was primarily due to an expansion of the Current Account deficit, despite a surplus on the Capital Account. The deficit on the Current Account resulted from a higher merchandise trade deficit due to higher imports, primarily fuel,” the report states.
Balance of Payments information is statistical data on a country’s fiscal transactions, including imports and exports. To therefore record a deficit, Guyana would have had to spend more on imports, among other things, than it derived from exports.
According to the report, Guyana’s overall Balance of Payments situation in the 2017 fiscal year showed a deficit of US$69.5 million. This is a hike when compared to US$53.3 million of the previous year. And a breakdown of the figures shows stunning disparities.
On the one hand, the Current Account shows a deficit of US$287.4 million for the year 2017. But in the previous fiscal year, the report notes, this was just US$12.4 million. The report admits that this is because of a negative balance on the merchandise trade account.
“The further weakening was due to the negative balance on the Merchandise Trade Account. Merchandise exports were slightly lower than projected, mainly on account of lower export earnings of gold and other exports in the last two months of the year.”
When Finance Minister Winston Jordan presented the 2018 budget last year, he had announced that merchandise imports were estimated to grow by 9.6 per cent. This has been attributed to increased imports of mining machinery, chemicals, fuel and lubricants. According to the 2017 report, imports exceeded the Government’s projections.
“Imports were slightly more than the US$1.59 billion projected at the time of the presentation of the 2018 budget. As a result, the Merchandise Trade deficit of US$196.2 million was considerably higher than the projected deficit of US$147.2 million”, the Report detailed.
“Notwithstanding the deficit on the Services Account was lower than estimated, the improvement in the Services Account more than offset the weaker balances on both the Non-Factor Services and Unrequited Transfers accounts,” the report states.
Economy
Jordan was, on January 17, quoted as expressing hope that Guyana would see a rise in exports for 2018. He had noted that growth in the agriculture, fishing and forestry sectors would be driven by expansion in other sub-sectors except sugar.
That was then. At the 48th Annual Meeting of the Board of Governors of the Caribbean Development Bank, in Grenada in June, almost five months later, Minister Jordan had announced that the previous 3.8 per cent growth projection he announced at the last budget reading would be revised downwards.
“In spite of both domestic and external shocks, Guyana has maintained its positive growth trajectory that has been evident for over a decade. In 2017, the economy recorded a growth rate of 2.1 per cent, reflecting improved performances in the forestry and rice sectors. On the other hand, contractions were witnessed in sugar and the construction and mining sectors”, he had announced.
“The outlook for 2018 is very positive, notwithstanding further declines in the sugar industry. Real growth is projected to be 3.4 per cent, slightly below the budgeted 3.8 per cent; with increased output in rice, construction, manufacturing, and services sectors,” the Minister said in his speech, calling this a robust performance.
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 it was 3.2 per cent; and in 2016 it was 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 claimed that the poor performance was linked to the dismal figures recorded in sectors including sugar — a sector the Government itself radically downsized when it came to office.
