Guyana only borrowing member country to record economic growth – CDB

— 19 other countries in region rack up increased debts

Guyana, with its budding oil and gas industry, has been spared the economic pain suffered by many of its regional counterparts. According to the Caribbean Development Bank (CDB), Guyana, unlike 19 other countries, did not record any increase in its debt to Gross Domestic Product (GDP) ratio.
This was revealed in the CDB’s 2020 Review and 2021 Outlook Regional Report, which was recently released. In the report, the bank notes that on average, the regional debt to GDP ratio increased from 66.5 per cent to 79.5 per cent among 19 Borrowing Member Countries (BMCs).

In Barbados for instance, the debt reached almost 150 per cent of GDP. According to the CDB, regional debt is likely to continue rising to 81.5 per cent of GDP in 2021, before it eventually falls in countries like Barbados and Jamaica.
Guyana, which is also a BMC, was able to avoid this altogether and was, in fact, the only BMC surveyed by the CDB to record economic growth for 2020, with 26 per cent. The economies of the other BMCs contracted by 12.8 per cent on average due to the COVID-19 pandemic.

According to the CDB, Guyana’s economic growth was driven solely by the start-up in first oil, though this growth was still lower than expected due to the declining oil prices that were brought on by the COVID-19 pandemic last year.
And while the former A Partnership for National Unity/Alliance For Change (APNU/AFC) has frequently pointed to this economic growth as evidence of them managing a healthy economy, it has been pointed out by the People’s Progressive Party (PPP) and by economic experts that oil is not a job retentive industry and that the regression of the non-oil economy is cause for serious concern.
Indeed, the CDB noted that Guyana saw mixed performances from the agriculture sector. While sugar production fell, rice production increased. During his recent reading of Budget 2021, Finance Minister Dr Ashni Singh had reported that the country’s non-oil economy contracted by 7.3 per cent with sectors such as fishing, mining, manufacturing, forestry, and services recording declines.
While the agriculture, fishing, and forestry sector expanded by 4.1 per cent, the sugar-growing one contracted by 3.7 per cent, with production falling to a low 88,868 tonnes. The rice-growing sector grew by 4.8 per cent, with paddy production reaching 1,057,580 tonnes in 2020.
With respect to the production of other crops, despite excessive rainfall in November and December, this sector is estimated to have grown by 6.6 per cent in 2020. The Finance Minister explained that the COVID-19 pandemic would have resulted in increased demand for many fruits, particularly citrus.
Meanwhile, the livestock sector is estimated to have grown in 2020, recording an increase of 5 per cent. This was driven by poultry, egg and beef production, which are estimated to have grown by 10.4 per cent, 34.1 per cent, and 3.4 per cent, respectively.
The fishing industry contracted by 17.1 per cent while the forestry sector contracted by 8.1 per cent. Regarding fishery, he said the decline was largely a result of fewer vessels going out to fish due to lower domestic and external demand stemming from the pandemic
With respect to forestry, the Finance Minister explained that the poor performance is primarily driven by an 11.8 per cent decline in sawn wood production, reflecting the slowdown in construction activities.
Manufacturing contracted by 8.6 per cent, construction by 6.3 per cent, and services by 9.4 per cent. Meanwhile, the overall balance of payments recorded a surplus of US$60.6 million in 2020, compared to a deficit of US$48.9 million recorded in 2019.
With the measures announced in the 2021 budget, the Finance Minister had said Guyana’s real Gross Domestic Product (GDP) is projected to grow by 20.9 per cent, with the non-oil economy growing by 6.1 per cent.
However, he explained that the projection is premised on the assumption that a reopening of the economy takes place with COVID-19 restrictions being gradually lifted and is, therefore, subject to significant downside risks.
Similarly, the agriculture, fishing and forestry sector is expected to expand by 5.6 per cent while the mining and quarrying sector is projected to grow by 39.1 per cent.