Flooding could result in reduced growth for Guyana’s non-oil economy − IDB

− says floods have affected rice production, livestock & mining

The Inter-American Development bank (IDB) foresees reduced growth in the non-oil economy as one of the effects of the flooding that plagued Guyana earlier this year and led to the government distributing billions in assistance to those affected by the disaster.

According to the bank in its latest quarterly report, Guyana’s non-oil Gross Domestic Product (GDP) growth was originally projected to be 6.1 per cent. But with the floods brought on by heavier than usual May-June rains, this may be revised.
It was pointed out that there was flooding in riverain communities throughout Guyana that affected approximately 52,000 households and caused around 200 people to be relocated to temporary shelters.
“The floods have affected all regions in Guyana spanning the coast from west to east as well as the south, where river levels rose. A regional team of experts arrived in Guyana to assess the extent of the damage. Floods have affected rice production, cash crops, livestock, transportation, and mining,” IDB noted.
“GDP growth of the non- oil sector was originally projected to expand by 6.1 percent, but that could now be subject to revision considering the current context of heavy flooding in Guyana since the end of May,” they also stated.
The IDB acknowledged the steps taken by the government to mitigate against the floods. This included declaring the flood a national disaster, passing a supplementary budget of approximately US$102 Million back in June, with US$48 million of that amount earmarked for flood relief efforts.
The financial institution also recalled the last major flood in Guyana, which was in January 2005 when GDP fell by almost 2 percent and the extent of the damage was valued at approximately 60 percent of GDP. According to the IDB, the overall economy is expected to grow by 20.9 per cent this year.
“Guyana’s GDP grew 43.5 percent in 2020 and is projected to grow by 20.9 percent in 2021. The main driver of GDP in the medium term is oil exports, which the International Monetary Fund (IMF) estimates will represent 38.2 percent of GDP in 2020 –2021,” they said.
“Although the non- oil economy contracted by 7.3 percent in 2020, the agriculture sector expanded by 4.1 percent, led by 4.8 percent growth in the rice sector and 6.6 percent in a variety of crops making up almost 11 percent of GDP. The service s sector, which makes up a quarter of the economy, contracted by 9.4 percent,” the IDB said in its report.
Between May and June this year, heavy rains resulted in widespread flooding across the country, affecting thousands of households. The devastation included submerged buildings and vehicles with adverse effects on crops, livestock and health.
It has been noted that the rainfall experienced in May alone was recorded as the second highest level of rainfall across the country in the last 40 years. All 10 administrative regions in Guyana experienced varied levels of flooding, prompting Government to roll out immediate responses such as evacuation of those most at risk and flood assistance.
Following extensive fieldwork, the President had announced in a national address last month that $7.8 billion in flood relief assistance would be provided for citizens and farmers who were affected in all 10 administration regions by the rains and flooding that beset Guyana earlier this year.
Approximately 52,000 households were affected in categories of homestead farmers, kitchen gardens, and households exclusive of farms/gardens. In these categories, the Head of State noted, farmers within the context of a homestead will receive $100,000 each, those with kitchen gardens will receive $50,000 each and households excluding homestead and kitchen garden will receive 50,000 each.
The President explained that the combined assistance to homestead farmers, kitchen gardens and households for these categories will be in excess of $3.5 billion. He acknowledged that whilst some large-scale farmers were severely affected, especially in the rice and poultry sectors, the ceiling of assistance will not exceed $10 million for individual farmers.
With regards to the rice sector, where 50,000 acres of farmlands and 2000 farmers were directly affected, President Ali announced that farmers with harvest ready rice that were destroyed will receive $80,000 per acre and rice sowed and lost in the autumn crop, these farmers will receive $65,000 per acre.
For land that was completely prepared but was not sowed, $45,000 per acre will be given to these farmers. In addition to this support, 60,000 bags of seed paddy will be made available. The combined assistance in these four categories will be in excess of $3.2 billion, the distribution of which has already started.