Non-oil economy, tourism sector contracted because of COVID, political crisis – Minister

…says budget includes stimulus for small & medium-sized businesses

While the former Government often boasts of the 4.7 per cent overall growth of the economy in 2019, this statistic masks a frightening truth. The non-oil economy, which is a major employer of Guyanese in a way the oil sector cannot match, has contracted and resulted in major job losses.

In her 2020 budget presentation, Minister of Tourism, Industry and Commerce Oneidge Walrond informed the National Assembly that the 18 months of political uncertainty and the COVID-19 pandemic has wreaked havoc on both the non-oil economy and the tourism industry.
She noted in the area of tourism, 62 per cent of hotels, guest houses, resorts and other places that provided entertainment and leisure are either closed or have drastically scaled down their services. In addition, Guyana’s non-oil economic Gross Domestic Product (GDP) will contract by up to 5 per cent.
“In times of uncertainty, investment is curtailed, production and consumption is reduced, employment is affected, less revenues accrue to governments to provide essential services, all leading to a vicious cycle of economic dysfunction, that hurts predominantly the most vulnerable among us.”

“As is well known, the political uncertainty of 2019 and early 2020, transitioned into a full-blown crisis in the aftermath of the general elections, which was intensified by the globally unprecedented occurrence of COVID-19 pandemic,” Walrond explained.
Even small and medium-sized businesses, that Walrond reminded the National Assembly were also members of the Private Sector, have not been spared. In fact, they are among the worst hit by the pandemic and political crisis, since, according to her, many have had to downsize.
“When the Private Sector thrives, the people thrive. The Private Sector employs people. The Private Sector pays taxes, with which we fund essential services, for people. The Private Sector brings in foreign currency. The Private Sector is one of the most important components in alleviating poverty. Economic development is unthinkable without the growth of the Private Sector,” Walrond said.
“These events have had a devastating effect on business and commerce. While the Guyana economy is overall expected to grow by approximately 33 per cent this year, the non-petroleum economy GDP is expected to contract, by up to 5 per cent. It is this non-petroleum economy which accounts for the employment, the livelihoods and the prospects of the majority, thousands of Guyanese citizens including the most vulnerable.”

Relief measures
Budget 2020 was presented under the theme “Our Plan for Prosperity: Protecting our People in a COVID-19 Environment; Strengthening Democracy and the Rule of Law; Incentivising Economic Growth and Job Creation; and, Enhancing Welfare.”
Walrond reminded that many small and medium-sized businesses, which are part of the private sector and are operated in some instances by single parents, are important in Guyana’s economic growth and job creation. According to Walrond, the budget caters for everyone in the Private Sector, from the small to medium to the large-scale employers.
Her Ministry has received some $2 billion in capital and current allocations. Some of this money will go to a small business development fund, which is tailored to assist small enterprises and at the same time keep persons employed
“On the theme of relief and recovery, the small business development fund is going to be a key instrument in our pandemic response. It’s going to be a mechanism where much-needed resources are channelled to small, medium and micro enterprises.”
According to Walrond, the money will be given “especially those which demonstrate a commitment to preserving employment. We have programmed $100 million for the fund, through which we will disburse small business relief grants for qualifying.”
She further explained that $21.8 million has been allocated to upgrade community-based tourist facilities, as well as to implement COVID-19 protocols. The money will also be used to equip communities for receiving visitors in a post-pandemic environment.