NEW YORK: Business is not all that bad as data for private sector credit for the third quarter of the year has shown growth, indicative of an improvement in private sector outlook. With this encouraging development, Finance Minister Winston Jordan said maintaining a stable political climate remains a priority for the government.
Over the last 12 months, he said the prolonged political contretemps of prorogation, dissolution and the eventual holding of elections engendered a lack of confidence in the future, reflected in delayed investment decisions, a fall-off in investments, and reduced public and private sector spending.
The consequence of all of that was the inevitable contraction of the economy.
Mr Jordan also pointed out that environmental vulnerabilities are ever present and can have detrimental effects on the economy.
Guyana has to contend with rainy seasons, flooding, and droughts and there is a very high probability that at least one of these phenomena will occur each year.
By mid-year 2015, the forestry, sugar, rice, and fisheries sub-sectors had all been affected by environmental factors, resulting in lower economic activities and, by implication, lower growth in Gross Domestic Product (GDP), export activities and balance of payments.
According to the Finance Minister, the effects of climate change now requires investment in climate change adaptation and disaster risk management, which, though challenging, present new opportunities for private sector involvement.
“We operate in a competitive world, where countries produce similar products and often, much more efficiently than we do. Guyana’s economy still depends heavily on the production and export of primary commodities.
VULNERABILITIES
“We have vulnerabilities due to export and import concentration. If there are global price and demand changes, these shocks are felt throughout the economy, including our balance of payments. Yet repeated budget speeches of the past administration point to the ‘resilience to the economy’, while failing to acknowledge and recognise that the economy’s characteristics have changed little in the last 50 years. We must also keep in perspective that Guyana’s economy is producing, in many cases, with aged machinery and aged production processes,” he pointed out.
Guyana, today, he said is classified as a low-middle income, resources-driven economy. Resource-driven economies are mainly successful when six core elements are present. These are building the institutions and governance of the resources sector; developing infrastructure; ensuring robust fiscal policy and competitiveness; supporting local content; deciding how to spend a resources windfall wisely; and transforming resource wealth into broader economic development.
“Today, as we seek to become a ‘green economy’, several of these core elements are also necessary for implementing a low carbon trajectory towards a green economy. We inherited the Low Carbon Development Strategy (LCDS) and are committed to the REDD+ [Reducing Emissions from Deforestation and Forest Degradation] arrangement and the partnership we have with Norway.
“However, the strategy needs to be placed within the context of a fully-integrated and mutually-supportive legal, regulatory, fiscal and financial framework. Further, the strategy cannot be a substitute for a long-term development plan nor long-term development planning,” Mr Jordan pointed out.
STRENGTHENING CAPACITY
To address this lacuna, he said the government has approached the Caribbean Development Bank to strengthen its capacity for long-term planning.
The Finance Minister said a major challenge facing Guyana is how the country must leap-frog the lack of an industrial age revolution through a low carbon trajectory to create a sustainable green economy, in which manufacturing plays a significant role in job creation.
Even more problematic is the absence of a human resources pool to successfully execute the LCDS to green economy transition, he noted.
“This is why our Government, through the Minister of Education, has been speaking about STEM [Science, Technology, Engineer and Mathematics] education and of a re-tooled and re-focused University of Guyana (UG). We hope the private sector and, especially manufacturers, can join hands in strengthening UG and create mutually beneficial partnerships.
“For Guyana to optimise and maximise its manufacturing competitiveness, given our focus on a ‘green economy’ and a low carbon pathway, our government plans to engage the private sector, civil society and our development partners in an ongoing process of national dialogue so that we can reach a national consensus on the sustainability of a singular LCDS approach to sustainable development,” Mr Jordan said.
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