– Finance Ministry notes significant expansions across most major sectors
– reduction in balance of payments deficit, climb in foreign reserves

THOUGH noting 2019 as a challenging year, the Ministry of Finance has recorded many positives in its End of Year Outcome 2019 report on the fiscal performance for the year, which showed impressive growth in Gross Domestic Production (GDP), a significant overall improvement in balance of payments’ deficit and a climb in foreign reserves.

The End of Year Outcome 2019 report, as presented by Minister of Finance, Winston Jordan, was released by the Ministry of Finance on Wednesday. It highlighted that the economy performed “creditably and remained stable”, with key macroeconomic variables continuing to be favourable and pointing to sustained growth and investments for a successive year.
The report comes as an update to the Mid-Year Report of 2019 and stands in the place of the usual update to the End of Year projections which would have been included in the 2020 National Budget to Parliament, in November 2019.
This method was not possible due to Guyana’s political situation. It may differ from forthcoming audit reports of the central government and the Bank of Guyana.
REAL GDP GROWTH
Some of the key points highlighted were an “impressive” real GDP growth at 5.4 per cent, with 4.3 per cent recorded for the non-oil economy, consistent with the rebased national account series. “The estimated real GDP for 2019 was supported by significant expansions across most major sectors, including mining and quarrying, manufacturing, construction and services. Stronger growth was constrained by a marginal decline of 0.5 percent in the agriculture, forestry and fishing industry, despite gains in rice, other crops and fishing,” the report of the Minister noted.

The quantity of paddy harvested, in 2019, reached 1,049,874 metric tonnes, the highest level since 2015. Other crops production expanded by 0.3 per cent, as a result of increased production of pumpkin, cocoa, ginger, peppers and pineapples.

Added to this, fishing experienced mixed outcomes in 2019, with finfish production increasing by 19.7 per cent over the previous year, and shrimp production declining by 28 per cent, on account of the sargassum weed invasion, among other factors. Even so, this subsector expanded by 0.7 per cent.

On the other hand, sugar production contracted by 11.8 per cent in 2019, with Guyana Sugar Corporation (GuySuCo) falling significantly short of its production target. The minister said that there was “remarkable gains” in the livestock subsector noting that table egg production grew by 45.3 per cent; beef production by 32.6 per cent; pork grew by 66.8 per cent; and mutton and chevon by 8.1 per cent.

“However, poultry production did not recover sufficiently to overcome the decline recorded at the half-year. This resulted in a 7.8 per cent decline in poultry production, in 2019, which, in turn, led to a contraction in the livestock subsector of 3.5 per cent,” the report noted.

The forestry subsector recorded notable gains at the half-year, that persisted into the third quarter; however, these were undone in the final quarter of 2019, resulting in a contraction of 3.9 per cent for the entire year.

The manufacturing sector realised significant growth of 14.7 per cent, the highest rate since 2013, when the sector grew by 8.2 percent. This achievement was bolstered by rice and other manufacturing, which expanded by 26.4 per cent and 14 percent, respectively.

Construction expanded for a fourth consecutive year, with growth reaching 3.1 per cent, 0.2 percentage points above the rate achieved in 2018 while the services sector expanded for a fourth consecutive year, in 2019, growing by 4.2 per cent, the highest growth rate over the four-year period.

Also impacting the year was Guyana’s early emergence as an oil-producing nation which resulted in a124.2 per cent expansion in the petroleum and gas and support services subsector, which, in turn, drove growth of 10.6 per cent in the mining and quarrying sector.

The year also marked the assent to the Natural Resource Fund Act of 2019 in January 2019 which has since made Guyana one of the first countries to legislate the governance and accountability structures for the management of petroleum resources ahead of the proverbial “first oil”.

OTHER SECTORS

Meanwhile, the balance of payments deficit fell to US$49 million which is substantially smaller than the US$132.2 million in 2018, and the US$106.1 million projected for 2019, at the time of the 2019 Mid-Year Report. The lower-than-projected balance of payments deficit was financed by debt relief of US$50.7 million and debt forgiveness of US$45.7 million, while net foreign assets of the Bank of Guyana increased by US$47.5 million.

Meanwhile, in line with these developments, gross international reserves of the Bank of Guyana rose to US$575.6 million, from US$528.4 million, in 2018.

The stock of money and quasi money grew by 16.8 per cent, with private sector credit rising by 8.6 per cent; and inflation remained moderate, at 2.1 per cent. Additionally, the stock of public debt fell to US$1,689.1 million, 32.7 per cent of nominal GDP.

“Going forward, it remains important to continue to foster economic resilience by facilitating growth in the non-petroleum sectors and taking the necessary steps to minimise threats, such as Dutch Disease,” the report outlined.

On the fiscal side, even though expenditure fell below the mid-year revised budget, the implementation rate of the Public Sector Investment Programme (PSIP) improved to 95.6 per cent. Added to this, the Minister noted in his report that progress continued across several sectors, in 2019, and there was focused effort in prioritising institutional strengthening and more evidence-based policymaking.

This resulted in the launching of the first two volumes of Guyana’s newest long-term plan – the Green State Development Strategy: Vision 2040. They outline the eight development objectives that will be pursued over the next 20 years. The third Volume – the Monitoring and Evaluation Framework and costing of the plan – is expected to be completed in 2020

The report noted that though the prospects of Guyana as a new oil producing country have been slowed by several emerging issues such as the postponement of the 2020 national budget to a post-election timeline and the COVID-19 pandemic, “Guyana remains among the very few countries that are expected to grow appreciably in 2020”.

http://guyanachronicle.com/2020/07/03/economy-performed-well-in-2019