The Minister of Finance recently reported on the state of our economy as of the first half of the year. This means that the effects of the Linden protests would not have been factored into the figures. Overall, the Minister indicated that the economy grew by 2.8% up to June. He did not indicate whether the Linden protests might impact negatively on the achievement of the projected 4.1% growth rate for the year. The latter figure had already been lowered in March from the original projection of 4.6%, on account of escalating oil prices.
In making his presentation, the Minister noted: “Given the significance of sugar and the volatility of sugar production in recent years, we have been computing a non-sugar GDP.” If we excluded the performance of sugar, the economy actually grew by 6.2% for the first half of the year. What this signals, is that if sugar had performed to expectations, our growth rate would have been so much significantly higher.
But we cannot dismiss this ‘what might have been’ as simply due to ‘the volatility of sugar production.” This euphemism will not do us much good. It also vitiates the claim of the Minister about the “continued progress on the diversification of the productive sector where we have now arrived at a point where we are no longer as we were 10 years ago, entirely dependent on one, two or three dominant sectors”. If sugar were performing, we would still be relying on sugar, mining and rice for the bulk of our production – as we have done for almost the last century.
The sad truth is that our US$200 million investment in the Skeldon expansion is acting as an albatross on our economy and we cannot whitewash it by talking about a ‘non-sugar GDP”. We have to make a decision about what to do with sugar. We know that remedial works are scheduled to be conducted on the Skeldon Factory in November. But we stand with GAWU that there is something fundamentally wrong with the factory and that the authorities must ‘come clean” on it.
Over the last few years we have lost over 100,000 tonnes of production per year at a time when the price of sugar has been at a historic high. This means we have lost more than US$162 million (GY$32.4 billion) over those three years. Additionally, the cost of production has risen astronomically rather than coming down to the US.08 cents per pound projected, because of Skeldon’s problems. Consequently, we have not made as much profits as we could have on the approximately 230,000 tonnes we have been producing.
The economic ‘diversification” that has given us a positive growth rate even with the dismal fall of sugar is the increased production of gold, which has boosted the mining sector’s contribution to the GDP. While we must welcome this development, we cannot be complacent. As an extractive industry, unless the revenues are ploughed back into productive investments in the country all we will be left with after the gold runs out will be some rather large craters in the ground; mercury in our soils and waters and silt-laden rivers.
The Minister noted the slow turnaround in the bauxite industry with annual increases in production and exports. The increase for the half-year was an astounding 41.9%. It is for this reason we have been extremely sceptical of the decision of Bosai workers to effectively strike against the company when they chose to engage in protest actions rather than show up for work. The company lost significant production in the month-long shutdown as well as lost revenues in demurrage costs. Additionally gold miners were adversely affected when they were blocked from entering the mining areas because of the blockade of roads.
All of this will certainly place a strain on the attainment of our projected growth rate. We have to intensify real diversification. At the just concluded Economic Forum -hosted by the IMF and CDB – medical tourism and ICT services, already launched, were mentioned.