By Tusika Martin
The problems in the sugar industry during 2008 caused numerous problems for the country’s economy, leading to a decline in growth from the projected 4.8 percent to 3.1 percent.
The sugar industry did not perform as was anticipated, along with the fact that the Skeldon Sugar Factory was delayed, Finance Minister Dr Ashni Singh said.
Dr. Singh, yesterday, gave a review of the fiscal year 2008. He pointed out that despite the growth rate being lower than anticipated, this is the third successive year of expansion in domestic output.
He told the National Assembly that given the weight of sugar in the domestic economy, the manner in which this sector performed affected the overall performance of the economy.
Sugar production for last year was 226,267 tonnes from an anticipated 290,000.
This represented a 15.1 percent decline from the 2007 output, which was 266,482 tonnes. Dr. Singh said that the first crop increased by 2.3 percent to 103,280 tonnes, and was the largest first crop in four years. However, the second crop declined by 25.7 percent to 122,987 tonnes.
The Guyana Sugar Corporation (GuySuCo) has since attributed the decline to complications in the transition to the new factory at Skeldon, the impact of waterlogged soils on cane growth and sucrose content, pest infestation, and high incidence of industrial stoppages.
The minister described 2008 as a ‘tumultuous’ year with respect to the movement of commodity prices on the world market. He said that a number of measures were taken to ease the burden on consumers, and as result of these interventions, the domestic economy remained relatively insulated from the global upheavals.
The inflation rate at the end of 2008 was 6.4 percent, considerably lower than the 14 percent recorded in 2007, he said. Tax collections by the Guyana Revenue Authority during 2008 totalled $79.1B.
Internal Revenue collections amounted to $34.5 B, which is a 6.4 percent increase. Value-added and excise taxes amounted to $37.1B, a 1.1 percent increase over 2007 levels, but a shortfall of approximately 10.4 percent relative to the budgeted amount for 2008.
Reviewing the economy by its main sectors, the Finance Minister said that while the sugar industry has some difficulties, the rice sector responded to favourable price conditions with expanded acreage and upgraded equipment capacity.
These developments, he said, enabled the industry to overcome the challenges of adverse weather and untimely payments by some large millers to farmers, and increase output by 10.5 percent with some 329,574 tonnes, the highest annual production in five years.
Other agriculture subsectors also demonstrated strong responsiveness to the ‘Grow More’ campaign that was launched early in 2008.
Also in the agriculture sector, the Finance Minister said, the livestock and other crops’ sectors grew by 7.4 per cent and 7.7 percent respectively.
The fishing industry, on the other hand, continued to show the effects of contraction in the fishing fleet, depletion of fishing stock in certain grounds, the impact of fuel prices on heavily fuelled intensive operations, and lingering fallout from incidents of piracy, he said.
Together, these factors contributed to a two percent contraction in the sector’s output.
In his two-and-a-half hour presentation to the National Assembly, Singh noted that the forestry sector recorded a 15.2 percent decline in output, reflecting the effects of stronger enforcement and grading activities by the Guyana Forestry Commission.
The agriculture sector accounts for at least 34 percent of Guyana’s Gross Domestic Product.
Looking at the mining and quarrying sectors, Dr. Singh told the National Assembly that these continued their strong performance of recent years with growth of 6.1 percent in 2008. This was led by gold production, with raw gold declarations of 261,424 ounces on the back of prices that remained on average approximately 25 percent above those obtained in 2007.
Bauxite achieved outstanding growth of 22.8 percent in the first half of 2008, reflecting the conducive world market conditions during that period. However, the halving of the world market price and the accumulation of global inventory stockpiles in the last five months of the year filtered swiftly through to the domestic industry, he said.
Total bauxite production was at 2.1 tonnes which is a 6.7 percent decline relative to 2007. Diamond declarations continued to decline, he noted, partly as a result of productive capacity being diverted to the gold industry.
The manufacturing sector, he said, continued to show mixed performances, with subsectors such as rum, some other beverages, and paints recording increased production, while others, such as flour, declined. On balance, manufacturing output contracted by two percent last year.
Engineering and construction expanded by 8.5 percent, with the completion of a number of major public infrastructure projects; continued strong construction activity in the industrial and commercial sectors, and sustained expansion in residential housing development, especially in new housing schemes. Last year also proved to be another year of strong growth in the services sector. Transport and communication, he said, grew by 9.9 percent.
The distribution sector grew by 11.8 percent, reflecting both increased domestic agricultural output and imported consumer and intermediate goods.
Financial services returned a strong performance, growing by 12 percent, while rental of dwellings grew by 4.5 percent, other services by seven percent, and the Government sector by one percent.
Addressing the issue of Balance of Payments, the Finance Minister said that this reflected an overall surplus of US$7 million, a modest improvement from the deficit of US$1.4 million recorded in 2007. The current account deteriorated primarily on account of higher import prices, especially for fuel in the first half of 2008, he said.
This outweighed the combined strong performances of export earnings and higher current transfers, and resulted in a current account deficit of US$299.1M, as against US$189.1 M recorded in 2007.
Export earnings increased by 14.4 percent to US$798.4M, primarily reflecting the favourable conditions that obtained in the world market for primary commodities for much of the year.
The capital account, the minister said, recorded a surplus of US$305.7 M, compared to US$168.7M in 2007. The improvement in the capital account, he noted, outweighed the deterioration in the current account, and the Bank of Guyana increased its external reserves position to US$355.9M compared with US$312.5 M at the end of the previous year.
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