…inflation set to increase as a result of escalating oil prices – Dr Singh
Finance Minister Dr. Ashni Singh yesterday said that the country continued on its path of growth with the inflation rate at an acceptable level.
Dr. Singh, in his budget presentation, said that despite the prevailing global conditions particularly as these relate to the difficulties facing the Euro as well as the escalating oil prices, Guyana “achieved real growth in gross domestic product (GDP) of 5.4 percent.
The Minister as he reported on the inflation rate, said that it “remained within acceptable norms at 3.3 percent in 2011, notwithstanding the background of increases in global fuel prices.”
He said that this performance reflected Government’s interventions to lower the taxes charged on fuel products and to provide financial support to the GPL to avoid full pass through of imported fuel price movement.
The Finance Minister predicted that for 2012 the growth is projected to decline to a 4.1 per cent rate while inflation is projected to 4.6 per cent which the Minster attributed to the escalating oil prices.
During his review Dr. Singh reported an 11.3 increase in rice production.
He told the House that the rice industry extended its stellar performance of recent years with total production in 2011 of 401,904 tonnes, the highest ever in national history.
He said that during the year the industry continued to expand acreage under cultivation and earned higher yields, reflecting increased training to farmers, returns from the introduction of higher yielding varieties of rice and supported by Government’s investment in drainage and irrigation.
“Investment and production in the sector were also bolstered by the benefit of stronger external market prices.”
He said, “The other agriculture subsectors grew by 5.7 percent, reflecting returns on the Grow More campaign and the Agricultural Diversification Programme coupled with more integrated market access especially with the bridging of the Berbice River.”
The Minister also reported positive news for the livestock sector which he said expanded by 5.8 per cent and is mainly attributed to higher production of eggs, poultry meat and mutton.
“On the other hand, the fishing industry contracted by 5.3 per cent, reflecting a reduction in the number of operating vessels and fishing trips associated with the increased cost of fuel and the risk of piracy and also the continued depletion of fishing grounds…
“The forestry sector contracted by 9.3 per cent.”
He reported that the mining and quarrying sector recorded growth of 19.2 percent in 2011. “Underlying this was a 17.7 percent increase in raw gold declarations to 363,083 ounces, the highest level since 2004 when Omai Gold mines was still in operation, as favourable world market prices persisted in 2011 and induced significant continued investment in the sector.”
As it relates to the projections for the year Dr. Singh reported that the rice industry is now projected to expand further to 412,425 tonnes, a 2.6 per cent increase in value added to the industry.
“This record output target places the industry in a favourable position to exploit new and emerging markets. The industry continues to reap the benefits of investments made in research and extension services and is aided by improvements in drainage and irrigation infrastructure.”
He said, too, that the livestock industry is expected to grow by a further 4.9 per cent, while the other agriculture sector is also projected to expand by four percent.
The Finance Minister said that the continued expansion in these two sub-sectors positions Guyana to take advantage of regional market opportunities while ensuring domestic food security.
The forestry sector is projected to decline by 8.2 percent reflecting the implementation of programmes to improve stakeholder capacity in areas of forest policy and sustainable forestry management.
The Finance Minister said, too, that at the end of 2011 the balance of payments reflected a deficit of US$15M.
“”This is primarily attributed to developments on the current account due to a higher import bill driven by rising fuel prices and higher levels of imports of capital goods concentrated mainly in the industrial, agricultural and mining sectors…This outweighed the collective increases in export earnings associated with higher world market prices for key commodities and net current transfers.”
The Minister reported that export earnings in 2011 expanded by 27.6 per cent to US$1.1B “primarily attributed to increase in volumes exported as well as favourable world market prices for most of the key export commodities.”
Export earnings on sugar, Dr. Singh reported, increased by 21.6 per cent to US$123.4M due to a 16.8 per cent increase in average export price coupled with a four per cent increase in export volume to 211,762 tonnes.”
He said that rice exports earnings expanded by 14.5 per cent to US$173.2M mainly attributed to a 26.1 per cent increase in average export price to US$567 per tonne, while export volume contracted to 305,382 tonnes due to a decline in stock levels at the beginning of the year.
Total gold exports was US$517.1M, a 49.3 per cent increase over 2010 and this outturn is attributed to an expansion in gold mining as both the small and medium scale miners expanded their operations, spurred by favourable world market prices, while volume increased by 14.9 percent to 347,850 ounces.
The Finance Minister reported, also, that the capital account recorded a surplus of US$373.2M compared to US$339.2M attributed to higher foreign direct investment concentrated mainly in the mining, and telecommunication sectors.
“Reflecting these developments, the Bank of Guyana ended the year with total external reserves of US$798.1M, equivalent to 4.2 months of imports.”
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