Jan 30, 2016 News
-bank lending increased 20 percent last year
Government is gearing to finalise its Sovereign Wealth Fund this year, to ensure that it reaps the benefits from its industries.
The disclosures were made yesterday during the presentation of the 2016 National Budget
presentation by Minister of Finance, Winston Jordan, who declared that the country is conservatively targeting 550,000 ounces of gold- about a 100,000 ounces more than what was recorded at the end of last December.
Speaking on the mining and quarrying sector, Minister Jordan noted that in spite of the downturn in bauxite (13.4 percent) and quarrying (0.3 percent), the sector grew by a strong nine percent, thanks to a very dominant performance by gold, which grew by 16.4 percent.
Though the increase in gold production was attributed to the new entrants – Guyana Goldfields and Troy Inc. – it was the local miners who accounted for over 90 percent of the 451,490 ounces that were declared.
“The significant incentives granted to the sub-sector by this Government, undoubtedly, played a major part in the substantial increase in declaration. But Guyana remains troubled by disclosures that as many as 15,000 ounces of gold per week are being smuggled out of the country.
“We have begun to address this matter frontally and expect that all stakeholders in the sub-sector will play their part in bringing an end to this illegal practice.”
Jordan disclosed that increased export receipts of gold and “other exports”, by 6.7 percent and 9.4 percent respectively, ensured a small 0.2 percent increase in merchandise export earnings, to US$1.2 billion.
“As expected, there were significant reductions in export receipts for bauxite (16.4 percent), timber (18.5 percent), sugar (8.1 percent), and rice (11.5 percent).”
The Minister said that although the country’s extractive industries were hindered by low global prices in 2015, there were many positive developments.
“For instance, the gold industry achieved unprecedented levels of production, spurred by the coming on stream of two large gold operations. Permanent and temporary employment will continue to be generated as these two gold companies continue their expansion within the mining industry. Such bold investments are vital for economic growth and development and will be encouraged by this administration.”
However, there were worrying indications that small and medium scale operators in the sector have struggled, due to low commodity prices.
“In addition, many small-scale miners, who received concessions in 2015, were unable to take up these opportunities due to lack of tax compliance. This is indeed a cause for concern, as every Guyanese must pay their fair share of taxes. We intend to work closely with the gold mining sector to ensure sensitization on this issue.”
Despite the challenges, he assured, the efforts of local miners must be applauded, for it is the gold industry that will continue to drive growth in the economy over the medium term.
“The Government will continue to work with the extractive sectors to support increased production that is environmentally and socially sustainable.”
Jordan said that petroleum is poised to become an important industry for Guyana.
“Following earlier discoveries, Exxon Mobil will undertake further exploratory drilling of the Liza Well. Additionally, a Petroleum Prospecting Licence and Production Sharing Agreement have been signed, recently, with Tullow Guyana B.V. and Eco (Atlantic) Guyana Inc. for a small concession called the Orinduik Block, just offshore of Guyana and close to Exxon Mobil’s discovery.”
He said that despite the low oil prices, which are expected to continue through to next year, licensed operators remain committed and new venture interests are considered on a regular basis.
“These investments will bring fruitful rewards to the Guyanese, people through increased revenues, employment and income, which will propel Guyana towards achieving national as well as sustainable development goals. The preparedness of Guyanese to respond to the needs of this growing sector is critical, and as such, much emphasis will be placed on capacity building during the year.”
However, there was some bad news. The bauxite sector underperformed in 2015, largely due to low commodity prices. It will not get better this year.
“During 2016, the sector will continue to face challenges, as commodity prices are expected to remain low. Work is presently underway to stimulate greater foreign and local investment in the forestry sector, especially in value-added activities. Sustainable management of the forestry resources will continue through community training and capacity building, which will target over 400 persons.”
According to Jordan, the Government, through the Ministry of Natural Resources, will continue to work along with the international community to develop a comprehensive, equitable and sustainable international regime of compensation for the provision of climate amelioration services provided by Guyana.
This year, it is the projections that the mining and quarrying sub-sector is targeted to improve by 16.6 percent.
“Once again, this growth will be driven by gold, whose output is conservatively estimated to increase by 22 percent to 550,000 ounces. Other mining (sand and stone) is targeted to improve by 4.4 per cent, with the predictable upsurge in construction activities. As the bauxite industry continues to struggle with reorganization and soft prices on the world market, production is expected to be maintained just at the 2015 level of 1,526,467 metric tonnes.”
Meanwhile, it was also disclosed that net domestic credit of the banking system grew by 19.4 percent to $185 billion.
Loans and advances to the private sector grew by 6.2 percent. Credit to all sectors grew, except for the mining, manufacturing, other services and agriculture sectors.
“Private sector credit represented 64.1 percent of M2, compared to 61.3 percent in 2014. The public sector, which consists of deposits net of loans and advances, treasury bills and debentures, remained a net depositor with the banking system. The public enterprises (net) deposits amounted to $45.3 billion, a 22 percent increase.”
Total liquid assets of the commercial banks expanded by 14.6 percent to $122.8 billion. The banks’ excess liquid assets amounted to $47.8 billion or 63.8 percent above the required level and reflected the banks’ preference for short-term assets, comprising mainly Government of Guyana treasury bills.”
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