Jul 20, 2016 News
By Jarryl Bryan
In the wake of the discovery of further oil reserves in the Liz- 2 well, Guyana has moved from a lower middle income into the upper middle income classification. This is according to the World Bank, as of July 2016, after doing its annual revision of the world’s economies.
Each year, the World Bank conducts an analysis of countries around the world, by using their Gross National Income (GNI) per capita. Low income economies are those with a GNI per capita of US$1,025 or less in 2015.
Lower middle income economies are those with a GNI per capita of between US$1,026 and US$4,035. Upper middle income economies are the ones with between US$4,036 and US$12,475, while high income economies are the ones with a GNI per capita of US$12,476 or more.
Guyana’s basic minimum wage is $50,000 (US$250) or $600,000 (US$3000) per annum. Currently, its income tax threshold is $660,000 (US$3,248) per annum.
While this change places Guyana in an enhanced standing on the world stage and is an indicator of growth, it will also mean a change in Guyana’s eligibility to access loans from the World Bank.
Guyana is now on par with its oil-producing neighbour Venezuela, which has fallen in the latest World Bank statistics from a high income to an upper middle income classification. Venezuela has recently been in the throes of an economic crisis which has seen riots and street violence over food shortages.
Equatorial Guinea has also fallen from its perch as a high income economy to an upper middle income one. Georgia, once part of the Russian Empire, has also jumped from a lower middle income to an upper middle income economy.
Last year ExxonMobil (which drilled the Liz- 2 well), made a deepwater discovery of oil in the Stabroek Block, located around 120 miles offshore Guyana. In the wake of the impending multibillion oil sector, there has been a rush to put measures in place.
For instance, the administration is looking at countries with Sovereign Wealth Fund (SWF) mechanisms in place. This is with a view of managing the revenue Guyana will get from the oil. In addition, the Ministry of Education announced that a Petroleum Engineering course would be added to the University of Guyana curriculum.
In addition, gold production has been on the rise. Minister of Finance Winston Jordan had recently credited this to the productive output from small and medium scale miners, in addition to large companies like Guyana Goldfields and Troy Resources.
The Finance Minister had revealed that gold production for April amounted to 60,558 ounces, compared with 36,629 ounces achieved in April of last year. According to Jordan, gold production thus amounted to 222,500 ounces from January to April 2016, representing an increase of 104.8 percent for the corresponding period in 2015.
Meanwhile sugar production for January to April 2016 totaled 55,687 tonnes, compared to 67,555 tonnes achieved for the corresponding period in 2015, a 17.6 percent decline.
Guyana’s sugar export market is under threat from a major quarter, however, as the European Union (EU) took a decision back in 2013 to phase out the sugar quota system with the African Caribbean Pacific (ACP) Group of states by next year.
The country’s rice production from January to April, 2016 registered 205,208 tonnes, compared to 303,314 tonnes produced during the same period last year.
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