Jul 25, 2016 News
– but shows international community’s confidence in new Administration, says juniour Finance Minister
The World Bank’s recent announcement that Guyana has gone from a lower middle income status to an upper middle income is both a positive and negative for this country.
This is according to Minister within the Ministry of Finance Jaipaul Sharma, who stated that the new classification is an indication of the international community’s confidence in the administration.
He also pointed to the fact that it was last year that the minimum wage was raised to $50,000, possibly playing a part in the decision.
He also stated that the newly developing oil sector in Guyana could also be something which led to the World Bank’s recent assessment.
That being said, however, Sharma stated that international institutions will pay less attention to Guyana. The public accountant likened the situation to a patient on their sick bed who has recovered or a student who has graduated from school.
Sharma said that one likely effect will be Guyana having a tougher time accessing concessionary loans and better interest rates from institutions. Guyana has been the beneficiary of a number of loans and grants from institutions like the International Monetary Fund (IMF) and the World Bank.
“It is an indication of Government performance and the loopholes we have closed,” Sharma said. “They are seeing what is happening, including increased revenue collection. It is a good indicator, but we will be treated as normal.”
Guyana achieved this rating from the World Bank, as of July, 2016, after the international organisation did their 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.
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.
Last year, Exxon Mobil (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.
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 Gold Fields and Troy Resources.
The Finance Minister had revealed that gold production for April amounted to 60,558 ounces, conjectured 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 2016, a 17.6 percent.
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