Sep 08, 2016 News
The gold sector has delivered a remarkable performance thus far for 2016.
In fact, a holistic view of that sector along with other revenue earners would give the impression that the economy seems to be doing just fine.
But is the performance of the gold sector masking an unsavory truth?
According to the political opposition, what lies below the flowery picture of continued economic growth under the Government, is a worrying economic decline.
Specifically speaking to this matter was Opposition Member, Irfaan Ali. He believes that there is now consensus among many that the economy is backpedaling or in reverse gear.
Ali said, “The contraction is felt by all and sundry and after a prolonged period of silence, even some apologists are provoked by their conscience to admit that the economy is on a slippery slope.”
He continued, “At first, some of the apologists were out and about arguing that the economic slowdown was transitory and linked to the anxiety associated with the 2015 elections. However, since the elections ended 15 months ago, evidence shows that the economy is regressing at lightning speed. It has become difficult for the spin doctors to sell the story that ‘elections jitters’ is stifling our economic performance.”
The Opposition Member added, “The harsh reality is that every major economic sector recorded lower output except the mining and quarrying sector. As I had explained before, the production of gold by two foreign companies, which set up operations under the PPP/C government, masked our economic decline.
As a matter of fact, if we were to exclude the production of gold by these companies from the computation of the real growth rate we would be posting negative growth rather than the 2.0 percent reported by the Minister of Finance, Winston Jordan.”
According to the 2016 Mid-year report, the mining and quarrying sector grew by 65.7 percent during the first half of the year buoyed by significant growth in the gold industry and improved performance from the bauxite industry.
The report said that production in the gold industry reached 322,493 ounces during the first half of 2016, an increase of 94.3 percent over the same period in 2015. Improved oversight of the industry and granting of concessions to the sector were among factors that contributed to an increase in output.
Statistics however show that other sectors did not perform so well.
In the case of the forestry sector, this contracted by 13.1 percent during the first half of 2016 compared to the same period in 2015. This was due to the fact that several concessions issued by the Guyana Forestry Commission (GFC), were not fully operational. It is anticipated that the second half of the year will see operators fully mobilized and a corresponding increase in production as compared to the first half, where mobilization of labour and equipment happened late in the second quarter.
The manufacturing sector contracted by 14.1 percent during the first half of 2016, largely as a result of the decline in output of rice and sugar.
Overall, the agriculture, fishing and forestry sectors contracted by 10.0 percent, in spite of growth in the livestock, other crops, and fishing subsectors. The report said that sugar production for the first half of 2016 was a disappointing 56,645 tonnes, or approximately 30 percent below production at mid-year 2015.
This shortfall in production was mainly due to the severe El Niño dry spell, from September 2015 to April 2016, which affected the growth of the canes which, in turn, resulted in lower yields.
This, combined with the Guyana Sugar Corporation (GuySuCo)’s inability to irrigate the fields, coupled with delays in the acquisition of fertilizer and fertilizer application, further compromised the quality of canes harvested. Following the shortfall, the industry’s target for 2016 has been revised to 218,188 tonnes from the budgeted 231,145 tonnes.
Ali said that since the economic decline has touched all the major economic sectors as well as every Guyanese, it is not easy for “the spin doctors” to sell the story that the country is prospering. He said that they are now serving large dosages of outlandish excuses.
He said, “The excuses range from claims that our economic slowdown was due to contraction in the underground economy to the weather phenomenon commonly known as El Niño. When they can’t blame it on the rain they just blame the sun and dry weather or something which is not observable.”
The Opposition Member said that those who understand the workings of the country’s economy would accept that the economic decline is due to several factors.
He said that these include the general decline in domestic income and consumption caused by the notable collapse of the major economic sectors; lower foreign and domestic investments and slippages from the poor implementation of the Public Sector Investment Programme (PSIP). Ali opined that the lower consumption is manifested in lower Value Added Tax collection, reduction in retail and whole trade and the 2.5 percent reduction in currency in circulation as reported by the Bank of Guyana for the first six months of 2016.
The PPP Executive Member said it is for this very reason the ‘good life’ that the economic growth was supposed to deliver is simply considered a mirage by the average Guyanese.
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