It is a known fact to all that the restoration of democracy after the PPP/C took office in 1992 was the dawn of a new era. Guyana had a $2.1B debt, which left the country financially paralyzed, and it took at least 10 years for the economy to be revived before we moved forward financially as a nation.
Noteworthy is that after the great flood of 2005, Guyana recorded a growth in GDP of 5.4 percent, while only 3 percent of total GDP was diminished. The global rise in fuel and food prices in 2008, when food prices in Guyana increased by 27 percent, did not affect the country’s economy significantly due to sound economic policies implemented by the administration.
The government’s initiative of increasing the tax threshold by 25 percent from $28,000 to $35,000 per month and removing the Value Added Tax (VAT) from many items played an important role in stabilizing the economy at that time.
The facts are there for Dr. Khemraj’s perusal and it is evident that this economy has been elevated from a Highly Indebted Poor Country (HIPC) status to a Lower Middle Income (LMI) country through favourable and well defined macroeconomic policies along with improved fiscal and monetary policies that can be attributed to prudent management. Notwithstanding these, the government has continued its drive for sustained growth and development. Virtually, this was not a possibility in the treacherous days of opposition rule. The slow growth from the late 1990s into the early part of the new millennium can be attributed to the opposition’s quest to make the country very unstable. The views that criminal elements were aided by the opposition also made it worse for the government, as it had to grapple with a spiraling crime wave.
The International Monetary Fund (IMF), in its outlook for Guyana in 2011, an elections year, stated that Guyana’s economic outlook remains positive. The multilateral lending agency also said that road projects, construction of a large hydropower plant at Amaila Falls (AFHP), and implementation of the Low Carbon Development Strategy (LCDS) should sustain growth levels above the long- run trend of three per cent, at around five per cent over the medium term, before tapering off in 2015 as one-off projects are completed.
Guyana’s LCDS, which seeks to boost competitiveness and private investment through its successful implementation, has significantly put Guyana on the map. As such, it is thus geared towards more sustainable development while at the same time work in conjunction with the Poverty Reduction Strategy Programme (PRSP) to reduce poverty significantly.
Further, the IDB stated that despite external and domestic shocks, the Guyanese economy demonstrated resilience and registered a fifth consecutive year of robust growth in 2010. Real Gross Domestic Product (GDP) expanded by around 3.4 per cent — slightly more than in 2009 — supported by expansion in the gold and services sectors, which helped offset lower output in the sugar sector. End of year inflation rose to 4.4 per cent from 3.7 per cent in 2009, reflecting higher food prices, as these tended to reflect the impact of higher fuel costs/procurement.
In light of the attack by the AFC, based on the trends in the mid-year report, Guyana’s economy was poised to exceed previous years’ growth. This is according to President Bharrat Jagdeo. The inflation rate at the end of the first half of 2010 was 2 per cent, driven primarily by movement in the food category; and, based on developments during this period. The major sectors upon which the economy is built, such as rice, forestry and gold, continued to be important drivers of growth, with favourable performances being recorded in other sectors, such as construction, information and communication, health, and social services.
The government, under the current PPP/C administration maintains that the favourable performance of the domestic economy demonstrates the strong underlying fundamentals on which the economy is built, and reflects gains made over the years at diversifying the sources of growth.