THE Ministry of Finance is expecting a slower growth rate in the country's economy for the remainder of the year in light of the September 11 terrorist attacks on the United States.

"The slower growth in economic activities in the domestic economy and the global recession has impacted negatively on our revenues", Finance Minister, Mr. Saisnarine Kowlessar told a news conference at the ministry in Georgetown yesterday.

He said a substantial amount of taxes is collected from international trade and a shortfall in revenue collection by the Guyana Revenue Authority is expected.

He, however, pointed out that the inflation rate is projected to be well within the target, and international reserves, equivalent to four months of import cover, are expected to be higher than projected.

At the half-year, the economy grew by 1.3%, Kowlessar reported.

"Although credit to the private sector has grown less slowly than anticipated, reflecting the contraction of economic activities in the second half, mortgage lending has increased at a faster pace", he stated.

He said a less heartening feature is the fact that while interest rates have been declining, the spread between the savings and lending rates has increased.

There had been a marginal deterioration in the current account deficit of the balance of the payments, as a result of lower domestic production and export prices, and higher fuel costs, the Finance Minister said.

This deficit, he said, will be financed by strong net capital inflows.

Strict monitoring of current expenditure and delays in the implementation of some capital projects should ensure that the fiscal deficit does not deteriorate markedly, Kowlessar projected.

He recalled that just over five months ago, the Government presented the budget for this year, the first since it was returned to office at the elections in March.

He said the violence that followed those elections disrupted economic activities and damaged infrastructure that required costly interventions to restore.

Kowlessar said the Government, in spite of this, presented "its biggest, most ambitious, tax-free budget of $64.7B" highlighting growth rate at 2.8%, inflation at 6%, fiscal deficit - 6.7% of GDP and so on.

"We were reasonably confident that these targets could have been achieved", he noted, adding that nothing prepared Guyana and the rest of the world for the cataclysmic events of September 11.

"This day of infamy saw an attack on the USA that killed nearly 6,000 persons and destroyed billions of United States dollars in property. The attack has accelerated the world economy into recession, with its attendant unwelcome consequences for our economy", he stated.

He said some of the effects will be direct and immediately felt but many are likely to impact on the country and its economy next year or the other year and will be addressed as they come.

"...but we are going ahead with our budget, with whatever we planned", he said.

Budget Advisor, Mr. Winston Jordan said some of the consequences of September 11 include remittance and insurance problems and drop in trade.

"...since a lot of our revenues come from taxes in international trade there will be some shortfall in terms of the revenue generation. What we are doing is adjusting, which should be expected from all economies in the global setting. A lot of adjustment will have to take place...", he said.

He pointed out that at the general level, businesses respond to incentives and growth in economy and there will be non-response when the economy is in a downslide.

He said some degree of mismanagement can be attributed to affected businesses, though there may be other factors.

He said the tripod on which the economy stabilises itself has been weakened over the last years since bauxite, rice, sugar for instance have been having their share of problems.

"The actual foreign exchange for open economies like Guyana which would drive growth in Guyana has not perhaps grown at the pace at which we want it to grow but at the same time, businesses themselves have not responded with the speed that is required for an increase in the globalised atmosphere that we find ourselves in", he said.

Jordan said what is needed is for those involved to reflect on the positives that have happened over the years and how they can build on those while expanding in new areas and taking advantage of emerging opportunities in the globalised world.

"Only then I believe that we would be on a path of self sustaining growth..."

He said the ministry's focus would be in the more value added areas of industry that it would want to see grow at a much faster rate - those that can provide substantial jobs while adding value to the product of the country.