Marking time
Editorial
The spectre of political instability is haunting the businessmen of Guyana and potential investors. It hangs like a cloud over this year's budget, debate on which started on Monday. Development depends on a number of things, prime among which is new investment. The budget does not contain a credible plan for attracting new investments. It makes a ritual reference to the summit with the private sector last year but that has in fact led to few concrete results. Moreover, that by itself cannot improve the business climate. The promotion of small business through the Institute of Private Enterprise Development and The Guyana Youth Business Trust are valuable private sector initiatives and there is talk of small business legislation during the year "to catalyse the growth of the microenterprise sector and to ensure its orderly development". But welcome as they are these will not provide the major boost in employment that is urgently needed to stop school leavers swelling the ranks of the unemployed. The tourist sector continues to offer promise. Will the Tourism Authority eventually be set up after so much delay? Will Minister Geoffrey da Silva be able to get things moving? Hopefully the Sustainable Tourism Conference to be held here in May will lead to some new initiatives as with the right incentives this sector could blossom quite quickly. The bad news in sugar is that not only is production projected to fall this year by 3.4% but the price is stagnant and the euro continues to weaken so the industry will receive less for each ton sold. Rice production is projected to barely grow by 0.l% but the big problem here is prices, and markets. Though overall bauxite production increased by 4.l per cent in l999 the higher valued calcined and chemical grade fell by 27% and 33% respectively. There is some hope that Bermine will be privatised this year. The engineering and construction subsector is estimated to expand by 8 per cent because of significant growth expected in residential construction, to be spurred by lower mortgage rates due to amendments to the income tax act to give concessions to lending institutions. The manufacturing sector is expected to grow by 4.5% but no basis for this projection is given. Commentators have noted that the budget lacks a vision. Ram& McRae asked if Minister Kowlessar was awaiting the completion of the National Development Strategy and questioned the wisdom of "allowing an economy that has slowed to run on autopilot". They also noted that the inflation target of 9.5% depends on the exchange rate remaining stable, "an assumption that cannot be taken for granted". The high growth rates of the economy since l990 have been severely affected in the last two years. There are a few possibilities on the horizon like the Beal deal and oil exploration. Neither of these would have much impact this year, though if oil were found that would give a considerable boost to confidence. But the short term prospects are not bright and the budget has produced few new ideas.
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