Economic prospects
Editorial
In an article in the Sunday Mirror economist Rajendra Rampersaud notes that last year was not an easy year for the economy. Rice and sugar production fell below target, ending at 25l.0 and 239.4 thousand metric tonnes respectively. Export proceeds for sugar were also affected by the weak Euro. Unpredictable weather patterns continued to affect the agricultural sector. Sugar was still the biggest earner of foreign currency, estimated at US$l34 million compared to US$l36 million the year before. Bauxite exports were estimated at US$74 million, down from US$77 million in l999 but gold exports were up US$l3 million at US$l22 million. Rice exports earned US$52 million, down 26% from l999. On the other side of the equation merchandise imports were estimated at US$635 million, up l5.5% on l999. High oil prices did not help. The current account deficit is estimated at US$l33 million but the overall balance of payments, says Mr Rampersaud, is expected to be positive due to greater debt relief and capital inflows. Gross international reserves stood at US$275 million, equivalent to about 5 months of imports. There was debt reduction of US$590 million under the Enhanced Highly Indebted Poor Countries Initiative which will reduce the debt to under US$l billion and the debt servicing ratio is down to l5% of export earnings, as against 47% in the nineties. The freeing up of resources from debt servicing allowed the government to invest more in health, education, housing and water supply. What about this year? If the recent strengthening of the Euro continues that would help sugar. Can we sell more rice to Caricom? Will oil prices stabilise? Is there a chance of privatising the State owned bauxite industry? Can we attract more value added enterprises like the coconut milk factory which will be exporting its canned product? Can the timber industry which is in the doldrums recover? These are some of the big economic questions. Of course the spectre of political instability continues to hang like a cloud over everything though both Mr Clifford Reis of Banks DIH and Mr Yesu Persaud of Demerara Distillers have indicated they are proceeding with plans to expand. The coming elections will inevitably lead to some slow down in investment and business activity. And the budget will be deferred at least to the end of March. So the year will have a slow start. How quickly it will recover and get going will to some extent depend on the efficiency with which elections are held and, of course, on the level of stability that follows and the energy and focus displayed by whichever government is in power thereafter.
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