Month: October 2018

29 Oct
By: MOF Communications Unit 0

Public Debt Quarterly Statistics Report, June 2018

Highlights Of This Report

  • Guyana’s public debt remains sustainable with a moderate risk of debt distress.
  • In May 2018, the National Industrial and Commercial Investments Limited (NICIL) issued a US$150 million or G$30 billion equivalent bond facility, arranged by Republic Bank Limited. The Government guaranteed bond has been issued for a five-year term with a rate of return of 4.75 percent per annum. The funds raised are to be used towards GuySuCo’s capital expenditure and general operations. This is the first type of transaction of its kind in Guyana which signals Guyana’s entry into the capital markets arena.
  • There were no new external loans contracted for the first half of 2018.
  • At the end of June 2018, Guyana’s stock of public debt amounted to about US$1,631.8 million, less than 1 percent decline compared to the 2017 half-year position. Of the total stock of public debt, external debt amounted to US$1,249.5 million (76.6 percent) whilst domestic debt was about US$382.1 million (23.4 percent).
  • The main creditors accounting for the largest share of the external debt portfolio are: IDB (40.5 percent); China EXIM Bank (15.2 percent); and CDB ( 11.9 percent)
  • The external disbursing loans represent about 20 percent of the external debt portfolio.
  • The entire external debt portfolio is denominated in foreign currency with the US dollar currency being the dominant currency (73 percent) in the portfolio. This foreign currency exposure highlights Guyana’s potential vulnerabilities to solvency and liquidity risks. A depreciation in the Guyana dollar against foreign currencies, in particular, the US dollar will increase debt service payments significantly in Guyana dollar terms.
  • Guyana’s public debt portfolio is not highly exposed to refinancing risk, since total short-term debt accounted for about 21 percent of the debt portfolio at end-June 2018. Notably, the domestic debt portfolio has a high level of refinancing risk since the majority (89 percent) of the portfolio consists of Treasury Bills which have a maturity of one (1) year or less.

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Public Debt Report, Quarterly Statistics – June 2018
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19 Oct
By: MOF Communications Unit 0

Address by Hon. Winston Jordan Minister of Finance at Green Guyana Expo & International Small Business Summit

Green Guyana Expo
& International Small Business Summit

(Theme: Sustainable Economic Growth through Small Business Innovation, Entrepreneurship and transformative Government Policies)

Address by Hon. Winston Jordan Minister of Finance


Mr. Chairman
Hon Vice Presidents Ramjattan and Allicock
Other Ministers of the Government and Members of Parliament
Members of the Head Table
Excellencies of the Diplomatic Corp
Representatives of the Media
Ladies and Gentlemen
Boys and Girls:

I am honoured to have been invited to address you at the opening of this inaugural Green Guyana Expo and International Small Business Summit – the first of its kind to be held in Guyana. At the outset, let me congratulate the organisers of this event, especially the indefatigable Eric Philips, who has been relentless in his pursuit to ensure the realization of this event. As he would have indicated, it was in January of this year when he led a three-person team to my office to sell the Green Expo and Summit. I readily came on board – of course, at a cost.

I would also like to extend greetings and a warm welcome to everyone, in particular, our visitors from other climes. Your presence here today is a reflection of your desire to be an active participant in the agenda of this Expo and Summit. I enjoin you to use the opportunity of your presence in Guyana to see some of our sites and to share in the convivial atmosphere for which we are famous. Special recognition goes out, too, the many school children who are in attendance. I want to commend the organisers for inviting them to this Opening Ceremony. Youths are our present and our future. Exposure such as this can only redound to their and our benefit.

Mr. Chairman, this Expo and Summit brings together business experts from Guyana and around the world to educate and inspire local businesses to adopt new strategies and good practices that are necessary to build business resilience and competitiveness. I also expect that this summit will discuss extensively, emerging trends and practices in the green business realm. Let me also state that the convening of this Expo and Summit is another testimony of the Government charting the path to help small businesses to grow and compete successfully.

The theme for this Expo and Summit is “Sustainable Economic Growth through Small Business Innovation, Entrepreneurship and transformative Government Policies”. At this juncture of our development, when Guyana awaits the arrival of first oil, in early 2020, this theme is most apt. This event is being held at a time when the Government is developing, altering and/ or otherwise shifting national policies and investments to reflect a Green Development Agenda. Indeed, since the presentation of our first Budget, in 2015, under the theme, “A Fresh Approach to the Good Life in a Green Economy,” our Government has been pursuing, systematically, a model of development that will be characterized as green, climate-resilient and sustainable. This novel approach will see the use of funds derived from the exploitation of our oil and gas resources to finance the Green Economy. We aim to avoid the pitfalls of many developing countries, including some of our neighbours, who are experiencing serious macroeconomic imbalances and structural disruptions to their economies because of the volatility of oil prices.
In June 2012, the United Nations Conference on Sustainable Development was convened, and dealt extensively with the benefits of a “Green Economy”. Since then, a number of governments have adopted, as a matter of priority, economic diversification and expansion that is guided by a green agenda. It is believed that this initiative produces more inclusive economic growth and prepares countries to better address external challenges, such as economic volatility and climate change. And so, it is in this context, that the Government of the Cooperative Republic of Guyana remains resolute in the formulation of the Green State Development Strategy, which will guide long-term planning – to position the country to better address challenges such as economic volatility and climate change – and to make the country better aligned with inclusive growth, sustainable development and poverty reduction. I am very pleased with the overwhelming response to this activity, and look forward to speedy conclusion of the document and early implementation of the projects and programmes.
This Expo and Summit will, no doubt, create opportunities for networking and facilitate trade. I am acutely aware that once accompanied by the right policies, trade can be a principal driver to the transition to a green economy. As identified in the United Nations Green Economy Guidebook, agriculture, fisheries, forestry, tourism, manufacturing and renewable energy are six key sectors that stand to benefit substantially from trade opportunities associated with the increase demand for environmentally-friendly goods and services. Guyana is well endowed with all of these resources; together with the right trade and investment policies, the country can reap substantial benefits from increased production and exports. The resulting improvement in the country’s gross domestic product, balance of payments and national income would be most welcomed.
Mr. Chairman, I want to posit that the achievement of green growth is inseparable from developments in the private sector, particularly small and medium enterprises. In my address to the Guyana Manufacturing and Services Association’s Annual Dinner and Awards Ceremony, in June last year, I made reference to the need for the private sector to hasten the transition to a Green Economy by introducing fundamental changes to the way they conducted business. His call was made in recognition of the fact that, without a decisive contribution of the business community, the transformation of our economy would be made more difficult.
Let me emphasize, that small and medium scale businesses should not be intimidated by the presence of the large, well-established and recognized firms, which would have already established their environmental footprints. Small and medium scaled businesses have a vital role to play in the transformation process as there is now a growing demand for green products and services. And there is no shortage of ideas and opportunities for start-ups to be successful and sustainable. The key is to first find a green market niche that is consistent with market demand and the Government’s priorities and develop it. Here, Ladies and Gentlemen, I would like to introduce to drinking straws made of bamboo, one of the many products, including chairs and beds, of Indonesia with which I became familiar during my recent attendance at the IMF/World Bank annual Meetings, in Bali. Bamboo is very well known in Guyana, as it grows extensively in the wild. Just think of the possibilities of bamboo products replacing, for example, the non-biodegradable plastic straws, chairs and tables. Having banned the use of certain plastic products in 2016, our Government is committed to ban even more by 2020. Small and medium businesses have an opportunity to, in local parlance, “cash in” on the void that will be created.
Distinguished ladies and gentlemen, our Government is cognizant of the growing demand for, and the challenges associated with, financing for small and medium scaled businesses in Guyana. The cost of finance remains high and, in spite of the presence and growing influence of a credit bureau, the preference for collateral at formal financial institutions remains strong and is very often not accessible. High non-performing loans and the need for banking institutions to improve their balance sheets and capital adequacy ratio also contribute to stultification of the growth of small and medium businesses. The Government has been playing its part, investing over $1 billion dollars in grant or near grant funding in programmes such as SLED, LEN, HEYS and the Small Business Fund. We have commissioned a study, supported by the Caribbean Development Bank, to examine the feasibility and the need for the re-establishment of a development banking facility or institution to help these businesses in targeted sectors and activities. The preliminary report of the Consultant undertaking the study has benefitted from multi-stakeholder views, resulting a request to the financing institution for a broadening of the terms of reference. Small and medium businesses will benefit further from measures to be enunciated in the 2019 Budget. As our Government continues to develop the national green finance roadmap, we expect the local financial institutions to adopt a less passive approach to financing these businesses. In this regard, during the recently-held Consultations on the 2019 Budget, I asked the Representatives of the Guyana Bankers’ Association to develop new and innovative products to drive our Green Agenda.
Mr. Chairman, investment in urban and rural infrastructure is necessary to stimulate economic activities and provide easier access to markets by small and medium businesses. While the government will continue to play a key role in the provision of infrastructure, the transformational change will require large-scale private sector involvement. And so, given the restricted fiscal space, on the one hand, and the widening infrastructure deficit, on the other, a Public Private Partnership (P3) Framework has been established as a delivery model to overcome some of the challenges that hinder the execution of development projects in Guyana. The framework prioritizes core projects for collaboration between the Government and the private sector.
Mr. Chairman, to reinforce its commitment to a green trajectory, Guyana has applied and successfully gained membership to the Partnership for Action on Green Economy (PAGE). PAGE is an organization that was launched in 2013 to provide assistance to countries in their transition to a green economy and the achievement of the United Nations Sustainable Development Goals. The staff at the Ministry of Finance is working collaboratively with PAGE to reframe macroeconomic policies, practices and models that are consistent with the country’s green agenda.
Let me close by, once again, recognizing the diligence, dedication and hard work of the organizers of this event. To all those present, I leave you with this quote from George Bernard Shaw: “The love of economy is the root of all virtue”.

Ladies and gentlemen, I thank you for the courtesy of your attention.

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08 Oct
By: MOF Communications Unit 0

Minister of Finance Responds to Stabroek News Editorial

Dear Editor,

The mask is finally off, SN “Cohesion” 2018-10-07. It would appear that your editorial board is not pleased with any initiative of the government.

This editorial trotted out a tired and lazy narrative of a “bumbling” “incompetent” government that “rules over us”. Of course, this comes from a newspaper that is owned by a wealthy family that over the years has served as the megaphone for the private sector, several of whose members became obscenely rich through corrupt schemes, massive tax evasion and other nefarious activities under the former PPP/C regime. It appears that SN didn’t actually want a change of government; rather, it wanted the PPP/C government to change its ways. Unfortunately for SN, the Coalition government is a reality, over three years old. We were elected to serve the people of this country. We have been doing so; we will continue to do so, regardless of criticisms and detractors, without fear or favour, affection or ill will.

A lot of aspersions were cast on a number of my colleagues. I believe they are capable of defending themselves. As to your criticism of my so called “less than exemplary performance in charge of the Ministry of Finance portfolio,” you must have forgotten, conveniently, the deformed and broken economy that our government inherited in 2015. Lest we forget, too, that economy thrived on rampant drug trafficking, money laundering, and a banking sector in which a few institutions recklessly lent funds for private white elephant projects.

The hangover from that lending binge has resulted in an average non-performing loan ratio of 13.2%; in the particular case of one bank, one out of every three loans are now categorized as non-performing. This was a significant factor in the immediate slowing of the economy, post-2015. Just look at the half finished, empty buildings dotting the landscape and one would understand that the construction boom, hailed by the PPP/C and their admirers, was nothing but a bubble waiting to burst. More directly, the Treasury has been forced to bear the cost of a large number of reckless investments, including Skeldon, Clico, and the Marriott Hotel. It didn’t stop there: the government has had to dole out billions to settle lawsuits as well as meet the cost to retrieve the outstanding US$5M for the sale of the government shares in GT&T.

Despite that and significant challenges in the sugar sector, that we as a country are now finally grappling with, our government has provided a bailout for Guysuco- a whopping $37 billion to date.This sum excludes the $5.7 billion severance payment for workers; the transfer to central government of expenditure previously borne by Guysuco, including D&I and community centres; and debt repayments on loans contracted for the ill-fated Sugar Modernisation Project. But not once have I seen an editorial questioning the management of Guysuco about its stewardship of taxpayers monies.

Still, the economy grew by 4.5% in the first half of this year and is projected to grow by 3.7% for all of 2018. This compares very favourably to most countries in the Caribbean and Latin America. And this growth does not come from profligate government spending: Debt to GDP ratio, a critical indicator of an economy’s health, is well within the internationally-accepted limit for countries at our level of development, at around 50% and remains the second lowest in the Caribbean. The International Monetary Fund, in its May 9, 2018 mission statement said it “supports the authoritiesprudence towards private external borrowing” and that “the central government deficit was 4.5 percent of GDP, lower than the budgeted 5.6 percent. This better than expected outturn was largely supported by higher revenue arising from improvements in tax administration.” And for this, I must commend the sterling and relentless work of Commissioner General Godfrey Statia. Let us recall that back in 2013, only one third, or 992 out of 2,618 registered and active firms, filed tax returns and that out of 75,992 active self-employed persons, only 33,740 filed taxes, paying an annual average of $98,000 per person.

Meanwhile, in a press release on June 25 2018, Tahseen Sayed, the World Bank’s Country Director for the Caribbean said “Guyana is making important strides to promote financial resilience and improve fiscal management, and has embarked on a broad-based reform program. These reforms will be key to building a strong economy that is underpinned by a strategic management of public resources for the benefit of the Guyanese people.” The statement continued that “Significant progress has been made in implementing the 2016 Financial Sector Assessment Program (FSAP) recommendations, including enhancing the supervisory power of the BoG and establishing an emergency liquidity assistance framework, a national payment system and a deposit insurance scheme. The mission welcomed the establishment of a Financial Stability Unit within the BoG to assess macro-financial vulnerabilities.

So, who are we to believe? Stabroek News with its apparent axe to grind? Or the IMF, the World Bank and the other international lending institutions including the Inter-American Development Bank and the Islamic Development Bank that are increasingly viewing Guyana as a stable, well managed country with bright prospects that is ripe for sustainable development?

Also, the editorial claims, bizarrely, that public sector workers have not received a major increase in salaries since 2015. Again, a case of selected amnesia: only three months after taking office, our government increased the minimum basic salary of each public servant to $50,000. This translated to a 26.4% increase for those who earned the old minimum wage of $39,540 and 17.1% for over 4,000 public servants earning the then minimum wage of $42,703. Subsequent to this, public servants, including teachers, have seen further increases that amount to over 50% since the Coalition Government took office.

Further, our government has reduced the Value Added Tax (VAT), from 16% to 14%; reduced Personal Income Tax, from 30% to 28%; increased the tax threshold from $600,000 to $720,000 or 1/3rd of gross income (whichever is higher); made employees’ NIS contributions tax free; and reduced tolls on the Berbice Bridge. And yes, we have reduced Corporate Income Tax for manufacturing companies, from 30% to 27.5% and granted significant concessions to the gold and forestry sectors, among others.

All the while, we have kept inflation well in check:negative 3.3% in 2015, 1.4% in 2016 and 2% in 2017. Despite the desperate fearmongering of the PPP/C and fellow travellers, the Guyana dollar/US dollar rate as of May 2018 stood at G$212.48,from G$210 in May 2015. That’s a depreciation of 1.2% over 3 years. Impressive, indeed! Yet, we are conscious that more needs to be done.

As for the editorial’s claim about the “loss of all the senior officials who have resigned” from my ministry in “the last few weeks”, I refer you to a previous misguided article in which the reporter failed to seek clarity from my Ministry before publishing. In our subsequent response, we noted that “The policy of the Ministry under the stewardship of Hon. Winston Jordan is that employees who reach the age of retirement are not kept on unless they bring some special skill that is critical to the work of the Ministry, or, where suitable replacements cannot be found within the Ministry. We see this as part of giving younger civil servants the opportunities to build careers with us.” I would add that I remain extremely proud of the dedicated and highly competent team working at the Ministry of Finance. Under my leadership, this team has been able to produce, among others: two national budgets before the start of the financial year; Mid-year reports before Parliament goes into recess; two Public Debt Reports (not a requirement under any law); Public Private Partnership Framework; and more recently, a Green Paper on the Sovereign Wealth Fund. I have taken to Parliament, and had passed, more pieces of legislation than any other Minister of Finance did in their first three years.

Of course, Stabroek News itself is not immune to an exodus of skills, including competent editors and senior reporters, which is sadly apparent in the decline of its journalism over the past decade.

Rest assured that I will continue my single-minded dedication to the task at hand.

Yours sincerely,
Winston Jordan, MP
Minister of Finance

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06 Oct
By: MOF Communications Unit 0

Joint World Bank Mission visits Ministry of Finance

The Ministry of Finance is hosting a Joint World Bank Mission comprising the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA) and the International Financial Corporation (IFC) – the private sector arm of the Bank from October 1st to 9th, 2018.

The visit signals the Bank’s continued confidence in the macroeconomic stability of the economy and growing interest in Guyana’s Development Agenda, and the inclusion of the IFC underscores the importance government has placed on ensuring that the new World Bank partnership framework incorporates policies and measures to support the development of a vibrant private sector that is geared to benefit from, and to complement the emerging oil and gas sector.

During its engagement with Minister of Finance, Winston Jordan and his technical team, the Bank commended the Ministry for the high standard of Guyana’s Green Paper on the Sovereign Wealth Fund (SWF) and committed to providing more technical guidance and support as Guyana moves towards the completion of the draft SWF Legislation. In this regard, the draft SWF Act was shared with the Bank to solicit its technical review and advice given its vast experience with this type of legislation in oil producing nations.

This Mission will initiate discussions on the second tranche of the Programmatic Fiscal and Financial Stability Development Credit (DPC) and continue engagements with Government Officials and the wider stakeholder community on the preparation of a Systematic Country Diagnostic assessment for Guyana.

The first tranche was successfully negotiated earlier this year and disbursed to Guyana, the Second DPC will be negotiated and disbursed in 2019.

The Systematic Country Diagnostic Assessment is a precursor to developing a full Country Engagement Strategy that will inform the Bank’s future programming for Guyana within the next investment cycle of the Bank (IDA 19).

The Mission is led by Ms. Galina Sotirova, Country Manager for Guyana with responsibilities for the Caribbean Country Management Unit and includes Ms. Judith Green, Principal Investment Officer of the IFC and eight other senior technical experts including experts in the area of Oil and Gas.

As part of its wider mandate the Bank mission consulted widely with the Private Sector, Civil Society, several Commercial Banks and the University of Guyana among other stakeholders.

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02 Oct
By: MOF Communications Unit 0

Invitation for Bids (IFB)

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