Category: Highlights

21 Jan
By: MOF Communications Unit 2

Guyana’s Natural Resource Fund attains associate membership at IFSWF

(Georgetown, 21-01-2020) – Guyana’s Natural Resource Fund (NRF) has attained associate membership of the International Forum of Sovereign Wealth Funds (IFSWF); a global network of sovereign wealth funds of more than 30 countries including Singapore, Botswana and Australia. 

The IFSWF works to foster good governance, transparency, accountability and prudent investment practices within its members through the application of the Santiago Principles, helps them navigate the complex investment environment through knowledge sharing, and represents the ‘views of members to the wider financial community.’ 

The NRF was established in 2019 under the Natural Resource Fund Act 2019 and is designed to manage the revenues garnered from Guyana’s petroleum resources for the present and future benefit of the people, and for the sustainable development of the country. The Ministry of Finance has entered into an operational agreement with the Bank of Guyana to manage the Fund. 

The achievement of associate membership demonstrates Government’s commitment to transparently manage Guyana’s petroleum revenues.  

Read more about the NRF at finance.gov.gy. and at https://www.ifswf.org/members/natural-resource-fund.

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12 Dec
By: MOF Communications Unit 0

Ministry of Finance and Bank of Guyana Sign Operational Agreement for the Operational Management of the Natural Resource Fund

As part of Government’s preparations towards becoming a petroleum producing country and in anticipation of first oil in 2020, work commenced in earnest in 2017 on the drafting and consultations regarding the development of a Sovereign Wealth Fund (SWF) legislation for Guyana. Different countries who are fortunate enough to have such funds, determine the scope and objectives based on national development priorities and the Santiago Principles. The better managed of these funds have benefited from a core of competent professionals, effective and robust institutional mechanisms and transparent management and reporting mechanisms.

In Guyana’s case after several rounds of internal consultations, international expert consultations, examination of other country experiences and drafting support, particularly from the Commonwealth Secretariat an initial draft legislation was developed. In an effort to ensure awareness and secure public feedback on the content of a potential SWF, His Excellency requested the development of a Green Paper to be laid in Parliament. A Green Paper titled Managing Future Petroleum Revenues and Establishment of a Fiscal Rule and a Sovereign Wealth Fund was developed and published in August 2018. This supported wider stakeholder consultations with the private sector and civil society as well as international agencies and experts. Based on the feedback and comments received for our private sector groups and civil society engagements the Natural Resource Fund (NRF) Bill No. 14 of 2018 was tabled in Parliament on November 15, 2018 and assented to on January 23rd, 2019 – making the Cooperative Republic of Guyana one of the few countries in the world to have developed this type of legislation ahead of first oil!

Notable features of this landmark legislation – the Natural Resource Fund Act – include (i) a withdrawal rule that permits a flow of funds from the NRF into the national budget that is formula based; and, (ii) a design to achieve multiple objectives of – a) reducing the transfer of the volatility of oil prices and production into the economy, b) meeting the immediate and urgent development expenditure needs of our country and in turn benefits to our people, and c) intergenerational savings to ensure that the benefits of the extraction of this resource are shared across both current and future generations, recognising that oil is finite.

In order to ensure those savings are wisely and safely held and invested, the NRF Act of 2019 stipulates the mechanisms under which revenues will be deposited and how investments are to be conducted, including the eligible investments allowable. The Bank of Guyana has been mandated by the NRF Act to ensure that the NRF is managed prudently. Other countries that have similar funds managed by their Central Banks include Norway, Chile and Botswana. The inflows to the NRF will be in United States of America Dollars which will be deposited in US bank accounts held by the Bank of Guyana. It is important to note that most central banks and SWFs manage reserves by holding them in foreign denominated currencies outside of their jurisdiction. In preparation for its role as operational manager of the NRF, the Bank of Guyana has begun building additional capacity, supported by the World Bank’s Reserves Advisory and Management Programme (RAMP), with whom an agreement was signed on October 1, 2019.

On December 11, 2019, the NRF was one step closer to being operationalised after the Minister of Finance, Hon. Winston Jordan, and the Governor of the Bank of Guyana, Dr. Gobind Ganga entered into an Operational Agreement for the operational management of the NRF, in accordance with sections 11 and 12 of the NRF Act 2019.

This Agreement sets forth the obligations of the Bank of Guyana as the operational manager of the NRF, which include: 1) receiving and accounting for all deposits into the NRF; 2) investing the NRF In eligible asset classes; 3) appointing private managers and custodians; 4) reporting on the performance of the NRF on a monthly, quarterly and annual basis; 5) implementing management systems, procedures and risk management arrangements in accordance with international standards; and, 6) providing the public with information on the NRF as required by law; among others.

The Agreement, which will be published on the Ministry’s website in accordance with section 42 of the NRF Act, also includes the obligations of the Minister of Finance as the overall manager of the NRF that will allow for the effective operational management of the NRF by the Bank of Guyana. Additionally, the Agreement identifies certain principles for the operational management of the NRF to ensure transparency and accountability. Other important aspects of the Agreement include the fees to be charged by the Bank of Guyana, procedures for the appointment of private managers and custodians, and the liability for losses that may occur.

Signing today is a significant next step in establishing strong institutional arrangements to support the effective management of our petroleum revenues.

 

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07 Sep
By: MOF Communications Unit 1

Commissioning of Lube Bond and Office Facility – Address delivered by Hon. Winston Jordan Minister of Finance

Chairman and other Members of the Board of Directors
CEO, Management and Staff of GUYOIL
Representatives of the Media
Distinguished Ladies and Gentlemen

Good afternoon!

First, let me thank Ras Camo for that lovely Guyanese patriotic song, “Oh Beautiful Guyana”. That song keeps reminding us of what a blessed place Guyana is, especially in light of the devastation wreaked on The Bahamas by Hurricane Dorian. I distinctly recall many Guyanese who left these shores in the 1970s, 1980s and 1990s in search of a better life. Many of our teachers, who were educated at Cyril Potter College of Education and Lilian Dewar College and who were the beneficiaries of free education, left these shores for The Bahamas. Many of them probably lost everything as a result of Hurricane Dorian, which packed winds in excess of 200 mph. I take this opportunity to commiserate with the people of The Bahamas in this time of grave suffering. I understand that they intend to rebuild stronger and better. However, these powerful hurricanes are becoming more frequent. A Category 5 hurricane is classified as one packing winds upwards of 155 mph. However, with Dorian, the Scale may have to be extended to Category 10. The point is that we will have to think well beyond just put in place more resilient infrastructure. It is time these islands consider their long term future and examine how, in the context of the CARICOM family, they can take advantage of the bounties Guyana has to offer. Just some food for thought.

The second comment I would like to make, before touching on my Address, is that, at nearly $300 million, the planners of this modern edifice should have considered moving the entire staff from their Headquarters in Camp Street. This would provide synergies, economies of scale and general cost savings. In addition, the City is beyond congested; the future is the East Bank. Already, a number of businesses have established in the Providence area. Many housing schemes are springing up in several villages. And, with a road connecting the East Coast of Demerara with the East Bank of Demerara at Ogle and Timehri, new lands will be opened for business, farming and housing. So, the place to be is the East Bank; it provides easier passage to higher ground on the Linden Highway, should the low-lying coast be visited by a watery catastrophe.

Nevertheless, I am delighted to join you today for the commissioning of this modern Lube Bond and Office Facility. At the outset, please allow me, Mr. Chairman, to add my own special welcome to each of you and to thank you for your presence.

Mr. Chairman, the construction of this facility is, indeed, a positive development, as it is yet another indication of the great strides that the economy is making. Any economist would tell you that a good barometer of how well an economy is doing is the growth in construction. In fact, it is rumored that, in an attempt to understand how the economy was progressing, a former Governor of the Bank of Guyana would mount the last flight of stairs to the Roof Garden of the Bank, where he would enjoy a panoramic view of cranes, derricks and smoke-emitting chimneys.

If people are constructing, they are showing faith in the future. They would have made their own assessment and come to the conclusion that it is worthwhile putting down a permanent structure. All over the country, things are happening, something is being constructed. As a result, at the half year, the construction sector had grown by 8.2 percent, following 8.1 percent growth at the similar period last year. And, buoyed by this growth, we have projected the sector to grow by 11 percent by the end of the year. Overall, we project the economy to grow by 4.5 percent in real terms, the fifth consecutive year of growth under the Coalition Government; it would represent another year of solid, broad based growth, and give credence to the NASDAQ prediction of Guyana having one of the fastest growing economies in the world. This performance would nail the lies of the haters, the naysayers, the detractors and the fault-finders who see nothing but gloom in a country bristling with promise and progress, and making its way to prosperity. On the other hand, it would be sweet music to the ears of investors, both foreign and local, who have been exuding confidence in the long term prospects for the economy, ever since Exxon 13 + Tullow 1 have de-risked the Guyana petroleum basin.

I understand that this building is 100 percent solar powered, in keeping with the company’s strategic objective of “energy conservation in alignment with Guyana’s green initiative.” Solar power ranks highly amongst the cleanest and most green energy sources, since no pollution is created in the process of generating electricity. Evidence has also shown that although renewable energy requires upfront capital, it is one of the lowest cost energy options available, the most compelling reason for its utilization globally.

I have no doubt that this investment, while supporting the country’s long term development strategy, will reduce the company’s expenditure, improve its profitability, and put it in a better position to make larger dividends and other transfers to the Treasury. Unlike many of the commercial corporations that still shelter under the public umbrella, Guyoil has been a net contributor to the Treasury. However, while this position is not threatened with reversal anytime soon, GUYOIL has faced some challenges, in recent times, that have had an effect on sales volume, sales receipts and the bottom line. I know that the Board and Management will be working assiduously to reposition and realign the corporation as quickly as possible.

Be that as it may, I would like to applaud the Board of Directors and Management of GUYOIL for taking the initiative to go green. Transforming Guyana into a green economy requires the support of all stakeholders, particularly key stakeholders like GUYOIL.

The commissioning of this facility is also taking place at a time when the Government, in pursuit of its green agenda, is putting together an energy plan with an appropriate energy mix, utilizing solar, wind and hydropower, among other clean energy sources. Guyana is largely endowed with all of these resources and the discovery of oil and gas, in impressive amounts, has enhanced the country’s natural resource mix. This Government is aware that low cost, reliable and affordable energy supply is critical to economic growth and development, and has started to invest in renewable energy projects. I should like to use this opportunity to highlight the efforts of my Administration to diminish our dependence on fossil fuels.

The main electric utility, Guyana Power and Light Inc. (GPL), is preparing for utility scale solar PV farms for the national grid. With funding available under the Guyana REDD+ Investment Fund (GRIF), Guyana is pursuing 30 MW solar PV farms for the Demerara-Berbice Interconnected System and 5 MW (combined) for the Essequibo Coast and Leguan Systems. In addition, the Global Green Growth Institute (GGGI) is supporting the Government of Guyana and the private sector to advance solar PV initiatives under a pipeline of projects.

Our Government installed the first Solar PV Farm in Mabaruma, Region 1 with an installed capacity of 400kW. However, because of damage caused by lightning during installation, the completion has been delayed.

Through support from the Government of Japan and the Japan International Cooperation Agency (JICA), we will benefit from a Renewable Energy and Energy Efficient Power System Project. This project comprises 2 components: (i) Technical Loss Reduction for the GPL Power System; and (ii) Installation of a 400kWp solar PV system with storage, along with a Building Energy Management System at the Caricom Secretariat building.

During 2020-21, we will install 3 utility scale solar PV Farms in Bartica (1.5MW); Lethem (1MW); and Mahdia (0.65MW). In addition, Guyana’s proposal for 3 additional utility scale solar PV Farms for Port Kaituma (0.65MW); Kwakwani (1MW); and Matthew’s Ridge (0.4MW), under the International Renewable Energy Agency/Abu Dhabi Fund for Development (IRENA/ADFD), was approved in January 2019.

With grant funding from the United Arab Emirates Caribbean Renewable Energy Fund (UAE-CREF), GPL will benefit from the installation of 600 kW Solar PV Farm at Wakenaam, with battery storage to supply the island with about 80% of its energy needs.
Also, the Government has embarked on a Green Public Sector Programme, in keeping with a Presidential charge for the public sector to lead the way in transitioning towards greater renewable energy use. During 2015-2019, rooftop solar PV systems were installed at 291 Government buildings resulting in a total combined installed capacity of over 5 MW.

The Guyana Energy Agency is carrying out a pilot programme for stand-alone solar street lighting and, to date, 65 solar powered LED street lights have been installed. An additional 400 solar powered LED street lights is being installed in 2019.

In addition, as a member of the International Solar Alliance (ISA), we have submitted an application for support for the implementation of a solar PV programme that targets off-grid Solar PV, with storage for hinterland communities and rural electrification. The programme will provide sustainable electricity and potable water to hinterland villages.

In the area of hydropower, we completed the construction of a 20 kW hydropower power plant at Hosororo, in Region 1, in 2018, and we will start the construction of a 150 kW hydropower power plant in Kato, Region 8, in 2019. In addition to these projects, several other hydropower stations are planned for the 2021-25 period, including Moco Moco (0.7 MW); Kumu (1.5 MW); and Ikuribisi (1 MW).

We hope to add a 188 MW Natural Gas Power Plant, in the not too distant future, to complement our intricate energy mix. Although not “green”, it is a cleaner source of energy when compared to our diesel and fossil fuel power generation options. Already, our Government has commissioned studies to assess the viability of this project, including looking at options, cost, impact and key considerations of transporting and utilizing offshore natural gas for electricity generation and incentivizing the growth of our fledgling manufacturing sector.

In the area of energy efficiency, over 26,400 LED lights and 4,500 occupancy sensors were installed by the end of 2018 in public buildings, ministries and schools. With support from the Government of Japan, the Japan Caribbean Climate Change Partnership (JCCCP) and the Japan International Cooperation Agency (JICA), Guyana commenced the planned installation of over 11,000 energy efficient street lights, which will continue during the remainder of 2019 and 2020.

An LED Lighting Replacement Programme is being implemented for the residential and commercial customers of the 6 Hinterland utilities (Kwakwani Utilities Inc., Lethem Power Company Inc., Mabaruma Power and Light Inc., Port Kaituma Power and Light Inc., Mahdia Power and Light Inc., and Matthew’s Ridge Power and Light Inc.) The objective of the Programme is to promote energy efficiency and conservation in connected households and commercial businesses by replacing older lighting technology with LED lights. A similar programme is planned for 2020 for Linden, Bartica, Leguan and Wakenaam.

Mr. Chairman, when this Government took office, in May 2015, there were many communities in Guyana that had access to little or no electricity. Renewable energy has taken electricity to remote and other communities in Guyana, improving living conditions and changing peoples’ lives forever. Many of our Indigenous communities are able to establish commercial activities for the first time because they now have access to electricity. Children in Indigenous communities are performing better at school because they have electricity and can spend more time doing homework.

And please note, ladies and gentlemen, that Guyana will not be the only oil producing country to pursue a renewable energy path. In fact, Norway, a major oil producing country, sources most of the electricity generated in the country from renewable sources, and is considered a world leader in the use of renewable energy.

You all are aware, that the impressive developments in the petroleum industry in Guyana are attracting global attention. Foreign investors on a daily basis are coming to Guyana, as they seek to participate in the new oil discovery. As a company with many years of experience in the downstream value chain, GUYOIL must take advantage of new business opportunities that will arise, so that the company can benefit directly from the country’s oil sector.

GUYOIL must also prepare itself to move beyond its current role of stabilizer of domestic prices, towards participating in the re-distribution of the country’s oil wealth to the society, in general, when oil production starts. You must become an industry leader, going where others fear to tread, thereby helping the Government to bring equity to the Regions and communities. You will need to expand your facilities, build capacity and acquire new skills, where necessary.
Increased economic activities have precipitated a significant rise in the number of vehicles entering the country. The standard of living of Guyanese will continue to improve, as the country is poised for high and sustainable growth levels. This growth will translate into more motor vehicles being imported for private and commercial purposes, among other things. I must add, also, that, with the production of oil, the Government’s plan is to diversify the economy, to develop the indigenous and new economic sectors, in order to avoid becoming heavily dependent on the petroleum resources. These developments will have implications for the services offered by GUYOIL. Therefore, you should prepare adequately to respond to the changing needs of your customers.
Ladies and gentlemen, in closing, I congratulate all those involved in bringing this investment to fruition. I hope that this facility will enhance service delivery, thereby making GUYOIL more relevant and more profitable.

Ladies and gentlemen, it is now my pleasure to commission this Lube Bond and Office Facility.

I thank you.

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27 Jul
By: MOF Communications Unit 0

Address by Minister of Finance at Linden Business Summit

Linden Chamber of Industry Commerce and Development

Business Summit, Watooka House

 (July 25, 2019)

Remarks delivered by Hon. Winston Jordan

Minister of Finance

 

Mr. Chairperson

Mr. Victor Fernandes

President, Linden Chamber of Industry,  Commerce and Development

Other Members of the Head Table

Distinguished Ladies and Gentlemen

 

Good morning!

I am honored to have been invited to address you at the opening of this inaugural Business Summit that brings together experts from the public and private sectors and the Diaspora. My deep appreciation goes out to the organizers of this Business Summit.  This event provides us with an opportunity to bring together a vital cross section of peoples and organisations dedicated to the sustainable development of the Linden community against the backdrop of the natural beauty of this region. Please allow me, Mr. Chairman, to extend a special welcome to everyone present, especially those from the Diaspora. I wish you a very pleasant and productive stay.

 

Mr. Chairman, though I keep a busy schedule, I am always happy to come and break bread with Lindeners, whenever I can. Since becoming Minister of Finance, I have visited Linden frequently, and have assisted in a number of areas, including providing beds for dormitories, lights, bus sheds and an early learning centre. I have also supported social and other worthy causes. This support comes from a minor vote, which comes under my purview. And I am always happy to assist within the constraints of the available resources.

Mr. Chairman, this Business Summit may be the first of its kind, but I certainly hope that it is not the last. I anticipate that it will evolve into an annual event. I am particularly happy to see here today, many participants from outside of Linden, but who are integrally involved with business and commerce in the town. I expect that this Summit will strengthen these ties, and that it will create new vistas in trade and commerce not merely in the business sector, but across the spectrum of positive people to people relations. In these turbulent times, where partisanship seems to trump partnership, one can only hope that that this Business Summit contributes to advancing the principles and foundation on which this Coalition Government was built.

I note from the programme, that this Business Summit will be addressing a number of key issues affecting business opportunities and development in Linden. While you are at it, I hope that you will also discuss green businesses and oil and gas, two emerging sectors that have the potential to shape Guyana’s trajectory in the medium to long term.

Mr. Chairman, I observe that the theme for this Business Week and Exposition is “New Horizons, New Opportunities in 2019”. Well we are way past half of the year, already. And, with a mere 5 months to the end of 2019, I am not sure about the suitability of this theme. However, it becomes apt if you were to drop “in 2019”. I would then find the revised theme “New Horizons, New Opportunities” to be fitting, at this juncture, when Guyana is poised to become a major oil producing country.

Mr. Chairman, I am here to reiterate that Guyana is open for business. Over the last 4 years, we have been constantly reforming and adjusting our policies, rules and regulations to make the investment climate more favourable, predictable, facilitative and friendly. This is unlike what we met, when we entered Office: a situation of who knew whom and who could have ‘hobnobbed’ with the then political elite, were favoured with concessions, prime land and property at peppercorn rates, and other giveaways. Today, those who benefitted are being called upon by their ‘handlers’ to show their appreciation by confronting the Coalition Government and the independent, Guyana Elections Commission (GECOM). My Government has taken the courageous step to remove this parasitic approach to one in favour of equity. In short, we want to establish a welcoming economic environment for all, not a select few. Among our notable achievements have been comprehensive reform and simplification of the tax system, including: reduction in Company tax for non-commercial companies from 30 percent to 25 percent; reduction in the Value Added Tax from 16 percent to 14 percent; increase in the VAT threshold from $10 million to $15 million; implementation of a special income tax rate of 25 percent for Small Businesses (This is in addition to the numerous concessions available to such businesses under the various Tax Acts); increase in the threshold for filing a property tax return from $0.5 million to $40 million, and reduction in the property tax rate on chargeable property; exemption from Customs Duty, Excise Tax and VAT on a range of capital equipment, intermediate and consumer goods; removed remaining restriction on accessing the Export Allowance to “soft currency” areas in Caricom; and made it easier for individuals and companies to get refunds of taxes from the GRA. At the individual level, we have reduced the personal income tax from 30 percent to 27.5 percent, increased the personal income tax allowance from $600,000 to $720,000 or 1/3 of gross income, whichever is higher; removed income tax from the employee’s contribution to NIS; and given equal treatment to Vacation Allowance across the public and private sectors. While these business-specific reforms have been direct, the tremendous increase in Government’s expenditure on health and education, housing and water, and the physical and economic infrastructure, while maintaining low, single digit inflation and a relatively stable and free exchange rate; and rigorous measures to fight corruption have contributed immeasurably to the facilitative climate for investment in Guyana. And weaving all these into a strong, durable fabric is the Green State Development Strategy (GSDS) which, in turn, is linked to the Sustainable Development Goals (SDGs), which we aspire to achieve by 2030. Permit me to say, too, that our reforms have extended to measures aimed at greening our economy, including the imposition of an environmental levy; the banning of Styrofoam used in the packaging of beverage, food and food products; removal of taxes on bio-degradable containers; the waiver of all taxes on motor cars and motor cycles; the lowering of taxes on new vehicles and tyres; the restriction on the importation of re-conditioned vehicles; and the banning of the importation of used tyres.

As a result of the bold, dynamic approach to economic reforms, we have recorded positive growth for each of the years 2015, 2016, 2017 and 2018. Indeed, in 2018, our real growth of 4.1 percent was the highest over the past 4 years and the highest since 2014. In the words of the recent Article IV Consultation Mission of the International Monetary Fund (IMF) – an impartial observer – this growth was spread across most sectors. It was to a large extent due to the energy and enterprise of private sector participation such as your good selves. And, many of you would, by now, be familiar with the report of a NASDAQ contributor, which was reported widely in the local press. Here is an extract, as reproduced in OilNow, an online news outlet:

Fueled by mega oil discoveries and production set to hit close to 1 million barrels per day by the mid-2020s, the South American country of Guyana is listed at number 1 among the 5 fastest growing economies in the world.

With a projected growth rate of 16.3% during the four-year period 2018-2021, a Contributor at NASDAQ, the second-largest stock exchange in the world, says Guyana is the fastest growing economy globally. “With a GDP size of $3.63 billion (2018 Rank: 160), a growth rate of 4.1% in 2018 and 4.6% in 2019, Guyana’s economy is expected to grow by 33.5% and 22.9% in 2020 and 2021 respectively,”

With this great outlook for our country, it is truly amazing that we have those in this country who continue to peddle misinformation about the state of our economy and of our future. For too long, we have allowed a small, but influential group, to paint a negative picture of our country. It is time we change that narrative and begin to champion that panoramic view that shows the immense potential of this country, in general, and Linden, in particular.

We recognize the grave challenges we have to face and overcome. From the very beginning of our term in office, our Government identified as a national priority the imperative of bridging the coast with the hinterland, of the need to achieve balanced growth among our regions. In that framework, we recognize that, in spite of the progress made, there is a lot more that needs to be accomplished. We have to address economic and social issues that constrain greater progress and development in Linden. All of us must play a role in laying strong foundations for the sustainable development of this town.

Today, we should be focusing on all forms of investment which, when made with imagination and foresight, and implemented with responsibility and dedication, could play a crucial role in putting Linden’s development trajectory on track. So, this Business Summit should present to you a yet barely explored side of Linden— brimming opportunities and warm and friendly people, all eager to be part of the development adventure. Every dollar spent by our Government, every dollar disbursed by our development partners and every dollar invested by the private sector is a vote of confidence in the resilience and potential of Linden and its people.

Ladies and gentlemen, Region 10 should be congratulated for being the only region thus far to complete the Plan of Action for Regional Development (PARD). This is intended to guide the economic, social, environmental and other development of the Region. Our Government has put together a range of exciting investment projects to be implemented in Linden, inclusive of the Linden-Lethem road, of which the first leg – Mile Zero to Wisroc Junction – will commence in the third quarter of this year. We have secured financing from the Caribbean Development Bank (CDB) to design the Mackenzie-Wismar Bridge. Construction is expected to start in 2020. A study is currently on-going for the upgrading of the Soesdyke-Linden Highway, including the installation of lights. Already we have received a budget support loan, which Cabinet has determined will be used to finance the upgrade and lighting of the highway. Ladies and Gentlemen, coming out of the representation by the residents of Linden from the recent Government Outreach, is a decision to reconstruct the Christianburg Primary School at an estimated cost of $105 million. We have put in our pipeline a Linden Waterfront Development Project. Most important of all, we will ensure that the benefits obtained from these and other projects are shared equitably amongst the communities of Linden.

A sector scintillating with potential is tourism. It is the one sector that, perhaps, has the greatest potential for growth and to make Linden a destination town. Your Government recognises the importance of tourism in the development process, and has been putting the necessary infrastructure and policies in place to promote the development of the tourism sector in Guyana.  And we have begun to be rewarded for our efforts: as you are aware, Guyana was only recently recognized as the Best of Eco-Tourism destinations in the world. Linden is strategically located and endowed with tourism products to provide services at the international standards. The massive oil discovery has given Guyana prominence on the world map. The influx of tourist will continue to increase, so take advantage of this market niche that you have. You have the recently-renovated Watooka Guest House, which was once classified as the most prestigious of its kind in the then British Guiana. There must be some truth to this description when one considers the dignitaries who have stayed at this facility. This is the facility where many members of the royal family stayed, including Queen Elizabeth II. This tells me that there was much class and elegance attached to this facility. And so, I urge the current managers of renovated Watooka Guest House to return it to the same class and level of service that is offered to your customers.

Tourists crave extraordinary scenes like the Gluck Island, where the blossoming of Guyana’s National Flower and unusual species of caiman and otters can be viewed. The success of the Annual Rockstone Fish Festival that attracts large numbers of tourists, is another indication of Linden’s tourism potential

But let me emphasise that although you have great tourism potential, tourism cannot operate on its own. You need to create linkages with other types of businesses to expand and develop all sectors and increase economic gain. Tourists need good accommodation, they need food prepared to a certain standard, and they need entertainment. These should be some of the areas of focus in your short to medium term business plans. Take advantage of information technology to boost tourism. The internet can help to reduce cost, enhance operational efficiency, improve access to customers and improve service delivery.

Other sectors that offer great potential for investors include agriculture, livestock breeding, aquaculture and forestry, manufacturing, textiles and garment industry, power generation and distribution, education, health services, infrastructure and real estate, as well as industries that can produce value-added products for export. The potential of Linden, with its highly-skilled workforce, to contribute tangibly to the emerging oil and gas sector should be exploited vigorously. As you can see, the list of possibilities in Linden is long and it could go on expanding.

It is the foremost responsibility of a sovereign, democratically-elected Government to provide for the needs of their people in ways that nurture unity and harmony, particularly in a country such as ours, with its vast richness of diversity. Development for one should contribute towards development for all. And there is a role for all to play in working for responsible, visionary development grounded in goodwill, good sense, expertise, industry and creativity.

Our private sector partners, the Diaspora and our young entrepreneurs must bring an invigorating blend of urgency and pragmatism, a ‘can do attitude’, and a willingness to roll up their sleeves to get things moving. Your energy and enthusiasm, and your innovative approach can help to discover what others have overlooked, that is, the vast potential and promise of Linden and the wider region.

Distinguished ladies and gentlemen, the elevation of Linden to the status of a town, in 1970, was initiated because the Government of the day, the People’s National Congress, recognized that Linden was endowed with an abundance of resources, and had the potential to efficiently manage its own affairs. Let me emphasize, however, that although your community was one of the most neglected ones for a long time, your Government still has that positive view of Linden, and we will continue to support your endeavours to development this town and the Region. I’m aware that bauxite is a far cry from those halcyon days when the product defined Linden, but you have an abundance of other resources, and, if they are efficiently utilized, can make Linden into a major business hub, servicing all poles of the country.

The Linden Chamber of Industry Commerce and Development has a critical role to play in the economic development of this town. I expect that you will stimulate and galvanize economic development by creating and developing business opportunities and job creation. But to successfully achieve this objective there must be collaboration between the government and the business community. Success is a destination that you must define for this region.  It must represents the vision of a new vista; a new horizon; a new set of possibilities for the region – a change.  That means you will need new skills and competencies.  You will need to change to deal with success.

Change will be a key element in your journey.  Some people will resist change, and leaders are people too.  But when a leader resists change, it slows progress toward the new horizon even more because it is up to them to lead the way.

The journey toward this new horizon brings new challenges and opportunities.  How you handle these new challenges and opportunities will directly impact the speed at which you reach your destination, or if you ever reach your destination at all!  Without change, growth is not possible.  Without growth, new levels of success are out of your reach and you will never experience the new vistas that you seek.

And so, I am heartened by the fruitful discussions that have started between the Chamber and NICIL. It is my hope that stemming from these discussions you will be better equipped to help residents to turn what they know and do best into profitable small, medium and large scale businesses, and provide guidance and advice on business expansion and sustainability.

I understand that one of the main bugbears you identified in your meeting with NICIL is the regularization of industrial land, and I also understand that the Head of NICIL and the Head of the Guyana Lands and Surveys Commission (GLSC) are working to bring about a speedy resolution to this problem. The Linden Economic Network (LEN) financing facility is also accessible and I want you to encourage the people in this community to take advantage of this facility and narrow the financing gap.

Distinguished ladies and gentlemen, the impressive developments in the petroleum sector provide new opportunities for private sector businesses. The Government is putting in place an appropriate local content mechanism, but in order for local businesses to benefit from this new resource they have to operate at the requisite standards and pay close attention to the evolving demand for goods and services at every level of the oil and gas supply chain. An efficient Chamber of Commerce can play a critical role in this process by providing the necessary guidance and advice to its members and the business community.

Mr. Chairman, with the anxious arrival of first oil in 2020, our Government intends to pursue economic diversification while oil is profitable, to ensure that the country is not heavily dependent on oil revenue, to the detriment of other sectors. We will ensure that Guyana does not fall into the trap, like other oil producing countries, including some of our immediate neighbors that took this initiative only after oil revenues began to dwindle. Our Government is aware that the role of the private sector in the diversification process is inevitable, and we are facilitating private sector development and expansion by removing bottlenecks to doing business and making the business environment more attractive.  I have already outlined a number of reforms and measures that we have taken. You will recall, too, the introduction of the Trusted Trader Compliance Certificate, which allows for faster clearing of containers at wharves; and the Automatic Issuance of Temporary Income Tax and NIS Compliance Certificates. More recently, the passage of the Customs and Trade Single Window System Bill 2019 will allow parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all imports, exports and transit- related requirements. And, if you need to be reminded, an entire fiscal incentives regime has been in place for Linden and the Surrounding Communities for over two decades. It is unfortunate that advantage has not been taken of these bounties to turn Linden into a paradise.

Mr. Chairman, our new oil find is receiving attention globally. But your Government is aware that that oil resources are exhaustible and oil prices are volatile, hence the need for efficient planning to ensure that the revenues are spent wisely and the economy is insulated from shocks stemming from price volatility. I’m sure that you are familiar with the various unsolicited proposals in the press about what we should do with our new found wealth. At the level of Cabinet, we have not discussed any of those or other proposals. What I can say, however, that the business community, especially Small Businesses, can expect support both in terms of access to affordable financing, additional concessions and more tax reforms to stimulate businesses. I hope that your Chamber will play an integral part in determining how we should use our new found wealth.

To safeguard against the risks stemming from the petroleum sector, the Natural Resource Fund Act (NRFA) was passed in the National Assembly, in January of this year; we are now in the process of putting the relevant systems in place to operationalize the Fund. The private sector has a critical role to play in the administration and oversight of the NRF. Among other things, the Act stipulates that representatives from the private sector must be part of the Public Accountability and Oversight Committee and the Macroeconomic Committee. I am happy to report that we had received the full support of the immediate past leadership of the Private Sector Commission (PSC). We have written to the PSC to name their two representatives, and we hope that the new leadership will move with alacrity to do so.

In closing, let me once again congratulate Linden Chamber of Industry Commerce and Development for organising this Business Summit. I would like to invite you to join in making this Business Summit the successful launching of a great economic venture. Our Government will champion all those who invest responsibly, who respect the environment and who have at heart, the achievement of peace and prosperity of our people.

I look forward to a time when we can look back on this Summit, not just as the dawning of a splendid new era in the history of sustainable development for Linden and Region 10, but also as one of the landmarks of economic progress in Guyana.

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

 

-END-

 

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18 Jun
By: MOF Communications Unit 1

IMF | Guyana: Staff Concluding Statement of the 2019 Article IV Mission

A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision.

A Staff team from the International Monetary Fund (IMF), led by Mr. Arnold McIntyre, visited Georgetown during June 3–14 to hold discussions for the 2019 Article IV Consultation. The team met with Prime Minister Moses Nagamootoo, Finance Minister Winston Jordan, Minister of Legal Affairs and Attorney General Basil Williams, Central Bank Governor Gobind Ganga, other senior officials, representatives from the private sector, banks, the opposition party, labor unions, and other stakeholders.

Economic growth strengthened in 2018 with broad-based expansion across all major sectors. Real GDP grew by 4.1 percent in 2018, up from 2.1 percent in 2017, led by construction and services sectors. Inflation remained steady at 1.6 percent at end-2018, on the back of stable food prices and exchange rate. For 2019, the mission projects real economic growth of 4.4 percent, driven by continued strength in the construction and services sectors ahead of oil production in 2020, and strong recovery in mining. The authorities do not foresee any significant spillovers from the crisis in Venezuela at present. However, the influx of migrants into the hinterland and rural areas could put socio-economic pressures on the local communities.

Weaker export performance and higher imports driven by high value imports related to oil production contributed to a weaker current account balance. In 2018, the current account deficit rose to 17.5 percent of GDP, from 6.8 percent in 2017. The deficit was largely financed by FDI related to the petroleum sector. Reserves stood at US$528 million in December 2018.

Public finances improved in 2018. The central government’s deficit was 3.5 percent of GDP, lower than the budgeted 5.4 percent of GDP. The better-than-expected outturn was largely supported by stronger revenues arising from the pick up in economic activity, as well as continued improvements in tax administration and the tax amnesty program which relaxed interest and penalties on payments of outstanding taxes. In addition, expenditure grew at a weaker pace due to slower capital spending as a result of capacity issues in both the public and private sector. In 2019, the fiscal stance is projected to be appropriately expansionary, at 5 percent of GDP, driven by significant need for infrastructure development and capacity building ahead of oil production.

Guyana’s medium-term prospects are very favorable. The commencement of oil production in 2020 presents an opportunity to scale-up capital and current spending at a measured pace over the medium term to address infrastructure gaps and human development needs, while attenuating debt sustainability concerns at the same time. The mission welcomes the passage of the Natural Resource Fund (NRF) legislation for managing the country’s natural resource wealth; it underscores the authorities’ commitment to fiscal responsibility. To ensure fiscal responsibility is achieved, the mission recommends complementing the NRF legislation with a fiscal framework that constrains borrowing and achieves a balanced budget in the near- to medium-term. To achieve this target, the annual non-oil deficit should not exceed the expected transfer from the NRF. This would ensure that excessive public expenditure will not lead to debt growing at the same time as the NRF accumulates. It is also necessary to preserve the spirit of the NRF framework, which appropriately aims to save part of the income from oil as net wealth for future generations. The pace of scaling-up public spending needs to be gradual to reduce bottlenecks from absorptive capacity constraints, avoid waste, and minimize macroeconomic distortions related to “Dutch” disease that has often inflicted economies experiencing sizable increases in resource-based income.

The mission supports continued efforts by the authorities to strengthen institutional, governance and management practices, which will also help reduce vulnerability to corruption. It commends the ongoing efforts in modernizing the revenue administration and strengthening the public investment management system. At the same time, the mission reiterates the importance of addressing the weaknesses identified in the 2017 Public Investment Management Assessment. Greater urgency is attached to these reforms ahead of the expected increase in public spending as oil production begins. The mission notes authorities’ intent to move to rigorous project selection and prioritization criteria within the context of the new long-term Green State Development Strategy. The authorities are committed to considering mechanisms to further improve fiscal transparency, including relating to the management of natural resources.

The mission encourages building on recent progress in strengthening transparency and governance. Guyana completed its first Extractive Industries Transparency Initiative (EITI) Report in 2019 and started implementing its recommendations to further enhance transparency in the extractive industry. In addition, the recent re-establishment of the Integrity Commission has resulted in over 50 percent of politically exposed persons (PEPs) and other required officers making declarations within the first year. Ensuring greater compliance over time with the asset declaration regime would underscore the authorities’ support and commitment to the UN convention against corruption. The mission also welcomes the progress made in strengthening public procurement, and encourages the authorities to ensure timely compliance with existing regulations and take further actions to fortify the transparency of the procurement system.

The authorities have indicated their concerns that the absence of a ring-fencing arrangement in the Stabroek Production Sharing Agreement could potentially affect the projected flow of government oil revenues. The rapid appraisal and development of multiple oil fields could affect the timing and amount of profit oil to be shared with the government from a producing oil field by allocating costs from various fields under development to the producing field. The authorities are developing strategies to mitigate such a possibility, including a national oil depletion policy to guide extraction and production and clearer ring-fencing rules for new investments.

The mission recommends that the authorities continually reassess the monetary policy stance to reflect changes in macroeconomic outlook or risks surrounding the outlook. The mission encourages exchange rate flexibility as part of the monetary policy framework, given the expected large and potentially volatile foreign inflows from oil production. It encourages the authorities to consider developing over the medium-term, supported by IMF Technical Assistance, the necessary infrastructure for a suitable monetary policy framework that facilitates economic growth and adjustment to oil price shocks while maintaining price stability.

The financial sector remains stable. The mission supports the authorities’ resolute efforts in implementing 2016 Financial Sector Assessment Program (FSAP) recommendations. Credit to the private sector grew by 4.0 percent in 2018, faster than 2.1 percent in 2017. The banking sector nonperforming loans (NPLs) to total loans ratio have fallen slightly to 11.9 percent as of end- December 2018, from 12.2 percent a year before, but remained high. Staff recommends an Asset Quality Review to examine banks’ credit risks and enhance financial sector stability. Four bills were approved by Parliament in 2018, covering deposit insurance, emergency liquidity assistance, bank resolution, and national payment system. The transition to Basel II regime (with some elements of Basel III) is on track for completion by end-2019. Staff encourages the authorities to implement the remaining FSAP recommendations, including eliminating reduced provisioning requirements for “well-secured” portions of NPLs and raising the minimum capital adequacy requirement to 12 percent.

Commendable progress has been made in strengthening the framework for anti-money laundering and counter terrorism financing, based on the 2017 national risk assessment. Guyana has been officially removed from the European Commission’s Money-Laundering Blacklist in February 2019 and is scheduled to undertake a mutual evaluation by the Caribbean Financial Action Task Force in 2022. The Financial Intelligence Unit (FIU) has been actively examining cases relating to suspicious transactions, money laundering, terrorist financing and criminal proceeds including those of PEPs, and is working towards greater collaboration with other global FIUs.

Structural reforms are needed to support economic diversification, and achieve inclusive and equitable growth. Infrastructure bottlenecks, skilled labor shortages, and weaknesses in electricity supply are major obstacles to growth. Staff supports the authorities’ proposed increase in investments to improve access to roads, electricity, and telecommunication services to enhance economic activities, including the hinterland. Simultaneous investment in upgrading the education system is critical and would enhance skills and employment prospects. To address skills gap and satisfy an expected increase in labor demand, Guyana could adopt more liberal or open immigration policies, including free movement of all categories of workers from other CARICOM countries. Promoting more flexible working arrangements could help increase female labor participation. Further regulatory and administrative reforms—including property rights and insolvency regime and reducing bureaucratic red-tape—would help strengthen competitiveness.

The IMF Executive Board is expected to discuss Guyana’s Article IV consultation in August 2019. The mission expresses its sincere thanks to the authorities and other Guyanese stakeholders for their warm hospitality, cooperation and candor.

 

IMF Communications Department
Media Relations
Press Officer: Maria Candia

Phone: +1 202 623-7100 Email: media@imf.org

Source: https://www.imf.org/en/News/Articles/2019/06/17/mcs061719-guyana-staff-concluding-statement-of-the-2019-article-iv-mission?cid=em-COM-123-38996

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06 Jun
By: MOF Communications Unit 0

Remarks by Guyana’s Finance Minister, Hon. Winston Jordan’ at the 49th Annual Meeting of Governors of the Caribbean Development Bank

Mr. President, fellow Governors, Government representatives, Ladies and Gentlemen: I bring you cordial greetings from the dear, green and great land of Guyana. Allow me, please, to express my profound appreciation for the warm welcome and great hospitality extended by the Government and people of Trinidad and Tobago. To our gracious hostess and Chairperson of the Board of Governors, the Honourable Minister of Planning and Economic Development, Ms.Camille Robinson-Regis, I offer sincere congratulations on a well-arranged meeting.

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