Highlights

-Funding sought for critical interventions of national importance

Georgetown, Ministry of Finance, December 13, 2021: Government today presented financial papers to address a number of urgent interventions across several key sectors including Agriculture, Housing and Water, Health, Education, Public Works and Security, with Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh today making the presentation to the National Assembly as it resumed for its 32 nd Sitting.

The Financial Papers, amounting to over $26 billion, include Financial Paper No 3 of 2021 totalling $5.1 billion which caters for Contingency Fund advances covering the period July 22-December 9, 2021 and provides for a number of interventions, including payment for one off cash-grants to severed sugar workers, Out of Crop support to the Guyana Sugar Corporation (GUYSUCO), cash- grants to private school students, provisions for eight containerized offices and construction of two bridges for the Brickdam Police Station which was recently ravaged by fire.

On Saturday and Sunday last, the Government commenced disbursement of the one-off cash grants of $250,000 each to severed sugar workers with Dr. Singh and Minister of Agriculture Hon. Zulfikar Mustapha spearheading the distribution.

The grant was handed over to sugar workers at four estates- Enmore, Skeldon, Rose Hall and Wales. The grant was first announced by Vice President Dr. Bharrat Jagdeo during a meeting with severed workers earlier this year and forms part of Government's commitment to rebuilding and restructuring of the sugar industry and providing direct relief to the people of Guyana.

The closure of the estates under the previous Government had left thousands of workers on the breadline, resulting in the sudden death of village economies where the estates were located. As a result of the disbursements, over $1.3 billion will be injected into the estates’ surrounding communities.

Meanwhile, in relation to cash grants to children attending private schools, it would be the first time that this initiative was implemented. President Irfaan Ali, in September last granted approval for the Because We Care cash grant to be extended to parents of children attending private schools.

With respect to Financial Paper No 4 of 2021, $21.47 billion is being sought, including supplementary funding of $755 million for countrywide drainage and irrigation interventions as Government continue to address the impact of flooding across the country. President Ali recently activated a Cabinet-level Task force to respond to the current rainy season, so as ensure that there is a proactive and coordinated response and mitigative systems are in place and functional.

The Supplementary paper also seeks $7.7 billion to support the acceleration of the National Housing Drive. Notably, Government has surpassed the targeted allocations of 10,000 house lots by end of 2021 and is on the path to achieving the Manifesto promise of 50,000 house lots allocated by the end of the first term in office. Relatedly, $1.1 billion is provided for the upgrade and expansion of Coastal and Hinterland Water supply.

As Government continues with its aggressive infrastructure agenda, funding is sought for the Sheriff to Mandela Road Project, critical sea and river defense works in several areas and reconstruction of bridges at Issano and Bamia. Funds for the Baggage Handling System at the Cheddi Jagan International Airport (CJIA) are being sought in Financial Paper No. 4 as well.

Other allocations that are being sought include medical supplies to continuously address the ongoing COVID-19 pandemic, resources to support Amerindian Development projects and programmes, as well as funding for the rehabilitation of the Office of the Director of Public Prosecutions (DPP) in the aftermath of fire in November last. Additionally, Financial Paper No. 4 is seeking funding to help clear arrears to the Guyana Power and Light (GPL) Incorporated and payment on the mobilization advance on the City Hall Restoration Project.

These Financial Papers, which are seeking funding for a number of urgent interventions of national importance, will be debated during the next Sitting of the National Assembly slated for December 16, 2021.

Amaila Falls Hydropower Project (AFHP)

Cabinet, at its most recent meeting, has granted its ‘no objection’ for the Office of the Prime Minister to engage China Railway Group Limited to construct the Amaila Falls Hydropower Project (AFHP) based on a Build-Own-Operate-Transfer (BOOT) model where the company will supply electricity to the Guyana Power and Light (GPL) Inc. at a cost not exceeding US$0.07737 per KWH and where the company will provide the entire equity required by the project and undertake all the risks associated with the project.

This follows the publication of a request for proposals by Government in various national newspapers during the period July 25 to August 15, 2021. A total of four companies submitted proposals, and China Railway Group Limited was identified as the most ‘capable partner’ by the Evaluation Committee after a rigorous evaluation process, following which the National Procurement and Tender Administration Board (NPTAB) submitted the relevant recommendation to Cabinet for ‘no objection’.

The AFHP was first identified in 1976 by the Canadian company “Monenco’ during an extensive survey of hydroelectric power potential in Guyana. Various studies have since justified and strongly supported the construction of the AFHP. Recognizing the suitability and attractiveness of the project, the pre-2015 PPP/C Government had advanced preparation of AFHP by conducting extensive technical and financial studies of the project, including an environmental and social impact assessment (ESIA). The then PPP/C Government had also mobilized international investor interest in the project, and a major private international investor (the Blackstone Group) had expressed serious interest in undertaking the project. Additionally, the then Government had earmarked US$80 million earned by Guyana under the Guyana-Norway partnership within the Low Carbon Development Strategy (LCDS) to help finance equity in the project.

These efforts to advance the project were blocked and derailed by the then APNU/AFC Opposition, who voted against the project in the National Assembly. The APNU/AFC later maintained their opposition to the project when they assumed office in 2015 and failed to offer any alternative to the project. This was despite the fact that the APNU/AFC Government in 2016, with support from Norway, hired an independent consultant (Norconsult) to review the project. The report, published in December 2016, recommended the development of AFHP as the best option for Guyana to achieve affordable, low-carbon electricity.

Consistent with a commitment given by the PPP/C to resume work to advance this project in the Party’s 2020 manifesto, on the basis of which the Party was elected to office in 2020, this Government has resumed efforts to realize this flagship project under the new and expanded LCDS. In its current formulation, it is expected that the project will require no equity contribution from Government, in comparison with the previous project structure which was based on a Government contribution of US$100 million. Additionally, the current structure anticipates a cost of power that will be lower than the initial cost of 11 cents per KWH contemplated by the previous project structure.

The AFHP will lower the cost of electricity needed to power Guyana’s economic diversification and transformation into a low carbon economy, as well as reduce the cost of power to the businesses and households. The project will also support initiatives such as the electrification of transport and e-mobility and accelerate the development of a robust ICT sector needed for an interconnected world as well as a competitive manufacturing sector.

The New Demerara Harbour Bridge (NDHB)

At the same meeting, Cabinet also granted its no-objection for the Ministry of Public Works (MoPW) to engage China State Construction Engineering Corporation Ltd. to construct the New Demerara Harbour Bridge (NDHB) based on a Design-Build-Finance (DBF) model with financial terms and conditions which would be no less favorable than those submitted in the preferred bidder’s price proposals. The proposal by China State Construction Engineering Corporation Ltd under the DBF model contemplates a construction cost of US$256.6 million, the lowest amongst all bidders.

Initially, the Government of Guyana, through the MoPW, pre-qualified nine (9) firms to submit bids for the construction of a two-lane dual carriageway (4 lanes) hybrid Cable-Stayed center span bridge with Concrete Box/T Beam Girder approach bridge structure with the following inclusions:

• Bridge collision protection.
  • Navigation span to accommodate Handymax vessel Navigation aids.
  • Lighting, signage, and all other ancillary works.
  • Access road with a minimum of 50 meters up to abutments.
  • Toll collection buildings and ancillary buildings on the West Bank of the Demerara River.

The pre-qualified firms were invited to submit bids to construct the bridge using a Design-Build-Finance (D- B-F) contract and Design-Build-Finance-Operate-Maintain (D-B-F-O-M) contract. At the pre-bid meeting, held on June 28, 2021, it was agreed that the closing date for submission of bids would be October 5, 2021. Only five of the pre-qualified bidders submitted bids, of which four (4) obtained the required minimum score for the technical proposal. The Evaluation Committee recommended that the Procuring Entity engage China State Construction Engineering Corporation Ltd. using the Design-Build-Finance (DBF) model on financing terms and conditions no less favourable than those proposed by the highest ranked bidder. The NPTAB subsequently submitted the recommendation to Cabinet, and Cabinet granted its ‘no objection’.

The NDHB comprises a critical component of the Government’s drive to expand and modernize Guyana’s transport infrastructure. It aims to replace the aging Demerara Harbour Bridge with a modern four-lane structure that will facilitate greater traffic capacity and dramatically improve commuter convenience. The new bridge will offer easy connectivity to both the existing East Bank Demerara road as well as the new Diamond to Ogle bypass on the eastern side of the River and to the existing West Bank Demerara Road and the new Parika to Schoonord Road on the western side of the River. The new bridge will also offer critical connectivity to the new Wales Development Authority which will be a major centre of productive activity when it comes on stream.

Georgetown, Ministry of Finance, October 20, 2021: Senior Finance Minister Dr. Ashni Singh and a group of Guyanese private sector representatives met earlier today with Mubadala, the sovereign wealth investment company within the United Arab Emirates. The Mubadala delegation was led by Mr. Musabbeh Al Kaabi, Chief Executive Officer of UAE Investments. The meeting took place at Mubadala’s headquarters in Abu Dhabi, on the margins of Guyana’s participation in World Expo 2020 currently being held in Dubai, at which Guyana’s delegation is led by His Excellency the President Dr. Mohamed Irfaan Ali.

During the meeting with Mubadala, Minister Singh and the Guyanese delegation reiterated the rapid economic transformation that is currently underway in Guyana, and highlighted a number of sectors that are poised for immediate growth and that are therefore ripe with investment opportunities. These include: the oil and gas sector which is poised to exceed one million barrels a day before the end of the decade; non-oil extractives such as gold, bauxite, manganese, and other minerals, with a number of international large scale operations already set to ramp up their production plans in the near term; tourism and hospitality including new and emerging sub-sectors such as the development of cruise ship facilities as well as yachting marinas; world class medical and educational facilities, including to provide medical care and education as services for export; as well as information and communications technology and others. Minister Singh also alluded to the several characteristics that make Guyana one of the most rapidly growing economies of the world and one of the most attractive destinations for investment globally under the leadership of President Irfaan Ali.

The Mubadala team welcomed the information shared by Minister Singh and the delegation on the Guyanese economy and associated investment opportunities in Guyana, sought various clarifications which were addressed by the Guyanese team, and signaled interest in advancing discussions in a number of specific areas. The two sides committed to advance these discussions as appropriate.

Mubadala is a $243 billion (UAE Dirhams 894 billion) business that spans six continents with interests across multiple sectors and asset classes. Headquartered in Abu Dhabi, Mubadala also has offices in London, Rio de Janeiro, Moscow, New York, San Francisco and Beijing. The UAE Investments platform within Mubadala contributes to the acceleration of the UAE’s economic transformation, and investing in national world class champions, fostering vibrant industrial and commercial clusters, and partnering with world-class global entities.

The Guyanese delegation’s participation in Dubai Expo continued during today and will continue tomorrow with a number of engagements set between the Guyanese representatives and representatives of both UAE Government agencies as well as private sector entities all with the aim of fostering closer economic ties and promoting accelerated economic growth.

Georgetown, Ministry of Finance, October 6, 2021: Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh, today announced that Government will be further reducing the excise tax on gasoline and diesel to ease the domestic impact of the continuous rise in the world market price for fuel.

It could be recalled that on February 17 of this year, the Government reduced the Excise Tax rate on both gasoline and diesel from 50 percent to 35 percent. Since this time, oil prices have continued to rise steadily on the world market, moving from over US$60 a barrel to over US$80 a barrel at close of trade on October 5, 2021. This steady rise in the world price has had a resultant effect with prices rising on the domestic market also.

Minister Singh announced today that the Government will be lowering the excise tax rate on both gasoline and diesel from 35 percent to 20 percent with immediate effect. This reduction will aid in cushioning the impact on domestic consumers, particularly the travelling public as well as those productive sectors for whom fuel is an important input.

The prices at the pump are expected to also be reduced with immediate effect, with gasoline prices expected to reduce from $213 per litre to $198 per litre, and diesel prices from $200 per litre to $185 per litre.

Minister Singh explained that the adjustment in the excise tax rate on fuel from time to time is part of the measures that the PPP/C Government will implement to cushion the domestic impact of world market price fluctuation. He emphasized that implementation of these measures are in keeping with President Irfaan Ali’s commitment to ensuring that Guyanese consumers continue to be protected from escalation in fuel prices on the world market as far as possible.

2021 Mid-Year Report reveals

Georgetown, Ministry of Finance, October 5, 2021: The Ministry of Finance’s Mid-Year Report for 2021 has indicated that Guyana recorded real Gross Domestic Product (GDP) growth of 14.5 percent while non-oil GDP grew by 4.8 percent, despite the challenges of the COVID-19 pandemic and even the devastating floods experienced in May-June.

Due to the unprecedented floods which impacted particularly the agriculture, forestry and mining sectors, along with the lingering effects of the COVID-19 pandemic, the effects of which will spill over into the last half of the year and even beyond, the revised full-year forecast for real GDP growth in 2021 is now 19.5 percent overall and 3.7 percent for the non-oil economy.

The Mid-Year Report is expected to be tabled by Senior Minister of Finance Dr. Ashni Singh at the first sitting of the National Assembly once the Assembly resumes after its current recess.

Sector Performance

With regard to sector performance, the agriculture, forestry and fishing industries for the first half of 2021 are estimated to have contracted by 2.4 percent compared with a decline of 4.1 percent for the corresponding period last year and it was noted that this was as a result of lower output from the other crops, sugar growing, forestry and fishing industries.

“At the end of the first half of the year, the Guyana Sugar Corporation (GUYSUCO) produced 29,650 tonnes of sugar. This performance reflects the record high levels of rainfall, which resulted in waterlogged soils, particularly at the Albion Estate, and strike action that resulted in over 5,600 man-days being lost,” the Mid-Year Report indicated. As such, it was emphasized that the sugar industry declined by 22.4 percent when compared to the same period in 2020. Some of the reasons indicated were a 30 percent mortality of mature cane at Albion estate, 10 percent at Uitvlugt and 5 percent at Blairmont due to the floods. Another 15,000 tonnes of sugar in the second crop were also expected to be lost, based on the Report.

Meanwhile, the Report noted that the rice industry grew by an estimated 7.8 percent in the first half of the year, marginally lower than the target set for the period, ‘other crops’ declined by 7.3 percent due to the floods and the livestock industry was estimated to have grown by 10.6 percent when compared to the same period in 2020. However, for that same period, the fishing industry contracted by an estimated 6.6 percent and the forestry industry by 7.1 percent.

Referencing the extractive industries, the Report indicated that in the first half of 2021 the mining and quarrying industries were estimated to have grown by 23.1 percent, with higher output from the petroleum and other mining industries despite contractions in gold and bauxite.

It was noted that total output from the petroleum sector increased by 65.4 percent when compared to the same period last year. With respect to diamond, sand and stone, these were estimated to have seen a total growth of 63.3 percent with quarry stone having a growth output of 141 percent, sand declarations growing by 119.3 percent as a result of increased activity in the construction sector while diamond declarations improved with a growth of 166.3 percent. The outlook for the remainder of this year for other mining industries was estimated to be promising as well with an estimated growth rate of 74.5 percent for the entire year.

With regard to manufacturing, this sector notably saw an estimated growth of 13.1 percent when compared to the same period last year with expansion of the sector being attributed to a growth of 23.1 percent in other manufacturing. In the category of other manufacturing, growth was experienced in the manufacturing of non-metallic products, chemical products and beverages.

Meanwhile, the services industries were estimated to have expanded in the first half of 2021 by 9.4 percent when compared to the same period in 2020 as it was noted that the measures to curtail the impact of COVID-19 would have severely impacted such activities last year. Notably, the Report indicates that the gradual relaxation of these measures would have contributed to some growth in the sector.

The Report also noted the strong performance of the construction sector which grew by 25.5 percent in the first half of 2021, reflecting increased emphasis on implementing the public sector investment programme as well as increased private sector construction reflecting improved private sector confidence and optimism regarding the economic outlook.

Balance of Payments – Larger Merchandise Trade Surplus

The Mid-Year Report noted that at the end of the first half of this year, ‘the overall balance of payments recorded a deficit of US$67.4 million compared with a deficit of US$2.8 million at the end of June 2020’ with the current account registering a deficit of US$39.1 million in comparison to a deficit of US$396.5 million for the corresponding period in 2020. This was attributed to a ‘significant increase in the merchandise trade surplus which moved from US$72.7 million, to US$813.3 million. The merchandise trade account, according to the Report, improved as a result of export receipts expanding by US$786.9 million, outweighing the US$46.2 million increase in imports.

Meanwhile, the capital account showed a deficit of US$19.6 million when compared with a surplus of US$419.7 million at the end of June 2020, attributed to ‘outflows of US$1,713 million from private enterprises in the oil and gas sector along with outflows of US$123.6 million in revenue from the petroleum sector to the Natural Resource Fund’. The Report also highlighted the fact that foreign direct investment in the first half of 2021 was 41.6 percent higher than the US$940.6 million recorded last year for the same period.

Inflation

At the end of the first half of 2021, consumer prices grew by 5.6 percent. This was largely driven by increased food prices, as a result of the inclement weather and shortages experienced following the flood. Further, the Report indicated that the bottlenecks in the global supply chain adds some measure of imported inflationary pressures. However, the Report underscores, that the price increases are ‘transitory’ and are unlikely to have lasting long-term impact on inflation’. Inflation is now projected to be in the order of 3.8 percent for the full year.

One of the Fastest Growing Economies

Earlier this year Senior Finance Minister Dr. Ashni Singh had indicated that Guyana would be one of the fastest growing economies in terms of real GDP and would see rapid transformation in a number of sectors especially since Government would make efforts to boost the non-oil economy as well.

“We’re anticipating a rapid expansion in the services sector, including transport and logistics, construction of infrastructure including roads, bridges, office buildings in the private sector, etc, along with expansion in other services such as financial services, all of which will contribute to rapid expansion in real output. So, you’re going to see Guyana being one of the fastest growing economies in real GDP terms…. globally in the hemisphere and certainly in the Caribbean… a lot of the real GDP growth in the region will be driven by Guyana,” he had emphasized.

The favorable economic performance at the end of the first half of 2021 in the non-oil economy bodes well for the upcoming second half of 2021 and beyond. It is expected that advances in key investments, both in the public and the private sector, will buttress the second half performance of the economy.