Senior Economic and Financial Analyst, Dr. Vilas Gobin delivered a presentation titled Avoiding Dutch Disease and the Resource Curse at the opening of Budget Sensitisation Sessions hosted by the Ministry of Finance.
Senior Economic and Financial Analyst, Dr. Vilas Gobin delivers Presentation at the Budget 2019 Sensitisation and Training Programme 2018, Arthur Chung Convention Centre, Thursday, June 21, 2018
Address by Hon Winston Jordan, Minister of Finance,at the Opening of Budget 2019 Sensitisation and Training Programme 2018, Arthur Chung Convention Centre, Thursday, June 21, 2018
The Ministry of Finance today opened its first Budget Sensitisation Sessions for 2019 at the Arthur Chung Convention Centre on Thursday, June 21,2018. The Sessions are aimed at providing support to Heads of Budget Agencies and their technical teams who hold responsibility for preparation/compilation of Agency Budget submissions.
Heads of Budget Agencies, Permanent Secretaries, Regional Executive Officers, Heads of Subvention Agencies and Constitutional Agencies
I am pleased to be able to join you this morning, at this important event attended by senior officers of the Government sector, who are charged with responsibility for their respective Agency’s budget. The start of the National Budget Cycle is an important milestone in our financial calendar. Budget 2019 represents the fifth,and penultimate, budget of this Administration’s first term in Office; and the third consecutive year that it will be presented to the National Assembly ahead of the start of the Financial Year. It is, therefore, an opportune time for us to take stock of the results that we have achieved – or not achieved – and to redouble our efforts to deliver goods and services of a sufficient quantity, quality and timeliness. Many of you have been at the helm of your sectors for several years and, therefore, are in a good position to critically and searchingly examine from whence you came, where you are, and where you are going.
As you pause to reflect, let me remind everyone that a national budget is the single most important planning tool in the armoury of the Government. It is a living and dynamic document that gives life to the national and sectoral visions and policies. Most importantly, it is the vehicle through which we implement programmes and achieve national results. When the resource envelope of any national budget is allocated in an environment of stable macroeconomic fundamentals and sound public financial management and, is supported by
- robust institutional structures,
- effective management systems,
- functional monitoring and evaluations systems,
- and last but most critical- diligent, committed and competent leadership,
then the chances of successful budget implementation are quite high. However, when any one of, or a combination of, those elements breaks down or goes missing, success becomes evasive, even though expenditure may have occurred.
As Heads of Budget Agencies, you must pay keen attention to ensuring that these elements are all in place in your respective sectors, regions and agencies.
The Government commits to making resources available, subject to the fiscal space, for you to pursue workable solutions. Please bear in mind, that expenditure pressures such as those demanded by, for example, our commitment to improving wages and salaries and national security; bridging the divide between the hinterland and the coastland; and narrowing the infrastructure gap, on the one hand, and revenue pressures to lower taxes and tariffs will continue to impose premiums on planning, programming and pro-active performance. Since 2015, we have proven that we are up to the task, that we are prepared to implement measures that will benefit a broad cross section of our population. In this regard, we have consistently improved wages and salaries; undertaken sweeping tax reforms to improve tax administration and bring greater equity to the tax system.
We have delivered early National Budgets for 2017 and 2018, to ensure that Heads of Budget Agencies had the entire financial year to implement work programmes – a stark departure from what obtained previously, when budgets were presented as late as end-March and approved in mid-April, thereby implying a 2-month turnaround before the next budget cycle began in early July. Procurement of public goods and services has undergone changes: thresholds have been increased; several training courses in monitoring and evaluation, and supply procurement have been executed -all with the aim of ensuring an environment that contributes to improved performance in the public service. More recently, we have developed a public-private partnership framework to enable more creative financing approaches, to overcome loss of concessional financing, occasioned by our elevated status of Upper Middle Income Country, as classified by the World Bank.
Spending money is easy. Spending money wisely and prudently to effect results takes skill and effort. It means understanding the problem and finding the solution that gives you the result, then designing a plan and costing it in a way that delivers value for money,then spending the money.Many times, we do the process the other wayaround: we spend money without understanding what is the problem to be addressed. The predictable result is the wastage of public resources that we are entrusted to spend. It is worth the time and effort – please ensure you secure the skills to understand the problems in your sector, devise solutions, plan for and cost the implementation of these solutions.
Additional revenue resources on the not so distant horizon present a wonderful opportunity for Guyana to transition from potential, of which we have so often heard, to prosperity, of which we have so often dreamed. But money alone has never solved a nation’s problems; in fact, in some countries, it has been the source of bigger problems and conflict. We must remain steadfast in our efforts to strengthen our systems and institutional structures to prevent waste. His Excellency, President David Granger has repeatedly highlighted the need for cost efficiency and results-based performance.Collectively, we are all tasked to deliver on his charge to us.
We are a country that is still far away from where we would like to be. Achieving the Good Life and making quantum leaps in improving human development across socio-economic fronts, will take concerted efforts and resources. Unlike other countries that have squandered their patrimony, the Cooperative Republic of Guyana must be different. We must aim to emerge over the medium term to become a model country that blends the exploitation of petroleum results with the pursuit of a Green state development Strategy. Gains in revenues must be utilised in a targeted and responsible manner to achieve a diversified and resilient economy. Accountability, transparency and good governance must be core principles that drive us to excellence in our work ethic and work output, thus enhancing our capacity to deliver RESULTS, services and works to the people across our ten regions.
The Green State Development Strategy offers a unique opportunity for us to transform our sectors and the country as a whole, along a path of green economy principles. I hope the budget submissions from your respective sectors will demonstrate green initiatives within the public sector, as well as support engagements with the private sector to boost the realisation of a green Guyana.
Permit me to use an in-house example: increasingly, we have been issuing e-copies of circulars, invitations and notifications from the Ministry of Finance, in our efforts to reduce the use of paper.We have changed our lighting fixtures to LED and, this year,the Ministry of Finance will be sending e-Christmas cards. We urge other agencies to jump on this bandwagon, in the process reducing cost and improving our green efforts, conscious of our environmental footprint. This is a very small, low hanging fruit readily available to be picked. I anticipate that this would be the start of much more that will be done. I would expect, for example,that the Ministry of Business will consider funding start-ups for small businesses to support green initiatives; that our buildings would be incorporating building codes so that support structures that use less energy can be utilised; that we will employ sustainable agro processing practices, and that greater use of management information systems will be made to reduce travel costs and paperwork to name only a few.
With our national development strategy and Local content in focus, we must give effect to Buying Local, wherever possible, to support our agro-producers and local manufacturers. This will contribute to reduced demand for imports, thereby saving foreign currency; improve local value added and growth; and increase national and household incomes and employment. As I have indicated on several occasions, I am alarmed and get visibly upset when I attend events across our beautiful country and am served imported water, when we have at least half a dozen high quality local producers. Or,when I am served a fruit bowl that includes apples, grapes and imported melons when I would much prefer a juicy Buxton Spice mangoes, a Pomeroon pear, sapodillas, pawpaw, oranges, cashews and watermelons. In addition, our choices for construction and renovations must seek to use more local woods and manufacturers. These are just a few examples, and I am urging you to incorporate many local content initiatives in your bidding documents.
I trust that the multi stakeholder expert groups that have met to develop the Green State Development Strategy, would have incorporated novel and innovative solutions to the challenges that exist within the various sectors. The Strategy should provide a menu of solutions that takes account of the peculiarities of our environment.
Far too often, I have found that the budget proposals submitted to the Ministry of Finance lead to more questions than answers. Budget proposals should be solutions to resolving challenges faced in order to achieve results.
Why do we have increasing allocations to the health sector, but continued drug shortages and less hospital inspections than previous years? Health accounts for 12.5% of the national budget, in 2018. What intervention within the budget proposal will resolve this conundrum of increasing allocations but declining availability?
Why do we have increasing allocations to education but still less than 50 percent of our children as passing Math and English? Education accounts for 17.2% of the national budget in 2018. What in the budget proposal will resolve this?
Why do we have increasing allocations for maintenance and infrastructure development, yet our Public Sector Infrastructure Programme is filled with requests to rehabilitate existing infrastructure rather than expanding the capital base of the country throughnew infrastructure, where none previously existed? Infrastructure accounts for 13.1% of the national budget in 2018
Are you, as Heads of Budget Agencies, approving performance-based gratuities without measuring performance? Or, worse, are you signing off on poor performance and shying away from your responsibility to take decisions in the best interest of achieving desired results? Are you putting pen to paper when staff do not deliver or simply sitting lamenting in your offices?
You must be able to competently critique systems that are not working or not contributing to delivering the results. And by critique, I mean offer workable solutions.
Are you coming to Budget 2019 hearings to rehash the same problems and hurdles you did for the last several years?Or, are you proposing innovative solutions to drive national development? What is your theory of change for the programmes under your remit?
I hope that these are some of the questions that occupy your minds. I can assure you that they will be asked during your participation at the national budget hearing slated to begin on August 16th. And the buck, as they, say stops with you. Where there are hurdles, you must innovate and find solutions. Where systems are failing you,must design new, more effective systems. In short, find solutions and deliver results.
The Ministry of Finance and the teams within the Office of the Budget and the Project Cycle Management Division stand ready to assist. We are only an email or whatsapp message away. These days that is sometimes faster than a phone call.
The sessions for the remainder of today and next Tuesday aim to provide you with the tools you need to finalise your crafting of your budgets for 2019. Remember, your budget 2019, is being prepared on the cusp of first oil in the first quarter of 2020. The thinking and brainstorming and strategic direction that must go into the preparation must have started before today. And at the end of this 2-day workshop, you should be better able to produce a product that is measurable, quantifiable, and marries problems with solutions. I look forward to you rising to the occasion to resolve the issues facing your sectors and agencies. See the trees, but aim for the forest.
I thank you.
Speech made by Minister of Finance, Hon. Winston Jordan on the occasion of the 43rd Annual Meeting of the Islamic Development Bank Group in Tunisia
H.E Dr. Bandar .M. H. Hajjar, President of the Islamic Development Bank
Distinguished Governors, Alternate Governors and Members of Delegation
Distinguished Invited Guests
Ladies and Gentlemen
I am honoured to address this 43rd Annual Meeting of the Board of Governors of the Islamic Development Bank. The Government and People of the Cooperative Republic of Guyana send you warm wishes for a successful meeting. I would like to thank the Republic of Tunisia for hosting this meeting, and for the warm welcome and gracious hospitality. I extend compliments, too, to the Islamic Development Bank for the excellent arrangements made and the successful organisation of this meeting.
This is my third opportunity to address this august gathering, since Guyana’s formal induction into the Bank’s fraternity, in 2016.I am doing so when there is cautious optimism about the outlook of the global economy.
According to the IMF’s World Economic Outlook (WEO),January 2018, global economic activity continues to firm up. Global output is estimated to have grown by 3.7 percent, in 2017, slightly higher than in 2016. The increase in growth was broad based, with a notable upsurge in Europe and Asia. This improvement has allowed for the revision in the forecasts for 2018 and 2019,to 3.9 percent, an increase of 0.2 percentage points.
Guyana is strategically and geographically located within Latin America and the Caribbean, where recovery is expected to strengthen, with growth projections for 2018 and 2019 being revised upwards to 1.9 percent and 2.6 percent, respectively. Also projected is an 11.0 percent rise in Latin American exports coupled with price hikes of commodities like oil and minerals. These forecasts account for the improved economic scenarios for Chile, Brazil, Peru and Colombia, which are expected to see the biggest increase in growth across Latin America from 2017 to 2018. In spite of this improved outlook, the region still faces several challenges, including climate-related catastrophes, as was so horrifyingly demonstrated by Hurricane Irma, and a plethora of other tropical storms of increasing intensity, frequency and severity. So even while we are excited about the possibilities that can be realised from this outlook, we remain vigilant to any unexpected shocks.
Since its assumption to office, my Government has been steadfast in its resolve to ensure growth in the economy. That resolve has resulted in economic growth averaging about 3 percent, between 2015- 2017. This growth was achieved at a time when many of our neighbours were facing low or negative growth rates and reduced standards of living. Guyana continues to rise to the challenges by fostering conditions and creating opportunities for renewal and expansion in the economy, so that the “Good Life” can be secured for all Guyanese. It is what we promised to the people of Guyana and to our partners who expressed hope in our leadership; and it is what my Government has been pursuing, relentlessly, as its mandate.
My Government has and continues to concentrate on a number of key strategic approaches for the economic well-being of our country. These include:
- Strengthening national planning;
- Building a robust oil and gas industry;
- Consolidating the macroeconomic fundamentals;
- Fostering Economic diversification;
- Strengthening private sector capacity and its involvement in national development;
- Diversification of the agricultural sector;
- Investing in human and social development;
- Development of climate resilient infrastructure; and
- Pursuing equitable growth in a green development agenda.
Mr. Chairman, Guyana has embarked on the formulation of a Green State Development Strategy that will stand as a living example of our country’s commitment to this planet we call Earth. Our Green State Development Strategy will ensure sustainable growth with equity that redounds to the economic well-being of every citizen. It could become, quite possibly, a model for other like- minded economies.
The Strategy is being fashioned through a collaborative and consultative process, and will be costed to inform future financing streams for the country. It will allow our people an opportunity to shape the scope and scale of our development priorities, given our existing and future resource flows. My Government will continue to assess the economic tides and employ timely policy measures to correct imbalances and mitigate negative effects that could stymie growth. In this regard, we aim to strengthen our analytical capability to determine the macroeconomic effects of various policies and interventions employed to grow our economy. Through the continued partnership with our multilateral partners and, specifically, with our growing engagement with the Islamic Development Bank, my Government is very enthusiastic about the full realization of our development agenda.
Mr. Chairman, Guyana has recently adopted a Public-Private Partnership (P3) Framework, which we recognize has the potential to expand the resource envelope for public sector investment in a prudent, efficient and effective manner. This Framework provides a structured platform for local and external private sectors to meaningfully engage with Government to achieve economic development.
Agriculture continues to be a major contributor to growth and expansion in our economy. In this regard, the Government has leveraged the inter-locking capacity of the Bank, and is currently in an advanced stage of designing a Reverse-Linkage Project with the Malaysia Agricultural Research and Development Institute (MARDI), which will assist in updating Guyana’s expertise and technology in rice production. This project will support the introduction of innovative rice varieties that are more resilient and will significantly increase rice yields per acre. I would like to thank the Bank and the Government of Malaysia for the efforts being made to make this endeavour a success.
My Government continues to be proactive in the promotion of non-traditional agricultural products, new technologies and supporting infrastructure, with the ultimate goal of enhancing national production and productivity. These efforts will not only ensure national food security, but, also, substantially transform the cost structure and competitiveness of our agriculture sector. With the Bank’s continued support as a financing mechanism and provider of technical expertise, we are optimistic about the sector’s growth.
Mr. Chairman, human capital development plays a critical role in long-term productivity and growth at both micro and macro levels of any nation. As a consequence, My Government, in partnership with the Bank, has programmed a project to improve national education at the primary and secondary levels. This project will embrace the Inquiry Based Science and Mathematics Education (IBSME) approach. It will also make use of UNESCO’s Global Micro-Science Experiments programme and supporting mathematics kits and will lead to the integration of mathematics through science lessons. This effort will raise the level of scientific and mathematical literacy among teachers and students while supporting a learner-centered environment.
Mr. Chairman, another critical aspect of human development is that of harnessing, caring and paying homage to a nation’s elderly populace. In 2017, the minimum standards for elderly residential care facilities were completed and enacted in Guyana. Concurrently, the Government approached the Bank for its support and assistance to design a project which will modernize and upgrade the facilities of the Palms Geriatric Facility. The project is expected to procure equipment and furniture. It will also result in the provision of enhanced medical care.
Such a “quick win” project, Mr. Chairman, is welcomed by the Government, not only for its demonstrative socio-economic impact and benefits, but, also, as evidence of the concretizing of the partnership between the Bank and our country. Indeed, since I last had the honour of addressing this forum, there has been notable progress in our relationship. The Bank fielded a programming mission, in December 2017,where a work programme for the three-year period, 2018-2020, was formalized. Financing and technical assistance, of about US$900 million, will be directed to key development areas, including economic infrastructure, rural development, human development and trade and competitiveness.
Mr. Chairman, I’d like to conclude my address by reaffirming my country’s resolve to further strengthen its cooperation with the Bank and fellow member countries. It is quite evident that our joint efforts can go a long way in bringing about socio-economic stability and prosperity in Guyana, which can redound to the benefit of the Latin American and Caribbean Region. Guyana remains hopeful for its future and grateful for the Bank’s support.
I thank you!
Feature Address: The Opening Ceremony of the Public Policy Analysis Management and Project Cycle Management Training Programme
February 26th, 2018 Grand Coastal Hotel, ECD
Hon. Joseph Harmon MSM, M.P.
Minister of State
Mr. Tarachand Balgobin, Director of the Project Cycle Management Division, Ministry of Finance- Chairman, Mr. Reginald Graham; Consultant Coordinator, Caribbean Development Bank; Dr. Modeste- Chief Planning Officer, Permanent Secretaries, Regional Executive Officers and Heads of Agencies, Members of the Media, Ladies and Gentlemen. I wish to welcome you all on behalf of the Hon. Minister of Finance who was scheduled to this presentation, but is out of the jurisdiction at this time, to this opening ceremony of The Public Policy Analysis Management and Project Cycle Management Training Programme that is being conducted by the Ministry of Finance in collaboration with the Caribbean Development Bank. I am also pleased to be associated with this activity since the Ministry of the Presidency has responsibility for the Public Service including the training of Public Servants.
I must also congratulate the participants in this programme for having been selected; for having completed the online aspects of the course work, and for now being involved in the face to face workshops to complete training.
Your participation as the decision makers and senior technicians within the Public Sector in this programme that has been designed to suit our local circumstances will no doubt buttress our Government’s continuous efforts to effectively disburse and expend Government funds and execute programmes and Projects through the Public Sector Improvement Programme (PSIP), the management of which you will be expected to improve. Additionally, your new skills will be acquired at a time when Government is set to “Roll Out” several innovative projects through its Green State Development Strategy (GSDS) that are crucial for the sustainable development of Guyana.
I also wish to express gratitude, on behalf of the Government of Guyana to the Caribbean Development Bank for choosing Guyana as one of the three Caribbean countries to participate in this pilot training programme. Guyana’s Public Sector Improvement Programme (PSIP) is largely funded by international donor agencies like the Caribbean Development Bank, an institution with which Guyana has enjoyed productive and progressive relationship since becoming a member in 1970. This developmental partnership has seen Guyana benefitting from many loans and grants, administered through the Ministry of Finance. These funds are usually aimed at Social and Economic Infrastructural Projects such as Schools, Public Buildings, Roads and Water Projects; Providing Community Skills Training; and Support for Small and Medium sized Enterprises. The facilitation of training programmes such as these is a further form of much needed assistance to our developmental efforts.
Mr. Chairman, this activity is most welcomed because it is in keeping with our Government’s commitment to the creation of a highly skilled, professional public service and to build the capacity of our human capital. We believe that the Political Administration should set the Policy framework by conceptualizing policies for development and allowing the professional administrators and technicians to analyze, design and implement those policies to ensure maximum benefits to our citizenry and value for money.
Guided by this philosophy, President David Granger on August 17th, 2015 appointed a Commission of Inquiry into the Public Service, “To examine, advise and report on the Salaries, Conditions of Service, Training and other matters pertaining to the improvement of the efficiency of the performance of the Public service and the well-being of the public servants in the Public Service”. In the Commission’s report the entire Chapter 3 was dedicated to “Training and Staff Development”. This Chapter embodies a comprehensive analysis of the training needs of the Public Service. It is now public knowledge that the Commission has completed its work and the Government has embarked upon several initiatives to institutes the recommendations made in the report. That process is benefitting from the input of many of the participants here today.
Mr. Chairman, I wish to iterate that this training initiative is of significant importance to the Government of Guyana Public Service Reform Agenda, given the important role that the Public Service plays in implementing Government policies and delivering Government services to our people. However, we have inherited several challenges as it relates to the implementation of Government Polices, Programmes and Projects. Some of these challenges include monies being allocated under the Public Sector Improvement Programme (PSIP), which is the Government’s main mechanism for capital spending. In 2015 and 2016 significant sums allocated for developmental projects were not efficiently disbursed. Several contracts were poorly administered and some have had to be “Rolled-Over” or put on hold. There was also evidence that some of the Heads of Budget agencies within the Ministries were unfamiliar with the new procurement system.
This has prompted cabinet to initiative regular statutory meetings with Permanent Secretaries and Technical Officers from the Ministry of Finance to ensure efficient disbursement of Public Sector Improvement Programme (PSIP) funds and effective Monitoring and Evaluation of Projects.
At the most recent meeting with the Permanent Secretaries and Technical Officers held in January 2018, a review of spending for 2017, and discussions about work plans for 2018 was conducted. The review included an overall analysis of the Public Sector Improvement Programme spending for 2017; and project execution rates in 2017.
The review revealed that……..also coming out of that meeting was a work plan for 2018 which included: Preparation of Procurement plans for all agencies; a format for Public Sector Investment Programme (PSIP) monitoring reports; and a format for performance analyses. In addition, it was decided to provide compulsory training for relevant staff; and promote institutional strengthening. This included the establishment of Planning Units in all Ministries of Government
Mr. Chairman, this training initiative is yet another tangible indication of our Government’s commitment to: Improved Management of Public Finances; Timely implementation of Programmes and Projects; Greater Transparency and Accountability; Effective delivery of Public goods and services; Obtaining value for money; and efficient and effective allocation of our resources. Governments can have the most modern of Bureaucratic structures and the most advanced information and communications technology but without skilled human resources the delivery of Public Services will be ineffective.
In conclusion, I would like to once again thank the Caribbean Development Bank for partnering with us in support of this training programme, and to challenge each participant with the responsibility of giving his/her best to the information disseminated during the workshops.
It is now my distinct pleasure to declare this training programme on Public Policy Analysis Management and Project Cycle Management Training Programme officially opened.
I am extremely honored to have been invited to address you at this globally recognized convention. This is my first PDAC Convention and I owe my presence to the persistence of my son, Darren, who has been in Canada for the past 11 years. When he suggested I attend, I promptly told him that this is a mining event; I am in finance. But, he told me that I was wrong; that this Convention was more than just mining. How right he was: I am glad that I came, for having arrived here only a few hours ago, I have already interacted with a wide cross section of people. In that regard, this Convention provides a wonderful opportunity for networking; and meeting people of different backgrounds, professions, persuasions and climes. In particular, it would be remiss of me, if I did not recognize the value of this convention for exchanging views on pertinent policy issues and investment opportunities in various destinations in the mining industry. Please allow me to add my Guyanese welcome to all of you attending this Guyana Day. I am always pleased to meet Guyanese in the diaspora – to hear from you – your concerns, hopes and aspirations – and to share with you our Government’s vision, plans and programmes in the journey to a Good Life for all of our citizens. Over the next few days, I hope we can sit at the table of brotherhood and sisterhood and break bread in your adopted yard, so to speak. I bring you warmth from the Mudland, where the sun rises in the East in the sugar belt of the Corentyne and sets in the West of our very own Essequibo. Not one cuirass, not a blade of grass! All of Essequibo is we own.
This Annual Convention has become a key event on the Prospectors and Development Association of Canada’s calendar. The Association must, therefore, be commended for attracting such a wide cross section of experts, miners, potential investors and the Diaspora, to discuss global developments that impact the scope and sustainability of the mining industry. The United Nations Sustainable Development Goals, which were adopted by the UN General Assembly, acknowledged inter alia, the need for environmentally sustainable economic development. The mining industry has a pivotal role to play in the attainment of these goals, by ensuring that its operations leave a positive footprint on the environment, even as it generate profits, creates employment and promotes economic growth.
Ladies and Gentlemen: I would now offer a brief economic overview of Guyana and contextualize the importance of the mining sector in Guyana’s economy.
Economic Overview of Guyana
Guyana is located on the northeast coast of South America, bounded by Suriname on the East, Venezuela on the West, Brazil to the South and the Atlantic to the North. With strong existing and historical links to the Caribbean, Guyana, as the only English speaking country on the South American mainland, acts an important bridge between these two regions. Our country is multi-ethnic and multi-religious, boasting a land mass of 214,970 square kilometres, which is inhabited by a small population of approximately 750,000 people. The country is well endowed with natural resources, including arable lands, mineral deposits, and tropical forests.
In recent years, the economy has achieved relatively stable economic growth, averaging an annual three percent, slightly below the targeted levels, but consistent with the global trends. Our fiscal position has remained strong, with growing current account surpluses while the overall deficit has been kept within sustainable levels. The financial system is robust, with banks and other non- bank financial institutions being sound and adequately capitalized. Public debt levels are prudently managed – under fifty percent of GDP – while annual inflation has hovered around two percent. With foreign reserves that are over three point five months of import cover, and with no exchange controls, our environment makes for hassle-free repatriation of profits and dividends.
Large hydrocarbon reserves, in excess of 3.7 billion barrels of recoverable oil, were discovered, recently, in the country’s offshore basin. Production of first oil is expected in the first quarter of 2020, with 120,000 barrels per day being targeted. This could eventually reach 500,000 barrels per day by 2025, and up to 1,000,000 barrels per day by the late 2020s. To put this in perspective, our neighbour, Trinidad and Tobago, has current production of a mere 39,000 barrels per day, while Oman’s 2017 production was 1,000,000 barrels per day and it was ranked 19th largest oil producer in the world. And this is only from the Stabroek Block, which is controlled by Exxon and partners. There are other major oil producers who have expressed interest in, or are already exploring on, the shelf. Annual earnings for Guyana from royalties and profit share from petroleum production could rise from over US$300 million in 2020 to over US$1 billion by 2025. Perhaps, not since the introduction of plantation sugar in Guyana, has a product have the capacity to revolutionize the country. From potential to prosperity, these resources, properly utilized, can have the transformative effect about which many past generations of Guyanese could only dream, but which the present and future generations could realize. This is why, to avoid the resource curse, of which we have been repeatedly warned, we are fashioning a constructive and enlightened Sovereign Wealth Fund, to provide for inter-generational equity. The Fund’s legislation is expected to reach Parliament in the last quarter of 2018.
We are also developing a Green Development Strategy in collaboration with the UN Environmental Programme. This Strategy seeks to articulate our Government’s vision of a green economy, using our new-found wealth. It will emphasise our thrust to diversify the economy away from its dependence on what our President has coined the Six Sisters – gold, bauxite, diamonds, timber, rice and sugar. They have served the economy well through the years; but, now, they have grown tired and are need of retiring and/or re-tooling. Our intent is to focus more on value added and manufactured goods. Further, the Strategy will elaborate on our resolve to move away from fossil fuel generated power to an energy mix comprising hydro, solar, wind, baggase and natural gas. Already, we have committed to 100 percent clean energy by 2025 and are working with the Government of Norway in pursuit of this objective. Finally, the Strategy will lay in bold relief our desire to bridge the developmental divide between the coast and the hinterland through undertaking massive infrastructural, economic and social projects and programmes.
Ladies and gentlemen, I do understand that all eyes and ears are now turned to developments in Guyana’s mining sector and its impact on the economy. I will now try to give you a brief overview of Guyana’s economy, with particular emphasis on the mining sector. Next, I will touch on the fiscal regime that is in place for mining. Finally, I will indicate some of the ways you, as investors, may enter the Guyanese mining sector.
The importance of Guyana’s Mining Sector
The mining sector is economically important to Guyana. As a share of the country’s Gross Domestic Product (GDP), mining accounted for approximately fifteen (15) percent at the end of 2017, with gold being the main contributor. Mining is also the major source of Foreign Direct Investment into the country, accounting for approximately twenty- five percent of the total amount. The mining sector is also a significant source of government revenue and provides approximately fifty percent of the foreign exchange needed to support the country’s international reserves and Balance of Payments. As an employer, the mining sector has been able to absorb a significant number of persons in its own right, as well as those released from other mining activities, such as bauxite, or other activities such as agriculture.
The impact of mining has had far reaching tentacles into the other sectors of the economy. It allowed for increased transportation, specifically into the hinterland regions, where mining is the dominant activity. Increased mining activities in hinterland regions has resulted in an expansion in the physical and other infrastructure in these regions, in as much as it has provided very important communication links with the coast. For those, with limited knowledge of the country, most of the population lives on a narrow strip of the coastal belt, which is six (6) feet below sea level, thereby making it susceptible to rising sea and ocean levels and other climatic phenomena. Mining in the hinterland regions thus provides a natural gravitation to higher ground by segments of the population.
Distinguished ladies and gentlemen, Guyana is endowed with a vast and diverse array of high quality metallic and non- metallic minerals. Gold, diamond and bauxite production dominate the mining sector activities, with gold accounting for more than fifty percent of annual output. Though declining from peak performances in the 1970s and 1980s, bauxite production is set to rise with increased production by the two foreign-owned companies as well as the coming on stream of a new entity.
Guyana is also moving to again produce manganese in the North West region of our country, specifically Matthew’s Ridge. A foreign investor is scheduled to begin production in the last quarter of this year. I encourage you to come Guyana, and to search, explore and exploit our rich deposits of minerals, rare earth metals, precious and semi precious stones and metals.
Distinguished Ladies and Gentlemen, one of the main reasons why this sector is unable to unleash its full potential is the unavailability of the requisite capital to local investors. To address this challenge, our Government is encouraging local miners to establish linkages with foreign investors and members of the Diaspora to access the necessary financing and technology. Recognizing the importance of the mining sector to the economy, and in an effort to make the sector more competitive, the Government has been providing fiscal incentives in the form of concessions on machinery, equipment and fuel, and waiver and remission of taxes on motor vehicles, based on the value of gold declaration. Mining Operators are also permitted to hold foreign exchange retention accounts. Larger operators are subjected to an Investment Development Agreement that allows for duty and tax concessions for specified periods in the life of the investment. With our one-stop investment agency, Go-Invest, ably facilitating investors and helping them to cut the red tape and bureaucracy, investors can be guaranteed the safety of their investment and the ease of doing business.
I mentioned, earlier, that Guyana currently exports gold, diamonds, bauxite and, to a lesser extent, silica sands. These are all well-established industries, which are found well-identified areas of the country. Gold is found, primarily, in our greenstone belt, which I understand is a continuation of the Ashanti belt in Africa and runs through French Guiana, Suriname, Guyana and Venezuela. The major gold finds within the region occur within this belt. The Canadian-owned company, Omai Gold Mines, had previously mined for gold in this belt, as, indeed, are other companies – Guyana Goldfields,, ETK Sandsprings, Strata Gold and others. I would encourage you to remain and hear what they are doing.
But, no success story comes without challenges. And so, with the contraction of the agricultural and forestry sectors, an increasing number of investors have been gravitating to the mining sector. This has created difficulties in that many of them are new to mining, have no experience in the sector and put a strain on land allocation and administrative resources. More attention will be paid to providing education and training, particularly on engaging of safe practices, and environmentally-friendly and sustainable mining.
Distinguished Ladies and Gentlemen, our Government is cognizant of the fact, that a strong legal and regulatory framework is a prerequisite for the orderly and safe development of the sector. As such, we will be undertaking revisions of the Mining Act and Regulations. These are expected to be completed and laid in the National Assembly by the end of 2018.
As a country endowed with an abundance of natural resources that are, for the most part, produced for export, Guyana’s openness to the rest of the word exposes us to predicate crimes such as money laundering. Hence, maintain confidence and integrity in our financial system, we have, in the context of AML/CFT, put the requisite laws and regulations in place to combat such activities.
So, what can we offer you? Guyana is still under-explored in terms of it abundance of mineral resources. So, if you are interested in exploration you must first apply for Permission for Geological and Geophysical Surveys better known as PGGS. You need to apply to the Minister of Natural Resources for this. To the Guyanese in the Diaspora: if you want to share in the buzz and excitement stemming from our recent oil discoveries; if you want to help us to diversify the economy, so as to ensure our non-dependence on petroleum revenues; then now is the time. The motherland needs you, your financing and your expertise! Come home to Guyana!
I thank you for your attention!
Minister of Finance, Hon. Winston Jordan remarks on the occasion of the Signing Ceremony for the Sustainable Land Development and Management Project
Your Excellency President David A. Granger; Colleague Ministers of the Government; Mr. Reuben Robertson, Country Representative of the Food and Agriculture Organisation of the United Nations (Guyana Office); Representatives of other sector agencies; Members of the media; other invited guests, Ladies and Gentlemen:
Today, I am pleased to make Brief Remarks on the occasion of the signing of the Sustainable Land Development and Management Project which will be implemented by the Guyana Lands and Surveys Commission in collaboration with the United Nations Food and Agriculture Organisation (UNFAO).
Allow me to begin by saying that I endorse this project, which has been designed to ensure that the productivity and economic potential of our land is maintained, even as we utilise our natural resources to streamline and develop our green economy. Indeed, the overarching goal of sustainable land management should be to contribute to government projects and programmes that are aimed at achieving poverty reduction, economic growth while promoting the full utilization of land resources in a sustainable manner. As such, issues to do with improving land tenure security; enhancing the efficiency, transparency, and improving service delivery of land titling and registration; and enhancing local government capacity to undertake land management functions, must be brought into contention.
I am happy that this project has been designed to tackle many of these areas. We have high expectations that this land management project will provide the required data to inform our planning processes, and help us to position, strategically, our physical infrastructure such as roads, bridges, drains, culverts and other structures, in order to avoid disrupting the ecosystem. It will also allow us to protect and rehabilitate those areas that have been degraded through irregular and unsustainable mining and logging practices that cause erosion and contaminate our waterways, among other negative effects. Further, it is envisaged that sound land management will provide information that helps to reduce the level of production risks and protect the natural resources potential by preventing degradation of air, soil and water quality. More importantly, it will help to ensure that economic ventures are socially acceptable and sustainable.
Lest we think otherwise, land management is absolutely essential, since it combines technologies, policies and activities with socio-economic principles and environmental concerns, in order to maintain and enhance the production of goods and services. The report from a global study that was conducted in 2013, proved that sustainable land management has the potential to feed more people; provide opportunities for growth and livelihood diversification, restoration of natural ecosystems; address climate change impacts and build justice and security for the rural poor.
In my maiden 2015 Budget Speech, and in recognition of the agricultural sector’s contribution to the economy, I pledged our Government’s commitment to: (i) restore and enhance soil fertility; (ii) crop rotation; (iii) efficiency in water use; (iv) reducing the use of chemicals and pesticides, among other measures. I wish to let you know that Government remains committed to this thrust through its yearly budgetary allocations to the sector.
I note that a key objective of this sustainable land development and management project is to create an enabling environment which will help to shape our economic landscape in the areas of renewable energy initiatives (solar, hydro and wind power), the preservation and protection of our eco-system, promotion of eco-tourism, and the creation of green jobs and green spaces for recreational purposes. It has been determined that these efforts would require a cross-sectional approach consisting of Government, the private sector and civil society in order to flourish.
Recognising the need to protect Guyana’s natural capital, the concept of sustainable communities was materialised through the establishment of the Ministry of Communities – the vision of His Excellency President Granger. This vision allows for the building of cohesive, empowered and sustainable communities that would protect the natural capital, boost socio-economic growth and increase job opportunities through Government’s support to micro, small and medium enterprises (Budget Speech, 2015 p.51). This is being done, currently, through initiatives such as the Micro and Small Enterprise Development Project and the Amerindian Development Fund.
I should highlight that the SLM addresses, to varying degrees, a number of the Sustainable Development Goals (SDGs), in particular, SDG 15 – “Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably managed forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss”. More importantly, it will develop data gathering and monitoring, reporting and verification (MRVs) mechanisms that would assist in supporting the implementation of our Green State Development Strategy and help us to monitor our progress towards the achievement of the Sustainable Development Goals by 2030.
In closing, the Government of the Cooperative Republic of Guyana looks forward to the timely and seamless implementation of this transformative project. We need to take stock of lessons learnt and ensure that slippages identified in the implementation of GRIF projects – those associated with time and costs overruns – are not repeated in this project. I want to impress upon the implementing partners of this SLM project to ensure that all deliverables are achieved within the specified timeframe and budget. This, of course, would require the cooperation of all relevant stakeholders to support the Guyana Lands and Surveys Commission in carrying out its mandate to realise the goals of the Sustainable Land Management project