Below is the full version of an interview on the economy in 2013, between The President of The Georgetown Chamber of Commerce and Industry, Mr. Clinton Urling and Stabroek News Business Editor, Mr. Arnon Adams. Parts of which was published in today’s Stabroek News.
Your views on the overall performance of the Guyana economy in 2013.
The economy revealed glaring vulnerabilities in 2013 with the precipitous price drop in the international gold market and the uncertainty surrounding major infrastructural works due to political discord. However, from all indications, it seems the economy continues to display resilience and will record another year of favorable growth. With the many challenges facing the economy in 2013, I await the finance ministry’s report on the economy to identify those areas which grew during the year. Regarding the microeconomic aspects many firms complained that their businesses experienced a slowdown in 2013. Many also complained about inflation and the increasingly high costs of doing business. It will be informative and instructive to see the empirical results relative to the findings from the Georgetown Chamber of Commerce & Industry when it releases its attitudinal survey report on 2013.
The most important single development that impacted positively on the Guyana economy in 2013.
The resilience of our private sector, and, in particular, the gold and mining industries would qualify. Despite having to deal with a number of challenges including rising costs, stalled infrastructure projects, political wrangling, lower commodity prices, high electricity costs, and lack of skilled labour, just to name a few, our private sector remained undeterred. Private sector participants continued to invest and increase productivity which has resulted in sustained economic growth. In the gold mining sector, this resilience was demonstrated when despite the drop in gold prices from around US$1900 an ounce to current levels of around US$1200, the industry still recorded higher productivity and declaration figures than in 2012.
The most important single development that impacted negatively on the Guyana economy in 2013.
While the drop in gold prices, poor returns on sugar from GUYSUCO and the exit of the US air carrier Delta Airlines were three significantly adverse developments, they all take a back seat to the incessant political rivalry that has effectively seen initiatives and institutions good for the country’s development not being implemented and/or established. Both sides of the political divide fail to reach out and compromise on the development and execution of initiatives that would benefit the country’s economy and make it easier for our private sector to operate. Cuts in funding for various infrastructural projects, the non-support for the Amaila Falls Hydro Project and anti-money laundering legislation, the failure to establish institutions for improving transparency and accountability in public business and the inability to mitigate current public perceptions of corruption are just a few of the most significant causalities in the current political standoff.
The impact (positive or negative) of the domestic political climate on the performance of the economy in 2013.
This was effectively answered in the above response.
The standout sector of the Guyana economy in 2013 and the reasons for its success.
In what would be considered as hardly surprising, the gold and mining sector again emerged as the most prominent. Despite the drop in price of gold, prices are still attractive enough for bringing investments into the sector. This coupled with more stringent regulations and oversight from the GGMC and government incentives to cushion the fall in prices and high fuel costs have resulted in the sector retaining its dominant position in the Guyanese economy.
The two key challenges likely to face the productive sector in 2014.
All of the 20 barriers that were identified in the Chamber’s Competitiveness Manifesto are still the key challenges facing Guyana’s productive sectors. However, political rivalry, high electricity, and lack of a clear strategic policy on diversification are the three most worrisome. On the latter, we have to move away from the sector-focused monoculture currently dominated by commodities and primary agriculture and toward the goal of diversifying. Diversify or die! It is as simple as that if we are serious about sustaining the long period of growth we currently enjoy. Government has to provide the foundation that harnesses and leads the private sector to new activities and productive capabilities.
Your prognosis for the performance of the small business sector in 2014.
The fortune of this sector has to be analyzed within the overall holistic economic framework. The sector’s success rests on a favorable macroeconomic environment and on the success of the economy as a whole. If the economy does well, it means the small business sector will do well or is an indication that it is doing well. Smaller businesses have a harder time accessing favourable financing and their business structure and management competence are not as streamlined as in larger firms. Both private sector organizations and the government will have to craft policies that boost small businesses’ capacity to succeed and overcome the aforementioned challenges.
Your comments on the quality of service afforded the business sector by key state agencies in 2013.
Overall, I think state agencies should be commended for their efforts at serving the business community. However, state agencies must continuously work at improving their operations to increase efficiency and courtesy when dealing with the public. The GRA must be singled out for its efforts at facilitating the business community. The decision to locate all the departments into one facility is commendable and saves time. However, the GRA would certainly benefit if more resources are allocated by policy makers to increase its personnel and to invest in more technology to make doing business easier.
Another important agency that needs more resource allocation, including the raising of salaries, is the Guyana Police Force. A strong and well-equipped GPF is critical to the preservation of a robust economic climate
Is foreign investment likely to grow in 2014?
Despite all the challenges, I remain optimistic about the Guyana economy in 2014 and I do expect more foreign investments. Our factor endowments will always attract foreign investments. However, the government has to be more proactive in this regard and that will have to start with a reformed GO-Invest and with new leadership at the helm of that important agency. Our economic needs are outpacing public funds that are available to fund Guyana’s growth and expansion. Therefore, it is critical that we craft innovative approaches to attract investments to Guyana, which ensure that we are capable of achieving our full potential.