A. Overview

4.1 Mr Speaker, this is the first year of the PPP/Civic Government’s renewed mandate. Therefore, it is fitting and right that I should highlight in clear and concise terms, our expectations of the country’s progress in five years time. The President, at the opening of this session of Parliament, succinctly addressed the Guyana that we are striving to build. He identified the new Guyana as one in which all the people benefited from “accelerated economic progress, expanded opportunities and rapid social development; a place where fairness and justice dwell and from which fear, prejudice and discrimination are banished.” 

4.2 The strategies, plans and programmes that will be fashioned and implemented over the next five years will be in pursuit of the attainment of these laudable goals. As highlighted in the National Development Strategy (NDS) document, the priorities of macroeconomic policy will address issues in respect of the promotion and sustainability of growth, and ensuring that the benefits are distributed in an equitable manner. But, Mr Speaker, there will be challenges, both external and domestic. How successful we are in confronting them will, to a large extent, determine the pace of our development – indeed, I daresay our very survival. As clichéd as it may sound, we live in a world that is undergoing changes at a rapid rate. Through a multi-dimensional process called globalisation, structures, institutions, practices and ideas are being transformed in profound ways. This will have far-reaching consequences for us as a country, and our relationships and interactions with the international community. Domestically, we will have to eschew ethnic division, confrontational politics, and other negatives that serve to decrease the attractiveness of our country as a haven for foreign investment.

4.3 Mr Speaker, we have forged a strategic approach with the objective of positioning Guyana to compete effectively in the global economy, while building the kind of society about which we have dreamt. The strategy encompasses (i) making traditional industries and sectors more efficient and competitive; (ii) diversifying the economic base; (iii) pursuing human development initiatives (including unlocking our human resources potential); and (iv) defending the national patrimony. I will now develop each of the elements of the strategy.

B. Re-engineering the Economy

1. Restructuring of the Traditional Industries 

4.4 Over the years, Guyana has relied principally on three products – sugar, rice and bauxite – to provide the bulk of foreign exchange, domestic income and employment. Although key investments in gold mining and forestry have increased their sectoral contributions to national income, it is the three traditional products that maintain a predominant influence on the yearly growth rate of the economy. Unfortunately, in recent times, these industries have experienced significant setbacks that threaten their survival. Each of these industries, therefore, will have to undergo some form of restructuring to enhance its viability, its ability to compete effectively in the international market place, and its net contribution to the economy.

4.5 In the case of sugar, a comprehensive, viable plan has been prepared. This plan envisages sugar production rising to around 500,000 tonnes by the fifth year of implementation, from the 273,000 tonnes that was produced last year. At an estimated cost of US$200 million, it calls for the building of a new factory at Skeldon and the modernisation of the factories at Albion and Rose Hall, the rehabilitation and replacement of field and factory equipment, and the consolidation of operations, among others. Most important, the cost of producing sugar would be reduced from the current 17.5 US cents per pound to around 9 US cents per pound, the current world market price. Further, in achieving the cost and production targets, the Demerara Estates could become viable. There will be no need, therefore, for closure of these estates and loss of jobs.
4.6 Mr Speaker, the issue of the restructuring of and support to the rice industry was raised at the Business Summit between the President and the private sector in 1999. After responding to the incentives of the Government and the lucrative European market, rice production rose sharply between 1992 and 1999. But a combination of circumstances, including the El Nino and La Nina weather phenomena and the loss of the preferential market in Europe left operators owing billions of dollars to the banking system. Thus, one of the outcomes of the business summit was the establishment of a tripartite committee that was tasked with resuscitating the industry. A five-pronged strategy was agreed upon. These are reducing cost, exploring new markets and marketing strategy, examining ways to ease the financial burden, improving drainage and irrigation, and pursuing the European Union’s proposal to fund an improvement programme for the regional industry. 

4.7 Mr Speaker, much progress has been made in this direction. At the urging of the Government, the commercial banks were persuaded of the wisdom of rescheduling and restructuring the debts of the industry. We will continue to engage the banks in dialogue to reduce the indebtedness of the small operators in the industry. The Government has been having intense bilaterals with Trinidad and Jamaica on matters involving access of Guyana’s rice to their markets. Other potential markets, including Brazil, are being actively examined.

4.8 We have expended huge sums to improve the drainage and irrigation system throughout the country and we propose to do so once again this year with the planned expenditure of over $1 billion. Also, Mr Speaker, a joint proposal for funding from the European Union (EU) was submitted by Guyana and Suriname. The EU is committed to assisting the regional rice industry to improve its productivity and enhance its competitiveness. Specifically, the programme will improve marketing, modernise the infrastructure, and increase research activities.

4.9 Mr Speaker, the Government-owned bauxite companies have been ailing for some time. In fact, had it not been for large injections of cash by the Government, averaging about $1.1 billion over the last two years alone, Linmine would have folded awhile ago. This would have brought untold suffering to the community. More recently, Bermine has been requesting direct support from the Government to maintain its operations.

4.10 Linmine has been engaged in a restructuring exercise. In this regard, all of the non-core bauxite activities were removed and the power plant was privatised. However, to date, the Government has not been successful in attracting an investor who is prepared to inject a large capital sum in the company. While the search continues, both the Government and the stakeholders in the industry will have to continue to implement measures to cut costs further, improve the marketing arrangements, and ease the financial strain on the Treasury.

4.11 Mr Speaker, it is because of the strain imposed on the Treasury by Linmine that we are unable to extend further subsidies to Bermine. It, therefore, becomes necessary to find a viable solution for Bermine’s continued existence. The Bauxite Committee has been exploring various options. However, any plan that is put forward must have the characteristics of being practical, feasible, immediately implementable, and does not impose any financial burden on the Treasury. Mr Speaker, every dollar that is transferred to the Linmine and Bermine in the form of subsidies denies funding of critical programmes in other sectors. The Government is prepared to work with the community to arrive at a consensus on the future of the industry.

2. Diversifying the Economic Base

4.12 Mr Speaker, even as we seek to restructure and strengthen the traditional production centres, we recognise that our economic base will remain vulnerable to the vagaries and volatility of the international markets. To continue to depend on a few primary products with limited value-added is to put in jeopardy the country’s future development and the attainment of a decent standard of living by our people. The reality is that we must diversify into new products and markets that are emerging in our increasingly globalised world. We must position ourselves to take advantage of advances in computer technology, telecommunications, fibre optics, and the internet, among others, which are facilitating the creation of a new super highway of ideas, information, markets, e-commerce, and services. We have to develop new industries in light manufacturing, agro-processing, eco-tourism and other services. In pursuit of this, we have allocated $425 million to stimulate investments in activities that have the potential to create substantial jobs and capable of increasing export earnings in the medium to long term.

3. Creating the Climate for Attracting Investment

4.13 Mr Speaker, the key to diversifying the economy, producing more goods, accelerating development and achieving some modicum of equity is investment. In addition to maintaining a sound and consistent macroeconomic environment, we will be undertaking several initiatives to attract investment to our country. These are grouped as follows: legislative, institutional, and infrastructure.

a. Legislative
4.14 An investment code has been prepared and it will be enacted into law as soon as all the consultations are completed. The Act will clearly define the various areas of interest and concern to potential investors, including the incentives’ structure. As stated previously, the Government intends to make liberal use of tax incentives to attract investors to Guyana.

b. Institutional 
4.15 The Guyana Office for Investment (GO-Invest) is being restructured. The new agency will be expected to aggressively seek out investors, promote Guyana as a place with which to do business, and expedite the processing of applications. At the same time, the new Foreign Trade and International Cooperation Ministry will be expected to pursue bilateral investment protection and promotion agreements and assist and support the work of the agency. Further, the trade offices that have been established in Guyana’s Embassies and Consulates will be re-organised and appropriately staffed to become pro-active agents for advertising Guyana and Guyana’s products abroad. Mr Speaker, while I am on the subject of Guyana’s image, I wish to recall here, that last year, the Overseas Private Investment Corporation (OPIC) restored insurance coverage to Guyana. This is essential for attracting US investment into Guyana.

c. Infrastructure Development
4.16 Mr Speaker, we recognise that investment of the magnitude we seek will not occur without the necessary infrastructure. In this regard, therefore, we forecast to spend $18.7 billion on the Public Sector Investment Programme, in 2001. This PSIP represents an ambitious undertaking of physical and social infrastructure renewal and expansion in the country. I would now turn to the highlights of this programme.

(i) Agriculture
4.17 Mr Speaker, enhanced agricultural production is an imperative that cannot be over-emphasised. In recognition of this, we intend to spend $2.1 billion in the agriculture sector for this year. While we are focused on improving Guysuco’s productivity, we must promote the small and medium-sized farmers who are engaged in activities such as rice and other crops’ cultivation, marine fisheries and freshwater aquaculture, beef and dairy, pork, poultry and egg production. We will implement the Poor Rural Communities Project, which provides for institutional support, the creation of farmers’ bodies in the form of water users’ associations, a revolving credit scheme, and civil works in selected areas in Regions 2 and 3.

4.18 Our planned drainage and irrigation programme for this year, which exceeds $1 billion, involves works in areas such as Mibicuri, Nos. 52 – 57 Villages, Golden Fleece, Handsome Tree, Ann’s Grove, Belfield, Mocha, Goed Intent and Parika. In addition to rehabilitation works programmed for West Berbice, a major, sea defence programme, costing approximately US$20 million over the next two years, will commence this year. The programme entails the reconstruction of sea defences where breaches have occurred and remedial maintenance at Capoey/Columbia, Tuschen, Meten-Meer-Zorg, DeKinderen, and Hague.

(ii) Transport
4.19 Mr Speaker, I am pleased to announce the completion of the entire integrated coastal highway system. We have secured funding for re-surfacing the Mahaica to Rosignol Road. We are currently in negotiations and are in the process of securing funds to re-surface the West Coast Demerara Highway; to create a four-lane link from the Demerara River Bridge into Georgetown; and to initiate a study for a bypass road to Timehri. Also, we are in discussions with local and international donors to construct the Guyana/Brazil Road. In addition to creating a major artery, the completion of this road will open the important North/South corridor of the country, and integrate the three Guianas.

4.20 We will continue to place emphasis on remedying the extensive network of community and farm-to-market roads and accesses. Over $1.8 billion has been budgeted to construct, re-construct or rehabilitate the Bartica-Issano, Black Bush Polder, Mabura-Lethem Roads and several roads country-wide, including at Hague, Enmore, Buxton, Mara, Nurney, Bushlot, Champagne, and Bath. We will commence the upgrading of the road linking Crabwood Creek to the Guyana Suriname Ferry Terminal.

4.21 Mr Speaker, this year, we will expend $448 million on our bridges’ programme. All of the bridges on the East Coast and East Bank of Demerara and the West Coast Berbice, including the main Mahaica and Mahaicony bridges, are scheduled for rehabilitation over the next four years. Already, we have started pre-qualifying the contractors for the first phase of the programme, which includes fifty-seven bridges. In addition, we will be designing a road safety programme for Georgetown and the major highways that will, among other things, identify the areas for street lighting and road marking. Negotiations have been re-started with Ballast Needam for the construction of the Berbice River Bridge. Funding has been secured for the creation of a Port Authority and institutional strengthening of the Ministry of Public Works and the Transport and Harbours Department.

4.22 A massive, US$30 million, four-year Air Transport Project is scheduled to start this year. The objective is to raise the standards of air transport operations, safety procedures, and affiliated services in Guyana to internationally accepted levels. The programme includes improvements to the Cheddi Jagan International Airport, Timehri. In this regard, $158 million has been provided in the Budget to start construction and rehabilitation of the Airport’s facilities, including resurfacing the runway, and repairs to the roof, radar and runway lighting system. In addition, the Project caters for the privatisation and expansion of the Ogle Airport, of which private investors intend to invest about US$3 million in the first phase, and the creation of the Guyana Civil Aviation Authority. Plans are in train, and funds have been budgeted, to upgrade the Albion Airstrip into an aerodrome to facilitate flights from Timehri, Ogle and Suriname.

(iii) Power
4.23 In the area of power supply, the Government has contributed $200 million for a Rural Electrification Project and is currently negotiating a US$25 million loan, from the Inter-American Development Bank (IDB), for an Unserved Areas Electricity Project. This Project will provide 55,000 customers with electricity over a five-year period. Both projects will be implemented by the Guyana Power and Light Company Limited and will start in Region Six this year. As part of its contribution to these projects, GPL will provide over $1 billion and will boost its generation capability, through the addition of three 10-megawatt sets, to meet the additional demand for electricity, particularly by the new housing schemes and industrial estates and parks. The Government will examine all areas for lowering the cost of electricity, including the possibility of developing Amalia Falls as a hydropower site and pursuing offshore exploration for fossil fuels.

(iv) Telecommunications
4.24 Mr Speaker, if we are to take advantage of the limitless opportunities created by the internet and information technology and become a haven for telecommunications work, we have to make our country more attractive in all areas. At the very minimum, we must have access to cheap, stable and reliable electricity and a well-developed telecommunications system. I have just outlined our programmes in the electricity sector. We have embarked on two programmes to create a more favourable climate for the development and exploitation of the emerging telecommunications technology and internet. First, the Government has declared its intention to liberalise the provision of telecommunications services in Guyana. Already, we have secured US$1.6 million in financial assistance from the IDB to define Government’s policy on investment in this sector and to institute legal, regulatory and business reforms. Second, we propose to develop an Information Technology Development Strategy that will increase connectivity for homes and will give Guyanese access to internet-related services. We are currently negotiating a large loan from the IDB to implement this project. 

C. Human Development Initiatives

4.25 Mr Speaker, while we seek to upgrade the physical infrastructure, we must not lose sight of the equally important development of our people. And so encapsulated in this Budget is a set of human development initiatives - education, health, water and sanitation, housing and poverty programmes - that defines our approach to improving the standard of living of our people. Together, these initiatives are expected to cost $20.5 billion or 14.7 percent of GDP and 39.6 percent of the expenditure to be appropriated. I now turn to each of these initiatives.

1. Education
4.26 Mr Speaker, we have identified five initiatives that we intend to pursue in the education sector. First, is the universal secondary education approach in which we are seeking a loan of US$50 million from the IDB to build more primary and secondary schools and to convert primary tops and community high schools into secondary schools. Second, we have provided resources to further technical/vocational training. Specifically, we will be building a technical institute at Corentyne and will be upgrading those at New Amsterdam and Linden. Third, is the project to computerise all schools. Fourth, is a Distance Education Learning Project that will utilise computers and the internet. Fifth, is reform of the curricula of schools to make it more relevant to the demands of today’s world.

4.27 This year, the Government has budgeted $11.8 billion to improve the quality of education and enhance its delivery throughout the country. Some of these resources will be used to continue the construction and rehabilitation of educational facilities, including nursery, primary and secondary schools, student dormitories, teachers quarters and practical instruction centers in areas such as, Skeldon, Reliance, Stanleytown, Annai, Karaburi, Manawarin, Friendship, Madhia, Santa Rosa, Buxton, Jawalla, Dora and Wakapoa. In addition, we will be focusing on teacher training at CPCE, and curriculum development and text book production at NCERD.

2. Health
4.28 Mr Speaker, by now it is self evident that a healthy workforce is a prerequisite for improved production and productivity. Our health policy will continue to emphasise individual responsibility, equity and quality, primary health care, and institutional strengthening. In 2001, a total of $5.3 billion has been earmarked for this sector. Some of the expenditure will focus on: (i) establishing dental clinics at Moruca, Matthew’s Ridge, Sophia, Lethem, Kato and Paramakatoi; (ii) constructing health posts at Tassiwini, Itaballi, Mikwak, Orinduik, and Kuduwini; (iii) extending the health centre at Ithaca and constructing new centres at Bush Lot and Calcuni; (iv) rehabilitating the Kamarang, New Amsterdam and Skeldon Hospitals; and (v) new living facilities for nurses at Kwakwani and Suddie. We have secured a grant of $450 million from the Canadian International Development Agency (CIDA) to fund three critical projects: (i) HIV/AIDS Prevention and Control through improved management of curable sexually transmitted infections; (ii) Tuberculosis Control; and (iii) Health Information Management. These projects will start this year. 

3. Water and Sanitation
4.29 Mr Speaker, we will continue to improve the provision of adequate, reliable and affordable potable water to the population. This year we will be investing $2.5 billion. These resources will be used to, among other things: (i) start the construction of the LBI inter-connected system, which will improve the quality and availability of potable water to the villages between Cummings Lodge and Strathspey; (ii) complete and commission the Pouderoyen inter-connected system; (iii) complete the Rose Hall inter-connected system; (iv) upgrade and extend the Leguan system; (v) complete the refurbishment of the Wakenaam system; (vi) finalise arrangements for the transfer of the Linden water system to the Guyana Water Authority; and (vii) complete and commission the second phase of the New Amsterdam water system.

4.30 In addition, other stand-alone systems will be refurbished country-wide, including those at Yukasari, Williamsburg, Lesbeholden, New Hope, Caledonia, Timehri and Covent Garden. Over 50 hand pumps and windmills will be installed in Regions 1,6 and 9, including at Quarrie, St Ignatius, Kuduwini, Tigerpond, Taushida and Gunn Strip.

4.31 In Georgetown, we have targeted the completion of Phase I of the GS&WC project, which entails further upgrading of the distribution network in North Ruimveldt and Sophia, and the installation of water meters in Queenstown, Bel Air and Lamaha Gardens. Further, we have secured US$25 million for Phase II of this project, which will continue the expansion of the distribution network and refurbish the sewage system. Preliminary activities for this phase will commence this year.

4. Housing
4.32 Mr Speaker, in 2001, about $650 million is provided to continue the land distribution programme, accelerate the development of infrastructure in the housing schemes and squatter settlements, expedite the granting of titles, enhance community participation by empowering them in the housing areas, and focus on the building of settlements in the hinterland and riverain areas. The US$30 million Low Income Settlement Programme will start this year. In addition to providing much needed institutional support to the Central Housing and Planning Authority, this programme will target the upgrading of squatter settlements in Tuschen, Zeelugt, Diamond, Golden Grove, Sophia and Amelia’s Ward. Additionally, we have earmarked in excess of $400 million to upgrade existing housing schemes in Regions 2, 6, 7 and 10, including Parfaith/Harmony, Belle West, Lowlands/Hope, Onderneeming, Haslington and Bath.

5. Poverty Reduction and Employment Creation
4.33 Mr Speaker, the Government intends to build on the Interim Poverty Reduction Strategy Paper, for which country-wide consultations will be launched next week. We maintain that an attack on poverty must focus on creating opportunities for all Guyanese. We are striving to put in place the kind of climate that is conducive to attracting massive investment, so thousands of jobs can be created. The additional resources that will be released under the Enhanced Highly Indebted Poor Countries (HIPC) Initiative will be used to augment Government expenditure in health, housing, pure water and sanitation, and education, with the overall objective of reducing poverty in the country. At the same time, we are pursuing a number of initiatives that target different categories of the poor. Mr Speaker, over $2 billion has been budgeted for such programmes as: 

• The Social Impact Amelioration Programme - $1.1 billion

• The Poverty Programme - $500 million, targeting mainly distressed communities

• The Poor Rural Communities programme - $188.4 million

• The Basic Needs Trust Fund programme - $100 million

• The Youth Initiative - $240 million, for projects identified by the youths.

4.34 The very large public sector investment, maintenance and poverty programmes of the Government will generate many jobs, of varying skill categories, for Guyanese throughout the country. In addition to these, other projects that can trigger self- employment or the establishment of micro enterprises, for which provision has been made in the Budget are:

• The Linden Economic Advancement Project (LEAP), which is a $2.0 billion programme, over four years, to provide a credit fund, vocational training and the creation of a business incubation machinery for the Linden community

• Project Support Programme - $425 million, to support small economic ventures

• The creation of Industrial Parks - $225 million, to develop industrial sites at Lethem, Belvedere, New Amsterdam and selected new areas.

D. Defending the National Patrimony

4.35 Mr Speaker, the Government has embarked on a programme of re-capitalisation of the Guyana Defence Force (GDF). In this regard, a sum of $575 million has been indicated to repair an aircraft, to purchase a new aircraft, and to acquire a high-seas patrol boat. In addition, the Army has been the beneficiary of four 44-ft motor life boats, which were acquired from the United States Department of Defense. These will be used to conduct search and rescue operations, and to patrol our sea borders to guard against poaching within our maritime zone and drug trafficking.

4.36 Mr Speaker, in relation to the fight against crime, we have sought to equip the police as best as possible, given the limitations of our resources. Both the capital and current budgets of the Police Force have increased significantly over the past three years. This has allowed them to recruit more persons, purchase equipment and motor vehicles, and employ new tactics, skills and techniques to reduce crime. We will continue to show our support to the Force in tangible ways.

4.37 Equally important in the quest for peace and stability is the observance of the rule of law. The judicial system must be able to dispense justice swiftly, fairly, and impartially, for this is the essence of a system of good governance.