2002 Policy Issues and Targets

In introducing the Government’s “key tasks and policies in 2002 and beyond”, the Minister announced that the process of creating jobs and rapidly increasing the income levels of Guyanese on which the government has embarked, would be accelerated through the efforts of the opposition members of Parliament and all stakeholders in preserving peace and stability.

1. Maintenance of a stable macro-economic framework.

The Minister identified the following specific policies:

(i) Monetary policies to maintain the stability of the exchange rate, contain inflation, safeguard the Bank of Guyana's external reserve position and support the Bank of Guyana in its quest to reduce interest rates further.

(ii) Fiscal policies to support growth, reduce poverty and increase public sector savings. Specific measures include a comprehensive review of the tax system and staffing the Revenue Authority to its full complement.

2. Private Sector Development

• Assist the private sector in export and investment promotion, and expansion of small business and cottage industries and enact small business legislation.
• Appoint a Commissioner of Insurance
• Establish dispute resolution and settlement mechanism
• Establish a Stock Exchange

3. Restructuring the economy

(i) Sugar: Begin massive restructuring and modernisation of Guysuco at a cost of US$110M and resulting in increased output to 450,000 tonnes per annum at a cost of production of US$0.11 per pound of sugar over five years.

(ii) Rice: Development of an integrated sustainable and profitable industry under a 10-year strategic plan initiated by the Guyana Rice Development Board. The plan has four key areas: research and development, improved processing methods, expanding/developing markets and support service including drainage and irrigation, land reform, finance and inputs.

(iii) Bauxite: Noting the Government's repeated attempts to sell the two main state owned bauxite companies, the minister announced his government's commitment to a complete restructuring of the sector.

(iv) Forestry and Gold: No initiatives.

(v) New Growth Areas

   Priority areas identified includes:

(i) Manufacturing: the development of garment manufacturing parks, in agriculture, the fisheries, other crops, cut flowers and agro processing.

(ii) Tourism: The establishment of the Tourism Authority and revamping the incentive regime.

(iii) In Technology, taking steps to attract investors to this sector including tele-centres.

(iv) Job Creation:

(1) Short-term programmes to provide cash and other support to displaced workers.

(2) A temporary employment and maintenance programme to employ 300-400 persons.

4. Transparency and Efficiency

Ministry of Finance, including the State Planning Secretariat will be strengthened to formulate and implement policies.

Once again the Ministry has announced new legislation on public procurement and tendering and a new Audit Act in 2003.

The Government proposes comprehensive amendments to the FIA and Bank of Guyana Act to prevent some of the excesses which surfaced in Globe Trust.

Establishment of a Financial Stability Unit though the scope and objective of such a Unit is unclear.

Ram & McRae's Comments

There is a commitment by the government to put in place an Audit Act by May 1, 2002 as part of an IMF conditionality.

The Minister appears unaware that it is not only the absence of legislation but also the weakness and timidity of regulators which sometimes permit excesses to continue longer than they should.

An announcement has recently been made that the Stock Exchange would go into operation by mid-2002 which appears to be a highly optimistic target.

The Minister appears to ignore the recommendations of the Auditor General that the State Planning Commission be formally dissolved since it now operates as a Department within the Ministry of Finance.

Similarly, the Estimates provide for subsidies to be given to several Departments which operate improperly outside of the Government's pay structure as well as entities which are delinquent in meeting their obligations to have their books audited. It seems improper for the Government to be condoning such misconduct.

The Government is committing itself heavily to the Sugar Industry. The assets employed are quite substantial as are the social considerations. It will be relying heavily on the managers delivering the expected output.